CASELLA -v- HEWITT [2008] WASCA 13

Reported Decision:	(2008) 36 WAR 1
Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2008] WASCA 13
Court:	THE COURT OF APPEAL (WA)
Case No:	CACV:151/2006	Heard:	12 OCTOBER 2007
Coram:	McLURE JA BUSS JA EM HEENAN AJA	Delivered:	12/02/08
No of pages:	52	Judgment Part:	1 of 1
Result:	Appeal dismissed
Category:	A
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Parties:	DOMENIC CASELLA ANTHONY JOHN HEWITT LANA JOYCE HEWITT RONALD PETER TOLEDO KAREN TOLEDO TERENCE STEPHEN DUCKWORTH ROCHELLE LOUISE DUCKWORTH as trustees for TR & G SUPERANNUATION FUND PETER GARDINER DARYL THOMSON GRAHAM DEWAR COLLEEN VAN DIJKEN JERVIS ATKINSON PAIGE ATKINSON LISA FRAYNE JARMAN CHRISTINE MARY WORTHINGTON
Catchwords:	Sale of land Conditional contract subject to subdivisional approval Sale of lot in proposed subdivision Joint Form of General Conditions for the Sale of Land 2002 Revision (General Conditions) Ability to withdraw from and terminate contract within specified time if Western Australian Planning Commission (WAPC) grants approval subject to a condition with which either the seller or buyer, acting reasonably, is unwilling to comply with or considers to be prejudicial WAPC imposes condition that proposed lot should be serviced by underground power to the satisfaction of Western Power Western Power subsequently specifies that 3-phase power should be supplied rather than single-phase power as anticipated Attempt by vendor to terminate contract following imposition of terms by Western Power Limited period for terminating contract for dissatisfaction with condition imposed by WAPC expired Meaning of condition Construction Summary judgment
Legislation:	Planning and Development Act 2005 (WA) Planning and Development (Consequential and Transitional Provisions) Act 2005 (WA), s 4 Rules of the Supreme Court 1971 (WA), O 31 r 2 State Administrative Tribunal Act 2004 (WA), s 20 State Administrative Tribunal Rules 2004 (WA), r 9 Town Planning and Development (Subdivisions) Regulations 2000 (WA), reg 4 Town Planning and Development Act 1928 (WA) (Repealed), s 20, s 20AA, s 20B, s 24, s 26 Western Australian Planning Commission Act 1985 (WA), s 4(1), s 18(1)
Case References:	Amcor Ltd v Construction, Forestry, Mining & Energy Union [2005] HCA 10; (2005) 222 CLR 241 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 Falc Pty Ltd v State Planning Commission (1991) 5 WAR 522 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Fitzgerald v Masters (1956) 95 CLR 420 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Royal Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289 The State of Western Australia v Rothmans of Pall Mall (Aust) Ltd [2001] WASCA 25 Theseus Exploration NL v Foyster (1972) 126 CLR 507 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Watson v Phipps (1985) 63 ALR 321 Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : CASELLA -v- HEWITT [2008] WASCA 13 CORAM : McLURE JA

BUSS JA

EM HEENAN AJA

HEARD : 12 OCTOBER 2007 DELIVERED : 13 FEBRUARY 2008 FILE NO/S : CACV 151 of 2006 BETWEEN : DOMENIC CASELLA

Appellant

AND

ANTHONY JOHN HEWITT

LANA JOYCE HEWITT

First Respondents

RONALD PETER TOLEDO

KAREN TOLEDO

Second Respondents

TERENCE STEPHEN DUCKWORTH

ROCHELLE LOUISE DUCKWORTH as trustees for TR & G SUPERANNUATION FUND

Third Respondents

PETER GARDINER

DARYL THOMSON

Fourth Respondents

GRAHAM DEWAR

COLLEEN VAN DIJKEN

Fifth Respondents

(Page 2)

JERVIS ATKINSON

PAIGE ATKINSON

Sixth Respondents

LISA FRAYNE JARMAN

Seventh Respondent

CHRISTINE MARY WORTHINGTON

Eighth Respondent

ON APPEAL FROM:

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Coram : MASTER NEWNES

Citation : HEWITT & ORS -v- CASELLA [2006] WASC 254

Catchwords:

Sale of land - Conditional contract subject to subdivisional approval - Sale of lot in proposed subdivision - Joint Form of General Conditions for the Sale of Land 2002 Revision (General Conditions) - Ability to withdraw from and terminate contract within specified time if Western Australian Planning Commission (WAPC) grants approval subject to a condition with which either the seller or buyer, acting reasonably, is unwilling to comply with or considers to be prejudicial - WAPC imposes condition that proposed lot should be serviced by underground power to the satisfaction of Western Power - Western Power subsequently specifies that 3-phase power should be supplied rather than single-phase power as anticipated - Attempt by vendor to terminate contract following imposition of terms by Western Power - Limited period for terminating contract for dissatisfaction with condition imposed by WAPC expired - Meaning of condition - Construction - Summary judgment

(Page 3)

Legislation:

Planning and Development Act 2005 (WA)

Planning and Development (Consequential and Transitional Provisions) Act 2005 (WA), s 4
Rules of the Supreme Court 1971 (WA), O 31 r 2
State Administrative Tribunal Act 2004 (WA), s 20
State Administrative Tribunal Rules 2004 (WA), r 9
Town Planning and Development (Subdivisions) Regulations 2000 (WA), reg 4
Town Planning and Development Act 1928 (WA) (Repealed), s 20, s 20AA, s 20B, s 24, s 26
Western Australian Planning Commission Act 1985 (WA), s 4(1), s 18(1)

Result:

Appeal dismissed

Category: A

Representation:

Counsel:

Appellant : Mr M L Segler

First Respondents : Mr T O Coyle

Second Respondents : Mr T O Coyle

Third Respondents : Mr T O Coyle

Fourth Respondents : Mr T O Coyle

Fifth Respondents : Mr T O Coyle

Sixth Respondents : Mr T O Coyle

Seventh Respondent : Mr T O Coyle

Eighth Respondent : Mr T O Coyle

Solicitors:

Appellant : Martin Lee Segler

First Respondents : Lavan Legal

Second Respondents : Lavan Legal

Third Respondents : Lavan Legal

Fourth Respondents : Lavan Legal

Fifth Respondents : Lavan Legal

Sixth Respondents : Lavan Legal

(Page 4)

Seventh Respondent : Lavan Legal

Eighth Respondent : Lavan Legal

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

Amcor Ltd v Construction, Forestry, Mining & Energy Union [2005] HCA 10; (2005) 222 CLR 241
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95
Falc Pty Ltd v State Planning Commission (1991) 5 WAR 522
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Fitzgerald v Masters (1956) 95 CLR 420
Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812
Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310
Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757
L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Royal Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289
The State of Western Australia v Rothmans of Pall Mall (Aust) Ltd [2001] WASCA 25
Theseus Exploration NL v Foyster (1972) 126 CLR 507
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Watson v Phipps (1985) 63 ALR 321
Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25; (2000) 9 BPR 17,521

(Page 5)

1 McLURE JA: The appellant appeals from the grant of summary judgment in actions CIV 1438 of 2006 and CIV 1458 of 2006 and declarations made in the actions that the appellant's purported terminations of contracts for the sale of unsubdivided lots of land were ineffective and that the contracts remained in full force and effect. I agree with Heenan AJA's remarks relating to the appellant's conduct of this appeal.

2 The claims the subject of the actions arise out of contracts made between the respective respondents (plaintiffs) and the appellant (defendant) on various dates in 2005. Each of the respondents agreed to purchase a proposed lot on then unsubdivided land in Boddington on the basis that the appellant/vendor would cause the land to be subdivided in accordance with a proposed plan of subdivision. The contracts were in all relevant respects in the same terms and incorporated the 2002 General Conditions for the Sale of Land published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (General Conditions).

3 Clause 13 of the General Conditions are stated to apply if the land the subject of the contract is not a Lot at the contract date. Lot has the same meaning as in the Town Planning and Development Act 1928 (WA) (TPD Act). It was accepted that the land the subject of each contract was not a Lot at the relevant time. Clause 13.5 provides:

13.5 Unacceptable condition imposed by Planning Commission

If the Planning Commission grants approval for the subdivision of the Lot from the Original Land subject to a condition with which either the Seller or the Buyer, acting reasonably:

(a) is unwilling to comply with; or

(b) considers it to be prejudicial,

the Party who:

(d) is prejudiced by the condition,

may within 10 Business Days of being notified of the condition elect by Notice to the other Party to withdraw from and terminate the Contract.

(Page 6)

4 The sole issue in the appeal is whether the appellant's termination of the contracts was (or arguably was) within the 10-day period under cl 13.5 of the General Conditions.

5 In May 2005 the appellant applied for the subdivision of the land the subject of the contracts. By letter dated 7 September 2005 the Western Australian Planning Commission (Planning Commission) gave notice to the appellant of its conditional approval of the subdivision. The letter relevantly provided:

Condition(s)

The WAPC [Planning Commission] is prepared to endorse a deposited plan in accordance with the plan submitted once the condition(s) set out have been fulfilled.

The condition(s) of this approval are to be fulfilled to the satisfaction of the WAPC.

The condition(s) must be fulfilled before submission of a copy of the deposited plan for endorsement.

The agency/authority or local government noted in brackets at the end of the condition(s) identify the body responsible for providing written advice confirming that the WAPC's requirement(s) outlined in the condition(s) have been fulfilled. The written advice of the agency/authority or local government is to be obtained by the applicant/owner. When the written advice of each identified agency/authority or local government has been obtained, it should be submitted to the WAPC with a Form 1C and appropriate fees and a copy of the deposited plan.

…

The condition(s) of this approval, with accompanying advice, are:

CONDITIONS

…

12. Suitable arrangements being made with Western Power for the provision of an electricity supply service to the lot(s) shown on the approved plan of subdivision. (Western Power)

…

ADVICE

…

(Page 7)

4. Western Power only provides one point of supply per freehold (green title) lot and requires that any existing overhead distribution mains in the street and consumer services within property boundaries must be converted to underground.

6 Planning Commission approval was subject to 14 conditions. The responsible body was the local government agency in several conditions including, for example, '[a]rrangements being made with the local government for the upgrading of Days Road from Crossman Road to the proposed subdivisional road' and 'battleaxe accessway(s) being constructed and drained at the applicant/owner's cost to the specifications of the local government'. There was also a condition which required '[s]uitable arrangements being made with Western Power for the removal and relocation of electricity supply infrastructure, including plant and equipment, located on or near the lots shown on the approved plan'.

7 By letter dated 3 January 2006 Western Power informed the appellant of its requirements for the provision of electricity supply to the land. Western Power required 3-phase power. The appellant claimed the cost of meeting that requirement was such that he could not complete the development at a reasonable profit and it was entirely likely he would make a loss. It was therefore a condition with which he was not willing to comply and which he considered to be prejudicial to him. By letter dated 6 January 2006 the appellant by his solicitors purported to terminate each of the contracts relying on cl 13.5 of the General Conditions.

8 Counsel for the appellant submitted below and in the appeal that (1) cl 13.5 was inserted for the benefit of both parties and was designed to enable either party to terminate the contract if any condition of subdivision approval was unacceptable; (2) in order for a party, acting reasonably, to make that decision, the true, effective content of the condition had to be ascertained; (3) where, as in this case, the content of a condition imposed by the Planning Commission was dependent upon the determination of the requirements of some other body, then on its proper construction, cl 13.5 referred to any condition imposed by the requirements of that other body.

9 The learned master held that it was plain from the terms of the contracts that the 'condition' referred to in cl 13.5 is that to which Planning Commission approval itself is expressed to be subject, namely to suitable arrangements being made by the appellant with Western Power. He rejected the appellant's submission that such construction is artificially narrow and leads to an unjust and commercially impractical result. He said if the appellant was dissatisfied with the open-ended nature of a

(Page 8)

condition imposed by the Planning Commission, he had the option of terminating the contract within 10 days of being notified of the condition. The master also concluded that the appellant's construction would result in unreasonable uncertainty in relation to when the other bodies had notified the vendor of the substance of the condition.

10 The appellant relies on three grounds being the master erred in holding that:

(a) the appellant had no arguable defence to the respondents' claim based on failure to give notice within the relevant time;

(b) the meaning of cl 13.5 was plain and unambiguous and could only bear one meaning;

(c) the 'condition' referred to in cl 13.5 is that to which Planning Commission approval itself is expressed to be subject.

The Contractual Context

11 It is necessary to refer to other material parts of cl 13. It relevantly provides:

13.2 Contract conditional

The Contract is conditional on the following.

(a) An application for the subdivision of the Lot from the Original Land being lodged with the Planning Commission within 3 months after the Contract Date.

(b) The Planning Commission granting approval for the subdivision of the Lot from the Original Land within 6 months after the Contract Date, or any longer period as specified in:

(1) the Contract; or

(2) a subsequent agreement in writing between the Parties.

13.3 Further condition for subdivision

(a) The Contract is also conditional on the following.

(1) The Planning Commission endorsing approval on a Subdivision Plan within 6 months after approval for subdivision by the Planning Commission.

(Page 9)

(2) The Subdivision Plan being in Order for Dealing within 3 months after the date of endorsement of approval by the Planning Commission in accordance with subclause (1).

(b) Each period specified in subclause (a) will, if applicable, be extended as specified in:

(1) the Contract; or

(2) a subsequent agreement in writing between the Parties.

…

13.7 Termination of Contract

(a) If:

(1) any condition specified in this clause is not satisfied within the time specified for satisfaction of that condition;

(2) a Party withdraws from, and terminates the Contract, following the imposition of a condition by the Planning Commission,

subclause (b) will apply.

(b) Where subclause (a) applies, the following apply.

(1) The Deposit and any other money paid by the Buyer under the Contract, must be promptly repaid to the Buyer.

(2) If the Deposit has been invested by the Deposit Holder in accordance with clause 1.9, the Buyer will be entitled to the interest on the Deposit.

(3) If any other money has been paid to the Deposit Holder by the Buyer, and invested by the Deposit Holder with a Deposit Financial Institution, the Buyer will be entitled to the interest on that other money.

(4) Subject to subclause (1) to (3), no Party will have any claim or right of action against the other arising from the termination, except in respect to any matter which arose before the termination.

12 For the sake of completeness it is necessary to refer to Special Condition 6 which forms part of each contract. It provides:
(Page 10)

The seller advises that he proposes to make arrangements for the provision of sealed roads, underground power and scheme water with the respective Government authorities as required in the conditions of subdivision attached hereto and which the buyer has read and understood.

13 The attachment referred to in Special Condition 6 is part of a letter dated 14 June 2004 from the Planning Commission to the former registered proprietor of the unsubdivided land setting out 14 conditions on which the subdivision would be approved. Condition 13 provides for '[a]rrangements being made for the provision of underground electricity to the lots approved under this application to the satisfaction of the Western Australian Planning Commission (Western Power)'.

14 An issue for determination in the action is whether Special Condition 6 is inconsistent with cl 13.5 and if so whether cl 13.5 is excluded to the extent of the inconsistency. Special Condition 6 may also be relevant to what is reasonable under cl 13.5. However, those issues only arise for determination if the notification under cl 13.5 was not out of time.

The statutory framework

15 It is apparent that cl 13 of the General Conditions has been framed against the background of the TPD Act and regulations made thereunder. That Act applied at the material time. Relevant provisions of the Planning and Development Act 2005 (WA) came into force in April 2006.

16 Section 20(1)(a) of the TPD Act is headed 'Plans of subdivision to be approved' and prohibits a person, without the approval of the Planning Commission, selling land unless it is dealt with by way of the sale as lot or lots and continues:

… and the [Planning Commission] may give its approval under this paragraph subject to conditions which shall be carried out before the approval becomes effective.

17 The Town Planning and Development (Subdivisions) Regulations 2000 (WA) provide that a subdivision application under s 20(1)(a) of the TPD Act must include copies of a plan of the subdivision in a form approved by the Planning Commission (reg 4).

18 Section 24 of the TPD Act also deals with approvals of subdivision plans. When a plan of subdivision may affect the powers or functions of any local government or public body other than the Planning Commission, or any government department, the Planning Commission is required to

(Page 11)

forward the plan to such other body for objections or recommendations (s 24(1)). Such body receiving a plan shall within 42 days forward to the Planning Commission a memorandum in writing containing any objections to or recommendations in respect of the plan and in the case of a local government any relevant environmental conditions which apply (s 24(2)).

19 After receiving a plan of subdivision and any accompanying memorandum from the other bodies, the Planning Commission shall approve or refuse to approve the plan or 'require the applicant for approval to comply with such conditions as the [Planning Commission] thinks fit to impose before approving the plan' (s 24(3)). Having regard to the terms of s 24(3), it may reasonably be assumed that the government or public bodies are required to make recommendations on matters within their functions and powers which the Planning Commission may or may not impose as a substantive condition of approval.

20 If an applicant is dissatisfied with a condition, he or she may 'within 28 days of being notified of that … condition' request the Planning Commission to reconsider the decision (s 24(5)).

21 Under s 26 of the TPD Act an applicant may apply to the State Administrative Tribunal for review of a condition of the grant of approval of a plan of subdivision. Any application for review must be lodged within 28 days of the date on which the decision-maker gave notice of the decision (State Administrative Tribunal Rules 2004 (WA), r 9(a) and State Administrative Tribunal Act 2004 (WA), s 20(1)(a)).

22 Under s 20AA(1) of the TPD Act, a person to whom approval of a plan of subdivision has been given may within three years from the approval of the plan of subdivision submit to the Planning Commission a diagram or plan of survey of the subdivision for the approval of the Planning Commission. If the Planning Commission is satisfied that the diagram or plan of survey is in accordance with the plan of subdivision and that any conditions have been complied with, it shall endorse its approval on the diagram or plan of survey (s 20AA(2)).

The Proper Construction of cl 13.5

23 The steps in cl 13 of the General Conditions can be matched with the statutory steps. Clause 13.2(a) refers to an application under s 20(1)(a) of the TPD Act. Clause 13.2(b) refers to the grant of approval by the Planning Commission under s 20(1)(a) and s 24. Clause 13.3(a)(1) refers to Planning Commission approval of a plan of survey of the subdivision

(Page 12)

under s 20AA of the TPD Act which approval must be given if the plan of subdivision under s 20(1)(a) has been approved and the conditions of approval complied with. It is only after the Planning Commission has endorsed its approval of the plan under s 20AA and its own requirements have been satisfied that Landgate will endorse the plan 'in order for dealing' as contemplated in cl 13.3(a)(2).

24 Unless otherwise extended, non-compliance with the time limits specified in cl 13.2 and cl 13.3 effects the automatic termination of the contract.

25 Only the Planning Commission can impose a condition on approval of a subdivision. The Planning Commission can only impose conditions on the grant of approval under s 20(1)(a) and s 24 of the TPD Act. The Planning Commission's grant of approval of the subdivision for the purposes of cl 13.2(b) and cl 13.5 was notified to the appellant in the letter of 7 September 2005. When the term 'condition' is looked at from the perspective of its relationship with the grant of approval under s 20(a) and s 24, it must mean the conditions imposed by the Planning Commission at the time of its grant of approval. However, if the substantive content of one or more conditions is left to other government bodies, the term 'condition' when looked at from the perspective of s 20AA has a different meaning.

26 As previously noted, the conditions imposed at the time of the grant of approval must be complied with (fulfilled) prior to the approval of the s 20AA plan which is a prerequisite to the plan being in order for dealing. The conditions imposed by the Planning Commission in this case are at different levels of generality. Some require the appellant to make arrangements or undertake works to the satisfaction of the Planning Commission. Some require arrangements to be made with, or works to be undertaken in accordance with specifications from, the local government authority. Others are complete on their face (such as condition 3 which requires that no lot be less than 2 hectares). The condition relating to electricity supply nominates Western Power to subsequently provide the detail of what will be suitable. Section 20AA(2) provides:

If the [Planning Commission] is satisfied that -

(a) the diagram or plan of survey is in accordance with the plan of subdivision approved under section 20(1)(a); and

(b) if that approval was given subject to conditions, the conditions have been complied with,

(Page 13)

the Commission shall endorse its approval on the diagram or plan of survey.

27 The term 'conditions' in s 20AA(2)(b) must mean the conditions approved by the Planning Commission as supplemented by the requirements of the relevant government or public bodies.

28 It was not contended that the relevant condition (or conditions) in this case were beyond power. This court must proceed on the assumption that the conditions are intra vires. If they are intra vires, that can only be because, notwithstanding the supplementation of the Planning Commission conditions by requirements of other bodies, the conditions as supplemented remain Planning Commission conditions of approval of the subdivision.

29 The contrary indications in the TPD Act as to the meaning of conditions are also reflected in cl 13.5. The reference in the opening lines of cl 13.5 to a condition of approval of the subdivision points to the condition imposed by the Planning Commission at the time of its grant of approval. On the other hand, the requirement that the relevant party 'acting reasonably' be unwilling to comply with the condition or considers it to be prejudicial points to the substantive content of the condition which in this case was subsequently supplied by Western Power.

30 I infer the drafters of cl 13.5 expected, not unreasonably, that the substance of any conditions would be contained in the Planning Commission's approval of the subdivision so the relevant party could make a judgment at the time of notification of the conditional approval, based on the merits and acting reasonably, as to whether the party was unwilling to comply with the condition or considered it to be prejudicial.

31 As the Planning Commission has not fulfilled the expectation on which cl 13.5 was based, the interpretation exercise is made more difficult. The task is to determine what a reasonable person would understand by the language in which the parties have expressed their agreement, having regard not only to the text but the commercial purpose and objects of the contract (Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 [40]; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 [22]).

32 As already noted, the text is internally contradictory. The contradiction should be resolved by a construction that furthers the objectively determined contractual purpose. The purpose of cl 13.5 is to entitle the relevant party who, acting reasonably, is unwilling to comply

(Page 14)

with a condition or considers it to be prejudicial, to terminate the contract. That assessment requires the relevant party to be informed of the substance of the conditions. It is neither practical nor feasible to suggest that the interested party could obtain relevant details from all nominated responsible bodies within a 10-day period. The purpose of cl 13.5 is undermined if lack of information as to the substance of the condition would itself permit termination. I am not persuaded that a possibility of factual uncertainty as to when the relevant substantive information has been provided (or what constitutes it) is a factor that justifies ignoring the purpose of the clause. In any event, all the responsible bodies are organs of government who ordinarily convey their decisions in writing.

33 As the Planning Commission has not fulfilled the expectation on which cl 13.5 was based, there is arguably no express term addressing the vendor's obligations in the event the Planning Commission nominates another body to supply the substantive content of a condition of approval. Whether or not there is an express or implied term that the vendor use his or her best endeavours to obtain the necessary information within a reasonable time is a matter for another day.

34 I am satisfied that there are no significant impediments to construing cl 13.5 to give effect to its commercial purpose. Accordingly, I conclude that a person is notified of the conditions of Planning Commission approval for the relevant subdivision under cl 13.5 of the General Conditions when the person is notified of the substance of the conditions. It was implicit in the parties' conduct below and in the appeal that it was accepted, at least for summary judgment purposes, that the appellant was not notified of the substance of condition 12 until receipt of the Western Power letter of 3 January 2006. We were not addressed on the subject of the criteria to apply in determining the 'substance' of a condition. In those circumstances it is inappropriate to rule on that issue.

35 It follows from my reasons that the master erred in concluding that the appellant did not have a fairly arguable defence to the respondents' claims that the notice of termination was out of time and in his construction of cl 13.5.

36 In a summary judgment application, leave to defend should be given where there is a question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 99. There should be summary judgment if the facts are undisputed and the law is clear: The State of Western Australia v Rothmans of Pall Mall (Aust) Ltd [2001] WASCA 25. In general, however, an application for summary judgment is not the occasion to

(Page 15)

dispose of difficult or substantial questions of law which cannot be determined without full argument:

Theseus Exploration NL v Foyster

(1972) 126 CLR 507, 514, 515. I am satisfied that the master erred in awarding summary judgment in this case. That would be so even if, in the end, I had agreed with his construction of cl 13.5. If the interests of justice would be advanced by the early determination of a reasonably arguable question of law, a preliminary question of law can be ordered under O 31 r 2 of the

Rules of the Supreme Court 1971

(WA). However, as the question of law was fully argued before this court and there were no relevant disputed questions of fact, the proper course is for this court to rule on the construction question (

Theseus Exploration

514, 515 and 523).

37 For these reasons, I would allow the appeal, set aside the orders made by the master on 10 November 2006 and order that the appellant have unconditional leave to defend actions CIV 1438 of 2006 and CIV 1458 of 2006. I would hear from the parties on costs.

38 BUSS JA: The background facts, the reasoning of Master Newnes (as his Honour then was) and the grounds of appeal are set out in the reasons of McLure JA and E M Heenan AJA.

39 I would dismiss the appeal. My reasons are as follows.

The appellant's conduct of the appeal

40 I agree with the observations of E M Heenan AJA in relation to the appellant's conduct of the appeal.

The contracts between the appellant and the respondents

41 Each contract in question was for the sale and purchase of a proposed lot to be created out of a parcel of land at Boddington. For the purposes of this appeal, there were no material differences in the terms of each contract. The contracts were made between on or about 17 February 2005 and on or about 9 December 2005.

42 Each contract incorporated the Joint Form of General Conditions for the Sale of Land 2002 Revision (General Conditions), published by the Law Society of Western Australia Inc and the Real Estate Institute of Western Australia Inc, 'so far as they are not varied by or inconsistent with the express terms of this Contract'.

43 Each contract included several provisions described as 'Special Conditions'. By special condition 6:

(Page 16)

The seller [appellant] advises that he proposes to make arrangements for the provision of sealed roads, underground power and scheme water with the respective Government authorities as required in the conditions of subdivision attached hereto and which the buyer [respondent] has read and understood.

44 The conditions of subdivision referred to in special condition 6, and attached to each contract, comprised part of a letter dated 14 June 2004 from the Western Australian Planning Commission (Planning Commission) to the former registered proprietor of the parcel of unsubdivided land. Condition 13 of the attachment stated:

Arrangements being made for the provision of underground electricity to the lots approved under this application to the satisfaction of the [Planning Commission]. (Western Power)

The General Conditions

45 Clause 13 of the General Conditions is concerned with subdivision. By cl 13.1, cl 13 applies only if 'the Land is not a Lot at the Contract Date'.

46 Before setting out the material provisions of cl 13, I should refer to the meaning ascribed by cl 26.1 to some of the terms embodied in cl 13:

(a) 'Land' means the land which the Seller has agreed to sell to the Buyer, including all improvements and other fixed improvements on that land.

(b) 'Lot' means a lot as defined in the Town Planning and Development Act 1928 (WA) (repealed) (Town Planning Act).

(d) 'Original Land' means the land from which the land being sold and purchased is to be subdivided.

47 Clauses 13.2, 13.3, 13.5 and 13.7 provide:

13.2 Contract conditional

The Contract is conditional on the following.

(a) An application for the subdivision of the Lot from the Original Land being lodged with the Planning Commission within 3 months after the Contract Date.

(Page 17)

(b) The Planning Commission granting approval for the subdivision of the Lot from the Original Land within 6 months after the Contract Date, or any longer period as specified in:

(1) the Contract; or

(2) a subsequent agreement in writing between the Parties.

13.3 Further condition for subdivision

(a) The Contract is also conditional on the following.

(1) The Planning Commission endorsing approval on a Subdivision Plan within 6 months after approval for subdivision by the Planning Commission.

(2) The Subdivision Plan being in Order for Dealing within 3 months after the date of endorsement of approval by the Planning Commission in accordance with subclause (1).

(b) Each period specified in subclause (a) will, if applicable, be extended as specified in:

(1) the Contract; or

(2) a subsequent agreement in writing between the Parties.

…

13.5 Unacceptable condition imposed by Planning Commission

If the Planning Commission grants approval for the subdivision of the Lot from the Original Land subject to a condition with which either the Seller or the Buyer, acting reasonably:

(a) is unwilling to comply with; or

(b) considers it to be prejudicial,

the Party who:

(d) is prejudiced by the condition,

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may within 10 Business Days of being notified of the condition elect by Notice to the other Party to withdraw from and terminate the Contract.

…

13.7 Termination of Contract

(a) If:

(1) any condition specified in this clause is not satisfied within the time specified for satisfaction of that condition;

(2) a Party withdraws from, and terminates the Contract, following the imposition of a condition by the Planning Commission,

subclause (b) will apply.

(b) Where subclause (a) applies, the following apply.

(1) The Deposit and any other money paid by the Buyer under the Contract, must be promptly repaid to the Buyer.

(2) If the Deposit has been invested by the Deposit Holder in accordance with clause 1.9, the Buyer will be entitled to the interest on the Deposit.

48 Clause 22 of the General Conditions provides that, subject to cl 23 (which is of no relevance for present purposes), 'time is of the essence in relation to the provisions of the Contract'.

Clause 13 of the General Conditions applied to the contracts

49 At all material times, the land being sold and purchased under each contract was not a 'lot', as defined in the Town Planning Act. Clause 13 of the General Conditions therefore applied.

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The relevant statutory framework

50 The Planning Commission was established by s 4(1) of the Western Australian Planning Commission Act 1985 (WA). Its functions are those conferred by s 18(1) of that Act or any other written law.

51 At all material times, the Town Planning Act was in force. It was not repealed until 9 April 2006. See s 4 of the Planning and Development (Consequential and Transitional Provisions) Act 2005 (WA).

52 Section 20(1)(a) of the Town Planning Act provided, relevantly, that 'a person shall not, without the approval of the [Planning Commission] … sell land … unless the land is dealt with by way of such … sale … as a lot or lots, or subdivide any lot'. Section 20(1)(a) empowered the Planning Commission to gives its approval under that provision 'subject to conditions which shall be carried out before the approval becomes effective'.

53 Section 20(2) of the Town Planning Act provided that the Registrar of Titles shall not create or register a certificate of title under the Transfer of Land Act1893 (WA) for land the subject of a plan of subdivision unless, relevantly, the diagram or plan of survey of the subdivision of that land submitted to the Planning Commission under s 20AA has been endorsed with the approval of the Planning Commission.

54 By s 20AA(1) of the Town Planning Act, a person to whom approval of a plan of subdivision has been given may, within 3 years of the date on which the Planning Commission approved the plan of subdivision:

(a) submit to the Planning Commission in the prescribed manner and form a diagram or plan of survey of the subdivision, accompanied by the prescribed fee; and

(b) request the Planning Commission to approve the diagram or plan of survey of the subdivision.

By 20AA(2), if the Planning Commission is satisfied that the diagram or plan of survey is in accordance with the plan of subdivision approved under s 20(1)(a), and if that approval given was subject to conditions, the conditions have been complied with, the Planning Commission shall endorse its approval on the diagram or plan of survey. By s 20AA(3), if, at the expiration of 3 years from the date on which the Planning Commission approved a plan of subdivision under s 20(1)(a), a diagram or plan of survey of the subdivision has not been submitted to the Planning Commission, the approval of the plan of subdivision ceases to

(Page 20)

have effect. The evident purpose of s 20AA is to ensure that where the Planning Commission gives subdivisional approval, with or without conditions, the applicant complies with any conditions, and obtains the Planning Commission's approval to a diagram or plan of survey of the subdivision, within the stipulated 3 year period. If the applicant does not, within that period, comply with any conditions or submit to the Planning Commission, for approval, a diagram or plan of survey, the subdivisional approval ceases to have effect.

55 Section 20B of the Town Planning Act provided, relevantly, that where an agreement to sell any portion of a lot has been entered into without the approval of the Planning Commission to the subdivision of the land comprising that lot having been first obtained, as required by s 20(1), the agreement shall be deemed not to have been entered into in contravention of that subsection, if, relevantly:

(a) the agreement is entered into subject to the approval of the Planning Commission to the subdivision of the land being obtained; and

(b) an application for approval of the Planning Commission to the subdivision is made within a period of 3 months after the date of the agreement.

Section 20B(2) provided, relevantly, that the agreement referred to in s 20B(1) has no effect, unless and until the Planning Commission gives its approval to the subdivision so referred to, within a period of 6 months after the date of the agreement or within such further period as is stipulated in that agreement, or in a subsequent agreement, in writing made by all the parties to the first-mentioned agreement.

56 Section 24(1) of the Town Planning Act provided:

When, in the opinion of the [Planning Commission], the plan of subdivision may affect the powers or functions of any local government or public body other than the Commission, or any Government department, the Commission shall forward the plan or a copy thereof to such local government, public body, or Government department, as the case may be, for objections or recommendations.

By s 24(2), relevantly, any such local government, public body or Government department receiving such plan or copy thereof shall, within 42 days, forward it to the Planning Commission with a memorandum in writing containing any objections to, or recommendations in respect of, the whole or part of that plan and, in the case of a local government, advice of any relevant environmental condition relating to the land. By

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s 24(3), relevantly, after receiving a plan or copy and accompanying memorandum, and any advice of a relevant environmental condition, forwarded to it under s 24(2) and considering any objections or recommendations contained in the memorandum and any such advice, the Planning Commission shall approve or refuse to approve the plan or require the applicant for approval to comply with such conditions 'as the [Planning Commission] thinks fit to impose' before approving the plan. As Ipp J noted in

Falc Pty Ltd v State Planning Commission

(1991) 5 WAR 522:

In terms of s 24(3) the [Planning Commission] is required to give consideration to any objections or recommendations 'made by any local authority, public or Government body with respect to such plan' and may approve or reject such plan and may fix such conditions as it may think fit. It is significant that the [Planning Commission] is the body in whom the power ultimately lies (subject to appeal) to approve a subdivision despite objections by local authorities and other government institutions. The [Planning Commission] may approve a subdivision contrary to any objections made by any local authority, public or government body under s 24, and has the duty to do so if it concludes that such an approval is warranted by sound town planning considerations applicable to the substantial merits of the particular case (535).

57 Section 26(1) of the Town Planning Act, as amended and in force at all material times on and after 1 January 2005, provided that an applicant who has applied for the Planning Commission's approval under, relevantly, s 20(1)(a), may apply to the State Administrative Tribunal for a review, in accordance with Pt V of the Town Planning Act, of, relevantly, the conditions affixed to the Planning Commission's granting of approval to a plan of subdivision for which the applicant sought approval. Section 26(1) also conferred a similar right of review where a person who has been given subdivisional approval is aggrieved by the Planning Commission's decision to refuse to endorse its approval on a diagram or plan of survey of the subdivision submitted to the Planning Commission under s 20AA.

The Planning Commission's approval of 7 September 2005

58 On or about 30 May 2005, the appellant made application to the Planning Commission for approval to subdivide the parcel of unsubdivided land at Boddington for the purpose of creating the lots agreed to be sold and purchased under the contracts.

59 By letter dated 7 September 2005, the Planning Commission approved the subdivision, subject to conditions. The letter stated, in relation to the conditions:

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Condition(s)

The WAPC [that is, the Planning Commission] is prepared to endorse a deposited plan in accordance with the plan submitted once the condition(s) set out have been fulfilled.

The condition(s) of this approval are to be fulfilled to the satisfaction of the WAPC.

The condition(s) must be fulfilled before submission of a copy of the deposited plan for endorsement.

60 The conditions of the Planning Commission's approval included, relevantly, condition 12:

Suitable arrangements being made with Western Power for the provision of an electricity supply service to the lot(s) shown on the approved plan of subdivision. (Western Power)

61 The letter dated 7 September 2005 contained four paragraphs under the heading 'ADVICE'. Paragraph 4 read:

Western Power only provides one point of supply per freehold (green title) lot and requires that any existing overhead distribution mains in the street and consumer services within property boundaries must be converted to underground.

62 It was not suggested, before either the learned master or this court, that condition 12 or any other condition of the Planning Commission's approval was invalid.

Western Power's letter dated 3 January 2006

63 By letter dated 3 January 2006, Western Power informed the appellant of its requirements in relation to the provision of an electricity supply service to the proposed subdivided lots. Those requirements included the installation of 3-phase underground power, something not anticipated by the appellant. The letter set out details of the work to be carried out, and the costs payable by the appellant for the work.

(Page 23)

The appellant's purported termination of the contracts

64 On or about 6 January 2006, the appellant purported to terminate each contract pursuant to cl 13.5 of the General Conditions. He was unwilling to comply with Western Power's requirements (in particular, the requirement of 3-phase power) and he considered those requirements to be prejudicial to him.

The critical issue in the appeal

65 The critical issue in the appeal is whether the appellant's purported termination of each contract pursuant to cl 13.5 of the General Conditions was, or was arguably, within the period of 10 Business Days specified in cl 13.5.

66 The determination of the critical issue turns on the proper construction of the contracts; in particular, on the proper construction of cl 13.5.

67 The appellant and the respondents were agreed that, as between them, the appellant was bound to comply with condition 12 of the Planning Commission's approval of 7 September 2005.

68 No issue arose for decision before the learned master as to whether the appellant had acted reasonably, within cl 13.5, in purporting to terminate the contracts. No such issue arises in the appeal. If the appeal is allowed, however, whether the appellant acted reasonably, and other issues, will require resolution at a trial.

The appellant's submissions

69 The appellant submitted that:

(a) cl 13.5 was for the benefit of both parties to each contract, and its purpose was to enable either party to elect to withdraw from and terminate the contract if that party, acting reasonably, was unwilling to comply with a condition of subdivisional approval or considered the condition to be prejudicial to it;

(b) in order for a party, acting reasonably, to make the requisite election, it was necessary for the true, effective content of the conditions of approval to be ascertained; and

(c) where, as in the present case, the true, effective content of condition 12 of the Planning Commission's approval was dependent upon the determination of the requirements of another

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body (namely, Western Power) then cl 13.5, properly construed, referred to any condition imposed by the requirements of that other body.

The proper approach to construction

70 The general principles to be applied in the construction of written contracts are set out in the judgment of Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99:

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. Of course the whole of the instrument has to be considered, 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. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. 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', to use the words from earlier authority cited in

Locke v. Dunlop

((1888) 39 Ch. D. 387, at p. 393), which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also

Bottomley's

Case

((1880) 16 Ch. D. 681, at p. 686). Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in

Hillas & Co. Ltd. v. Arcos Ltd

((1932) 147 L.T. 503, at p. 514), that the court should construe commercial contracts 'fairly and broadly, without being too astute or subtle in finding defects', should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf.

Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd

((1968) 118 C.L.R. 429, at p. 437)) (109 - 110).

71 The construction of a written contract is concerned with ascertaining what a reasonable person would have understood the parties to mean. Consideration should ordinarily be given not only to the language of the document, but also to the surrounding circumstances known to the parties, and the apparent purpose and object of the transaction. See Toll (FGCT)
(Page 25)

Pty Ltd v Alphapharm Pty Ltd

[2004] HCA 52; (2004) 219 CLR 165, where Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:

This Court, in

Pacific Carriers Ltd v BNP Paribas

((2004) 218 CLR 451), has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (

Pacific Carriers Ltd v BNP Paribas

(2004) 218 CLR 451 at 461 - 462 [22]) [40].

Also see

Maggbury Pty Ltd v Hafele Australia Pty Ltd

[2001] HCA 70; (2001) 210 CLR 181, [11];

Pacific Carriers Ltd v BNP Paribas

[2004] HCA 35; (2004) 218 CLR 451, [22];

Jumbo King Ltd v Faithful Properties Ltd

[1999] 3 HKLRD 757, 773 - 774.

The proper construction of cl 13.5 of the General Conditions

72 Clause 13 was inserted in the General Conditions to enable a Seller and a Buyer to enter into a contract, pursuant to s 20B of the Town Planning Act, for the sale and purchase of land that was not a 'lot' as at the date of making the contract, without the approval of the Planning Commission to the subdivision of the land comprising the proposed lot having been first obtained, as required by s 20(1)(a) of the Town Planning Act.

73 Clause 13.2 reflects the provisions of s 20B. Clause 13.3 reflects those provisions of s 20AA of the Town Planning Act which are concerned with the Planning Commission endorsing its approval on the diagram or plan of survey which, in turn, enables the Registrar of Titles to create or register a certificate of title under the Transfer of Land Act for land the subject of the plan of subdivision. Clause 13.5 reflects the power of the Planning Commission under s 20(1)(a) to approve the subdivision subject to conditions. Clause 13.5 also reflects the obligation of the Planning Commission, where s 24 of the Town Planning Act applies, to give consideration, before giving its conditional or unconditional approval to the plan of subdivision, to any objections, recommendations or advice

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'made by any local authority, public or Government body with respect to such plan'.

74 Significantly, it is the Planning Commission which has power under s 20(1)(a) and s 24(3) to approve or refuse to approve a plan of subdivision, either unconditionally or with such conditions as it thinks fit to impose. The Planning Commission is the body in whom the power ultimately lies (subject to review by the State Administrative Tribunal under s 26 of the Town Planning Act) to approve a plan of subdivision, despite objections, recommendations or advice made or given by any local authority, public or government body under s 24(2). See Falc (535) (Ipp J).

75 Any conditions imposed by the Commission under s 20(1)(a) or s 24(3) must be imposed when the Planning Commission gives its approval to the plan of subdivision.

76 The Planning Commission determines the form and content of any conditions. A local authority, public or government body which makes any objection or recommendation or gives any advice pursuant to s 24(2) does not determine the form or content of any condition. The Planning Commission makes the requisite determination after considering, where applicable, any such objection, recommendation or advice.

77 By cl 13.2, each contract made by the appellant was conditional on, relevantly, the Planning Commission granting approval to the subdivision of the lot being sold and purchased from the parcel of unsubdivided land at Boddington.

78 By cl 13.5, the parties contemplated that:

(a) the Planning Commission may grant approval to the plan of subdivision, subject to conditions; and

(b) if the Planning Commission granted approval subject to a condition, either party, acting reasonably, may be unwilling to comply with the condition or may consider the condition prejudicial to it.

79 It was therefore agreed, in cl 13.5, that if either party, acting reasonably, was unwilling to comply with a condition imposed by the Planning Commission or, acting reasonably, considered the condition to be prejudicial to it, then the party bound to comply with or prejudiced by the condition may, within 10 Business Days after having been notified of the condition, elect to withdraw from and terminate the contract. Time is
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of the essence in relation to the 10 Business Day period stipulated in cl 13.5: see cl 22 of the General Conditions.

80 Condition 12 of the Planning Commission's approval, read with the passage in its letter dated 7 September 2005 which is set out at [59] above, embodied four aspects. First, the Planning Commission required that the appellant arrange for an electricity supply service to be provided by Western Power to the lots shown on the approved plan of subdivision. Secondly, the Planning Commission required that the arrangements for the electricity supply service be suitable to Western Power. Thirdly, the Planning Commission required that the appellant obtain and submit to it the written advice of Western Power confirming that suitable arrangements had been made between Western Power and the appellant for the provision of the electricity supply service. Fourthly, the Planning Commission required that condition 12 be fulfilled to its satisfaction.

81 Condition 12 did not specify the precise nature or characteristics of the electricity supply service to be provided by Western Power or the costs of providing the service. The condition contemplated that those matters would be determined by Western Power upon application being made by the appellant to Western Power for that purpose and, perhaps, after negotiations between Western Power and the appellant. The features of condition 12 which I have just described did not, however, detract from the status of condition 12 as a condition of the Planning Commission's approval (within cl 13.5) or as a condition imposed by the Planning Commission (within cl 13.7(a)(2)). In other words, condition 12 was a condition of the Planning Commission's approval, and it was a condition imposed by the Planning Commission, even though the precise nature and characteristics of the electricity supply service, and the costs of providing it, were to be determined subsequently by Western Power.

82 In my opinion, cl 13.5 does not contain any relevant ambiguity. There is no relevant patent ambiguity; for example, the language of cl 13.5 is not self-contradictory, or intrinsically of doubtful meaning, or obscure as a result of grammatical or syntactical deficiencies. Also, there is no relevant latent ambiguity; for example, no uncertainty arises upon the language of cl 13.5 being applied to the facts (in particular, the terms of condition 12 of the Planning Commission's approval and the delay between the notification of that conditional approval and Western Power's determination as to a suitable electricity supply service and the costs of providing it).

(Page 28)

83 I consider that the term 'condition' within cl 13.5 and cl 13.7, and the term 'condition' within s 20(1)(a), s 20AA(2) and (3) and s 24(2) and (3), means any condition imposed by the Planning Commission itself, and in the form and content expressed by the Planning Commission. The term 'condition', in these contractual and statutory provisions, does not include any condition imposed by the requirements of another body (in the present case, Western Power) where the content of a condition of the Planning Commission's approval is dependent upon the determination of the requirements of that other body. If any requirements of another body include a 'condition', within the ordinary meaning of that term, it is a condition imposed by that body and not the Planning Commission.

84 The language of cl 13.5 does not permit a construction to the effect that the 10 Business Day period is to commence upon the relevant party being notified of the detailed features and implications of all of the conditions of the Planning Commission's approval or, alternatively, that a separate 10 Business Day period commences in relation to each condition upon the relevant party being notified of the detailed features and implications of that condition, where those matters depend upon the requirements of another body. Also, each of these constructions would produce a result which is unlikely to have been intended. The first alternative would involve, potentially, a significant delay in the commencement of the 10 Business Day period. The second alternative would involve, potentially, a series of 10 Business Day periods commencing at different times.

85 If the ambit or practical application of a condition imposed by the Planning Commission is dependent upon a determination to be made by another body, and it is apparent that:

(a) the party to the contract who is bound to comply with the condition will be unable to ascertain, reliably, the ambit or practical application of the condition until the other body makes its determination; and

(b) the determination will not be made and notified to it within the 10 Business Day period,

then if the relevant party, acting reasonably, is unwilling to comply with the condition because of its generality or lack of specificity, or considers those aspects of the condition are prejudicial to it, it may elect, within the 10 Business Day period, to withdraw from and terminate the contract. It would be necessary to examine the facts and circumstances of each particular case in deciding whether, in the example I have just given, the

(Page 29)

relevant party would be acting reasonably in seeking to withdraw from and terminate the contract. The reasonableness of the relevant party's conduct may depend, for instance, upon whether or not that party knew or, perhaps, should have known that the Planning Commission would or, perhaps, would be likely to impose a condition in terms or to the effect of the condition in fact imposed.

86 The construction of cl 13.5 which I prefer does not, in my opinion, deny cl 13.5 (or any other contractual provision) a practical commercial operation, or produce a result which is absurd, unreasonable or unjust.

87 My construction of cl 13.5 gives effect to the unambiguous language in which the parties have chosen to express their agreements. Nothing in the statutory context in which the parties contracted is inconsistent with the plain meaning of cl 13.5 or justifies the adoption of the strained construction advanced by the appellant. It is unfortunate from the appellant's perspective, but irrelevant, that, with the benefit of hindsight, the interests of the appellant (as distinct from those of the respondents) might have been served better if cl 13.5 had been amended, by the agreement of the parties, to produce a different outcome. A contractual provision does not cease to have a practical commercial operation, and does not produce a result which is absurd, unreasonable or unjust, because a party (whether through inadvertence, neglect or otherwise) has failed to appreciate its proper construction or application and, as a result, is disadvantaged.

Conclusion

88 In my opinion, the learned master did not err in concluding that the appellant did not have a reasonably arguable defence to the respondents' claims. The learned master was correct in deciding that the appellant's argument in relation to the proper construction of cl 13.5 of the General Conditions, and the appellant's contention that his notices of termination and withdrawal were given within the period prescribed by that clause, were wrong.

89 I would dismiss the appeal.

90 EM HEENAN AJA: This is an appeal from judgments entered in two actions (CIV 1438 of 2006 and CIV 1458 of 2006) in which a total of eight sets of plaintiffs (the present respondents) sought declarations against the same defendant, the present appellant, Domenic Casella. The declarations sought were to the effect that the attempts by the appellant to terminate eight conditional contracts for the sale of land were ineffective

(Page 30)

and that each of the respective contracts of sale remained in full force and effect. On applications for summary judgment in the two actions, Master Newnes entered judgment for each of the eight sets of respondents against the appellant and made the declarations as claimed. From those two judgments the appellant now appeals, seeking orders that the declaratory judgments in the two actions be set aside and that the appellant have unconditional leave to defend both actions.

91 The questions raised by the appeal are entirely questions of construction of the relevant provisions of each of the eight contracts of sale which are, in all material respects, identical. It quickly became apparent, and indeed counsel for the parties accepted, that the fate of each of the claims depends upon the proper construction of these provisions and that no evidence is needed to resolve these questions, other than the material which was before the learned master. Accordingly, although the question of construction is not without some difficulty, it was fully canvassed by the submissions of the parties on appeal; so this court can, and should, determine it conclusively.

92 If this court were to uphold the decision of the learned master, as I would, the respondents would be entitled to the declarations made by the learned master. In that case, there would be no point in setting aside the judgments which had been entered merely to provide an opportunity for the construction question to be re-argued in circumstances where it has been fully canvassed in this court. This, therefore, is an example of the situation described in Theseus Exploration NL v Foyster (1972) 126 CLR 507 where, notwithstanding that an issue of law involved some complexities and difficulties and might well have justified a hearing at a trial, it was determined on summary judgment. Given that this court has heard full argument on the questions upon which the fate of the actions depend, if it were to reach a conclusion that the appeal must fail, the proper course would be for this court to give effect to that conclusion and to affirm the final judgments which have been entered: cf Theseus Exploration NL v Foster, 514 (Barwick CJ), 514 - 515 (Gibbs J), 523 (Stephen J).

93 However, if this court were to conclude that the construction of the material provisions in the contracts advanced by the appellant was correct, the appropriate relief would be to set aside the judgments entered and give leave to defend. This is because the issue of construction, if resolved against the appellant, is fatal to any prospect of success for his defence; however, a decision on the point of construction in favour of the appellant would still leave other potential avenues of success open to the

(Page 31)

respondents in the actions. This would warrant a trial because of the need for those matters to be resolved upon contestable evidence which, naturally, was not addressed on the summary judgment applications.

A preliminary issue

94 The appellant has failed in a number of respects to comply with the timetable for filing and lodging the appeal books for this appeal. This failure has followed upon a history of non-compliance or late compliance with the timetable for several milestones in the progress of the appeal.

95 In response to a request for priority by the appellant's solicitors, this case was allotted an early date for hearing, on 3 August 2007. That, however, had to be abandoned because of delays by the appellant's advisors in making amendments to his case and in settling the appeal book indexes. Appointments to settle indexes on 21 May 2007 and 7 June 2007 were ineffectual because of delay. The appellant did not comply with the requirement to file an amended case by 14 June 2007. The case was relisted for hearing on 9 July 2007 but by that date the appellant still had not amended his grounds of appeal.

96 Orders for the filing of indexes to the appeal books by 2 August 2007 and, later, by 19 September 2007, were not complied with. On being notified that the appeal books were required, the appellant's counsel gave an undertaking that the books would be filed on 3 October 2007. That did not occur and the appellant's counsel was contacted by registry staff and notified that the books were required by noon on 4 October 2007, otherwise counsel would be required to attend before a single judge that afternoon.

97 On 4 October 2007 an affidavit was sworn by the appellant, stating that the books were at the printers and were expected to be available the following day. Counsel for the appellant then appeared before Wheeler JA in chambers that afternoon as directed. The explanation offered was that the appellant had not put his solicitors in funds to pay fees necessary for the preparation of appeal books and other expenses associated with the appeal. Her Honour was, in my respectful opinion, quite correctly, very critical of the delay which had occurred at multiple stages during the preparation of this appeal, referring to it as being 'scandalous'. As a result, her Honour referred the matter of compliance through to the Court of Appeal sitting to hear the appeal and directed that the appellant would need to deal at the hearing of the appeal with the question of why the appeal should not be dismissed for failure to comply with the orders of the court, or, further, why some other action might not

(Page 32)

be taken in relation to dilatory conduct in the presentation and prosecution of the appeal.

98 These matters were raised with counsel for the appellant at the commencement of this hearing. A further affidavit from the appellant had then just been filed, deposing to financial difficulties in raising moneys to meet fees and other expenses. Counsel for the respondents did not suggest that his clients had been prejudiced by the delays and was ready and willing to proceed with the hearing of the appeal on the merits. In the circumstances, this court then decided that the appeal should proceed and be determined on the merits.

99 However, it is necessary to mark in strong terms the court's disapproval of the delays which have occurred. It is also necessary to point out that failure to comply with the timetable for the progress of various stages in the preparation of an appeal, or to comply with directions of the court, may lead to an appeal being dismissed. It may also lead to orders for costs being made against the appellant - and/or the appellant's solicitors, if it is apparent that they are responsible for the delays or non-compliance - regardless of the outcome of the appeal.

Background to the appeal

100 The appellant owned an area of land on the outskirts of Boddington which was suitable for subdivision into a number of smaller rural lots. He applied for, and obtained, approval from the Western Australian Planning Commission (WAPC) to subdivide this land on specified conditions. Having done so, he then entered into a series of contracts of sale with the various respondents to sell designated lots in the proposed subdivision to them. These contracts incorporated the Joint Form of General Conditions for the Sale of Land, 2002 revision (general conditions). One of the incorporated conditions is general condition 13, which relates to subdivision. So far as is material, it provides:

13 Subdivision

13.1 When Clause applies

This clause applies only if the Land is not a Lot at the Contract Date.

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13.2 Contract conditional

The Contract is conditional on the following.

(a) An application for the subdivision of the Lot from the Original Land being lodged with the Planning Commission within 3 months after the Contract Date.

(b) The Planning Commission granting approval for the subdivision of the Lot from the Original Land within 6 months after the Contract Date, or any longer period as specified in:

(1) the Contract; or

(2) a subsequent agreement in writing between the Parties.

13.3 Further condition for subdivision

(a) The Contract is also conditional on the following.

(1) The Planning Commission endorsing approval on a Subdivision Plan within 6 months after approval for subdivision by the Planning Commission.

(2) The Subdivision Plan being in Order for Dealing within 3 months after the date of endorsement of approval by the Planning Commission in accordance with subclause (1).

(b) Each period specified in subclause (a) will, if applicable, be extended as specified in:

(1) the Contract; or

(2) a subsequent agreement in writing between the Parties.

13.4 Application and Subdivision Plan

(a) The Seller must, if the Seller has not already done so, lodge an application with the Planning Commission for the subdivision of the Subdivision Lot, from the Original Land, within 15 Business Days after the Contract Date.

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(b) Following the lodgement of the application in accordance with subclause (a), the Seller must use best endeavours to:

(1) obtain the approval of the Planning Commission, to the subdivision of the Subdivision Lot from the Original Land; and

(2) subject to the approval of the Planning Commission to the subdivision, arrange for preparation of a Subdivision Plan including the Subdivision Lot, and for the Subdivision Plan to be:

(A) lodged at DOLA; and

(B) endorsed as in Order for Dealing,

as soon as practicable.

13.5 Unacceptable condition imposed by Planning Commission

If the Planning Commission grants approval for the subdivision of the Lot from the Original Land subject to a condition with which either the Seller or the Buyer, acting reasonably:

(a) is unwilling to comply with; or

(b) considers it to be prejudicial,

the Party who:

(d) is prejudiced by the condition,

may within 10 Business Days of being notified of the condition elect by Notice to the other Party to withdraw from and terminate the Contract.

101 All parties accepted before the master, and on this appeal, that the grant of subdivisional approval by the WAPC, referred to in general condition 13.2(b) and 13.5, accommodated the situation where the WAPC granted subdivisional approval on conditions - indeed that is the notorious and the almost invariable practice of the WAPC. This must also be regarded as the correct approach because s 138(1) of the Planning and Development Act 2005 (WA) provides that:
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The Commission may give its approval under section 135 or 136 subject to conditions which are to be carried out before the approval becomes effective.

Although the

Planning and Development Act

was not in effect at the time of these contracts, its predecessor, the

Town Planning and Development Act 1928

(WA), contained equivalent provisions in s 20(1)(a). Plainly, it is the legislative framework for the grant of subdivisional approval which general condition 13 is intended to address. It is therefore proper to treat the construction of general condition 13.5 as reflecting the meaning of approval for subdivision contained in that legislation.

102 The appellant, in reliance upon general condition 13.5, purported to terminate each of the contracts after receiving notice from Western Power Corporation (Western Power) of the requirement for 3-phase power at a cost far in excess of what he had anticipated. In this regard, the appellant notes that other subdivisions in the locality are supplied by single-phase power.

103 The learned master held that the requirement to supply 3-phase power, as stipulated by Western Power, was not a condition of subdivision imposed by the WAPC and did not allow the appellant to terminate the contracts under the provisions of general condition 13.5.

104 That is, the learned master decided that the reference to conditions imposed on the grant of subdivisional approval in general condition 13.5 relates only to conditions imposed by the WAPC itself and does not extend to any conditions, terms, or obligations specified by any of the other authorities whose satisfaction is required for compliance with the broad conditions, such as the provision of underground power, specified by the WAPC. In this regard, the learned master observed:

In my view, it is clear that on its proper construction a 'condition', as referred to in [general condition] 13.5, is a condition of the approval granted by the WAPC and set out in its letter of approval of 7 September 2005. The fact that that may lead to practical difficulties for the defendant in his particular circumstances cannot lead to a different result.

It follows that the defendant was not entitled to terminate the contracts as he purported to do. The requirements contained in the letter from Western Power did not constitute a 'condition' within the meaning of [general condition] 13.5 and, in respect of the conditions attached to the approval of the WAPC, the time within which the defendant was entitled to terminate under [general condition] 13.5 had already expired [38] - [39].

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105 Furthermore, the learned master concluded that the limited period of 10 business days for availing of the termination procedure in circumstances to which general condition 13.5 applies, commenced at the time when the party to the contract was notified of the WAPC conditions imposed on the subdivisional approval. That period had long before elapsed in this case. Consequently, the purported termination of the contracts was also ineffectual because the time for doing so had passed.

Terms of the contracts

106 As each of the contracts for sale is in materially similar terms, it is sufficient to examine the contract of sale between the appellant and the third respondents, Terrence Stephen Duckworth and Rochelle Louise Duckworth, as trustees for the TR & G Superannuation Fund. That is a conditional contract, dated 1 April 2005, for the purchase by the Duckworths of land, situated at and known as Proposed Lot 316 of Lot 4 Crossman Road, Boddington, for a purchase price of $69,000. The manner of payment was by a deposit of $2,000 with the balance to be paid on the settlement date. In this regard, special condition 9 of the contract is as follows:

Settlement of this contract shall occur on the first business day that falls after the expiration of a [fixed] period of days following the service of a notice, given by either party to the other, that the subdivision diagram is in order for dealing at the Department of Land Administration. If the subdivision diagram is not in order for dealing by the 30

^th

June 2005 then the buyer at their discretion may bring this contract to an end and the deposit monies will be refunded.

107 A number of other express conditions are also specified in the contract. Special condition 6 provides that:

Relevantly, condition 13 of the attached conditions of subdivision provides that:

Arrangements [shall be] made for the provision of underground electricity to the lots approved under this application to the satisfaction of the Western Australian Planning Commission (Western Power).

108 By the pleadings in the actions it is apparent that the WAPC had granted approval for the subdivision of the development land on 14 June 2004, subject to the satisfaction of several conditions set out in that letter
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(of which, condition 13, set out above, was one). In other words, this conditional approval by the WAPC was granted prior to the contracts of sale which are the subject of the actions. However, that conditional subdivisional approval granted on 14 June 2004 was then replaced by a letter of conditional approval from the WAPC dated 7 September 2005. The parties took this second letter to be the relevant grant of subdivisional approval for the purposes of general condition 13.

109 The significance of this historical sequence of events, therefore, is that each of the purchasers and the vendor entered into the respective contracts of sale with notice of, and subject to, the conditions imposed on the grant of subdivisional approval by the WAPC in June 2004. Further, each of the parties entered into the contracts with notice of, and subject to, the vendor's proposals to provide sealed roads, underground power and scheme water, as required by the conditions of subdivision then applying. So far as underground electricity is concerned (set out in condition 13, as already quoted), this required the provision of electricity to the satisfaction of Western Power.

110 The contract also provides that the general conditions were to be incorporated so far as they were not varied or inconsistent with the express terms of the contract. The material condition for present purposes is general condition 13, which relates to subdivision and is set out above.

111 On one view of these contracts for sale, significant parts of general condition 13 may be inapplicable because the conditional subdivisional approval had been granted by the WAPC before the dates of the contracts. On that basis there would, therefore, be no scope for the application of general condition 13.2, 13.3(a)(1), 13.4(a) and, more critically, even general condition 13.5 which provided for the withdrawal from, or termination of, the contract in the event of any unacceptable condition being imposed by the WAPC. This is because an application for subdivisional approval had already been made and granted on specified and disclosed conditions annexed to each contract of sale. However, this is not the basis upon which the case was argued before the learned master or decided by him, nor was it advanced by any party in the course of this appeal.

112 Rather, the parties conducted the litigation on the basis that the relevant approval by the WAPC was given by a subsequent letter, dated 7 September 2005, which granted approval for the subdivision of the whole of Lot 4 Crossman Road, Boddington, in the terms specified. That

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approval was subject to 14 conditions. Relevantly, condition 12 provides that:

Suitable arrangements [shall be] made with Western Power for the provision of an electricity supply to the lot(s) shown on the approved plan of subdivision. (Western Power)

113 Despite some slight variations in the language between this condition and the previous condition 13 annexed to the contract of sale - notably, the latter condition refers to 'suitable' arrangements being made - no party submitted that, at least when it came to the obligation to provide underground power to the subdivided lots, there was any material difference between the June 2004 and September 2005 conditions.

114 If the letter of 7 September 2005 from the WAPC is to be treated as the conditional grant of approval for the subdivision of the land referred to in general condition 13.5, then the vendor had 10 business days from the date of notification of that condition within which to avail of the option to withdraw. However, no attempt was made by the appellant to withdraw from or to terminate the contracts of sale within that time.

115 Instead, the appellant's consultant dealt with Western Power which, in turn, notified the appellant's consultant on 3 January 2006 of its specific requirements for the supply of electricity to the lots. Western Power provided quotations for two options for the installation of the requisite power supply. Although not readily apparent from the materials, it seems to be common ground that Western Power required the supply of 3-phase power, rather than single-phase power, and that this option was far more expensive than the appellant had anticipated. This in turn rendered the proposed developments far less profitable. Consequently, on or about 6 January 2006, the appellant, by its solicitors, dispatched notices of termination of each of the contracts, relying on general condition 13.5. The appellant relied on the requirement of Western Power to install 3-phase power as being a condition of subdivisional approval with which he was unwilling to comply, or which he considered to be prejudicial, therefore giving rise to an entitlement to withdraw from and terminate the contracts under general condition 13.5. From that point on, the appellant maintained that each of the contracts of sale had been terminated. By contrast, each of the purchasers maintained that the notices purporting to terminate the contracts under general condition 13.5 were ineffective and that there was no such ground available to the appellant to withdraw from the contracts. This was the state of the controversy, as presented to the learned master for decision on applications for summary judgment made by each of the purchasers.

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116 It is pertinent to observe that if, contrary to the learned master's decision, the notification from Western Power of 3 January 2006 is to be treated as including a condition imposed on the grant of subdivisional approval by the WAPC - and, therefore, providing an opportunity for any of the parties to withdraw within 10 business days after notification of it, pursuant to general condition 13.5 - there is a further issue which potentially affects the power of a party to withdraw from or terminate the contract. This is the requirement, as specified in general condition 13.5, that the withdrawing or terminating party must act reasonably in deciding that it is either unwilling to comply with the imposed condition or that the imposed condition is prejudicial. No submissions on this question were put to the learned master, nor to this court. However, it is not insignificant that an express term of the contracts is that the vendor would provide underground power to each subdivided lot in accordance with the requirements of the WAPC - so that such an obligation must have been known at the time of formation of each of the contracts. Obviously, this is not a matter which could have been resolved on a summary judgment application, nor can it be addressed on this appeal, but it reveals that even if the appellant were successful, and his construction of general condition 13.5 adopted, that does not mean that he would necessarily succeed in the actions.

Grounds of appeal

117 The appellant submits that the learned master's construction is erroneous and brings the appeal on the following grounds:

1. The learned Master erred in law in:

(a) holding that the Appellant had no arguable defence to the claim of the Respondents;

(b) considering that the meaning of clause 13.5 of the Joint Form of General Conditions for the Sale of Land, 2002 Revision, was clear and that the language thereby was plain and unambiguous and could bear only one meaning;

(c) holding that it was plain from the terms of the contract that the 'condition' referred to in that clause 13.5 is that to which the WAPC approval itself is expressed to be subject, relevantly, to suitable arrangements being made by the Appellant with Western Power;

when the learned Master ought to have held that:

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(i) the case of the Appellant was not so plainly untenable that it could not succeed;

(ii) the meaning of that clause 13.5 was not so clear as to limit its application to a condition imposed only by the WAPC;

(iii) for a party to act reasonably in making the decision to terminate the contract, the true, effective content of the condition had to be first ascertained and thereby, the Appellant could not reasonably terminate the contract under that clause 13.5 until the true content of the WAPC condition, incorporating the Western Power requirements, was made known to him.

118 The learned master approached the construction of the material terms of these contracts of sale with a view to ascertaining the objective meaning of the language employed by the contracting parties in their written documents. In doing so, the plain and unambiguous meaning of the words was to be identified and applied on the basis that, if the language selected by the parties did have such a clear meaning, that must be regarded as the effect of their contract - even if the result might appear capricious or unreasonable. Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99, 109 (Gibbs J) was cited for the proposition that '[t]he court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust'.

119 The learned master recognised, however, that if the language adopted by the parties were ambiguous, or if the plain meaning of the clause rendered it inconsistent with some other contractual provision, the court should resolve the ambiguity or reconcile the inconsistency by adopting a construction which accords with 'business commonsense' or the commercial purpose of the agreement which appears from its terms and the knowledge, common to the parties, which formed the background to the formation of the agreement: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, 352 (Mason J); Australian Broadcasting Commission v Australasian Performing Right Association, 109 (Gibbs J); Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310, 313 (Kirby P); Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812, 821 (Charles JA).

120 Nevertheless, the learned master accepted that the court should be astute to avoid absurd constructions of the language employed in the contracts, notwithstanding that it might be plain or unambiguous. In the

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case of an absurd result stemming from the application of the plain meaning of the language, the learned master observed that the court should construe the contracts, if necessary, by supplying, omitting, or correcting words to avoid the absurdity:

Fitzgerald v Masters

(1956) 95 CLR 420, 426 - 427 (Dixon CJ and Fullagar J);

Watson v Phipps

(1985) 63 ALR 321, 324;

Westpac Banking Corporation v Tanzone Pty Ltd

[2000] NSWCA 25; (2000) 9 BPR 17,521 [19] - [23].

121 The learned master continued, and said:

I should say that it appears to be a matter of uncertainty in Australia whether evidence of surrounding circumstances known to the contracting parties (or which ought reasonably to have been known to them) can be used in the ordinary course of the interpretation of contracts or only where the language of the contract is ambiguous or susceptible of more than one meaning. The relevant authorities were discussed in

Home Building Society Ltd v Pourzand

[2005] WASCA 242, in the judgment of McLure JA at [25] - [33]. Her Honour observed that the cases are not easy to reconcile and concluded that in that case it was unnecessary to attempt to reconcile them [26].

The master then concluded that it was also unnecessary in this instant case to attempt to reconcile those authorities, because no counsel had suggested that any alleged surrounding circumstance might affect the meaning to be given to general condition 13.5. The master then observed that:

[I]n the very recent case of

Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd

[2006] FCAFC 144, the Full Court of the Federal Court concluded that, in the light of several recent decisions of the High Court, it was not necessary to find ambiguity before evidence of surrounding circumstances was admissible.

122 Whatever may be the state of this supposed controversy concerning the permissible extent to which regard may be paid to evidence of surrounding circumstances known to the parties at the time of contract, it remains orthodox that the terms of the written contract should be construed so as to give effect to the contract's discernible commercial purpose or to identify the genesis and aim of the transaction: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 429 (Stephen, Mason and Jacobs JJ); L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235. However, the evident commercial purpose of a transaction may itself be ambiguous or obscure and reference to it will not always allow any ambiguity or uncertainty in the terms of a contract to be resolved. In such a case the ambiguity or uncertainty in the commercial purpose may be the source of ambiguity or uncertainty within
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the contractual terms and recourse to such a general purpose may do no more than reveal that the contractual terms have failed to address and avoid the latent ambiguity.

123 Even when the purpose or aim of a transaction is clearly ascertainable it may not be capable of resolving the point of construction. In many cases the issue may be how far the parties intended to go in implementing some general commercial purpose or in addressing some factor which affected that purpose. The striking of an agreed balance by the terms of their contract on significant factors will usually be for the contracting parties themselves to determine as part of their mutual bargain. So it is, in the present case, because, in an abstract commercial sense, it may readily be accepted that the parties intended that their contracts should be terminable, by a party acting reasonably, if a condition on subdivisional approval was imposed which was unacceptable or prejudicial to one party, so long as the option to withdraw or terminate was exercised within a short time - in this case specifically a 10-day period. However, identifying whether or not the 'condition' imposed on the subdivisional approval which might justify such a withdrawal or termination would only include a condition imposed by the WAPC itself, or whether it would extend to a requirement imposed by some other body - compliance with which would be, in effect, a sub-condition for compliance with the WAPC's conditions - seems to me to involve some uncertainty and ambiguity.

124 In one sense, the commercial purpose for the insertion of such a withdrawal clause is plainly to provide an adequate opportunity to terminate the contract in the face of the imposition of some unduly onerous or burdensome obligation which must be satisfied before final subdivisional approval can be secured. If it were otherwise, in many practical situations, the very purpose of such a withdrawal option would be significantly diminished and of little real utility.

125 On the other hand, the language of the contracts specifies that it is the conditions imposed by the WAPC which generate the qualified opportunity to withdraw from the contracts and that this power must be exercised within a very short period. The reason for this limited period for withdrawal is, no doubt, to ensure that the timescale selected by the parties for the progress and working out of their bargain, and which they made the essence of their contract, is adhered to. After all, time is money, particularly in an appreciating property market.

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126 What the terms of these contracts do not specifically address, and which, to my mind, gives rise to this latent ambiguity, is the prospect that in imposing conditions on the grant of subdivisional approval the WAPC might, in effect, make compliance with the requirements imposed by other bodies essential to the fulfilment of the conditions which it itself imposed. In these circumstances, are the requirements imposed by those other bodies, such as Western Power, to be treated, in effect, as conditions imposed by the WAPC - because, clearly enough, final approval could not be secured without fulfilling them?

127 In this situation, therefore, I am of the view that it is both legitimate and necessary to have regard to the practical context in which these contracts for the sale of unsubdivided land were made, in order to ascertain the proper construction of them. Doing so, however, does not render the task of construction any easier, but it does highlight the significance and difficulty of the task.

128 In Royal Botanic Gardens & Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 186 ALR 289, the court was faced with an obligation to construe a lease between public authorities where it was acknowledged that its terms gave rise to certain ambiguities. In the joint judgment of Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ, their Honours wrote (at [10]):

Codelfa

Mason J (with whose judgment Stephen J and Wilson J agreed), referred to authorities [in particular, speeches of Lord Wilberforce in

Prenn v Simmonds

[1971] 1 WLR 1381 at 1383 - 1385;

L Schuler AG v Wickman Machine Tool Sales Ltd

[1974] AC 235 at 261; and

Reardon Smith Line Ltd v Yngvar Hansen-Tangen

[1976] 1 WLR 989 at 995 - 997] which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question were used and, from those circumstances, to discern the objective which the parties had in view. In particular, an appreciation of the commercial purpose of a contract (

Reardon Smith Line Ltd

at 995 - 996):

'presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating'.

Such statements exemplify the point made by Brennan J in his judgment in

Codelfa

(at 401):

'The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language

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convey meaning according to the circumstances in which they are used.'

(Some footnotes omitted)

Kirby J adopted (at [71] - [72]) a similar approach.

129 More recently, in cases where it has been necessary to deal with the fundamental preliminary question of whether or not parties had the intention of entering into legal relations, a test for identifying the existence or otherwise of such an intention has been described in similar objective terms. In Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95, Gaudron, McHugh, Hayne and Callinan JJ observed:

Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened (

Codelfa Construction Pty Ltd v State Rail Authority of NSW

(1982) 149 CLR 337 at 348 - 353 per Mason J;

Royal Botanic Gardens and Domain Trust v South Sydney City Council

[2002] HCA 3). It is not a search for the uncommunicated subjective motives or intentions of the parties [25].

Further, in

Pacific Carriers Ltd v BNP Paribas

[2004] HCA 35; (2004) 218 CLR 451, a case dealing with the meaning of certain letters of indemnity given by a bank to facilitate the delivery of sea cargo without the production of a bill of lading, Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ said:

The case provides a good example of the reason why the meaning of commercial documents is determined objectively: it was only the documents that spoke to Pacific (

Wilson v Anderson

(2002) 76 ALJR 1306 at 1308 - 1309). The construction of the letters of indemnity is to be determined by what a reasonable person in the position of Pacific would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to Pacific and BNP, and the purpose and object of the transaction (

Investors Compensation Scheme Ltd v West Bromwich Building Society

[1998] 1 WLR 896) [22]. (some footnotes omitted)

130 The approaches taken in Ermogenous and Pacific Carriers Ltd have more recently been affirmed in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [38], [40]. In that case, the court, comprising Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ, went on to observe:
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It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (

Pacific Carriers Ltd

v BNP Paribas

(2004) 218 CLR 451 at 461 - 462) [40].

131 Similarly, in Amcor Ltd v Construction, Forestry, Mining & Energy Union [2005] HCA 10; (2005) 222 CLR 241, Kirby J observed:

No longer do courts (or industrial tribunals) seek to give meaning to contested language considered in isolation from the context in which the words are used and the purpose for which the words were apparently chosen. Nowadays, the same insistence on context, as well as text, permeates the approach to interpretation that is taken to legally binding agreements [citing

Royal Botanic Gardens

and other references not here repeated] [66].

132 Therefore, by adopting the approach set out in the authorities above, this court should conduct this present process of construction by taking notice of the obvious; namely, that the contracting parties realised that subdivisional approval from the WAPC was essential if the sale and purchase were to proceed and that the conditions imposed by the WAPC would, obviously, involve time, effort and expenditure by the vendor to ensure compliance with the requirements of the authorities responsible for the supply of the necessary utilities - water, power, roads etc. Clearly, it was the purpose of the parties to provide an opportunity for withdrawal from the contracts, in certain circumstances, if the obligations so imposed were reasonably regarded as unacceptable or prejudicial. It was equally clear that if withdrawal were to occur, it must occur quickly.

133 However, the parties conspicuously failed to address the situation which developed. The obligations necessary to comply with the conditions of approval imposed by the WAPC would not be fully known, quantifiable or assessable, until the requirements of other authorities or utilities, which were made a species of sub-condition by the WAPC, were revealed. The terms of the contracts were silent about whether or not this might happen at all. And they certainly failed to specify any period within which the vendor might avail of the opportunity to withdraw from

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the contracts after the requirements of those authorities had become known.

134 As the learned master pointed out, and as the facts of this case disclose, the requirements of Western Power were not known until 3 January 2005 - almost four months after the conditional subdivisional approval had been granted by the WAPC. Furthermore, there is no evidence of when, if at all, the requirements of other authorities or utilities, who also needed to be satisfied before unconditional approval could be secured from the WAPC, were made known.

135 If the construction advanced by the appellant were to be adopted this would mean that, at the time of contract, the time for compliance with the WAPC conditions would not be known. Consequently, the contracts would remain subject to defeasance for an indefinite period, until the requirements of the last authority whose satisfaction was made essential for grant of subdivisional approval had been made known. Presumably, the appellant would say that, as it was, the contracts remained subject to defeasance until the conditions, if any, of the WAPC were disclosed. That is so, but the parties themselves imposed an outer limit on the time for the grant of subdivisional approval by the WAPC. General condition 13.2 prescribed that each contract was conditional upon an application for subdivision being lodged within three months after the contract date and the WAPC granting approval within six months of the contract date, or any longer period which might be agreed between the parties. General condition 13.3 also provided that each contract was conditional on the WAPC endorsing approval on the subdivision plan within six months after approval for subdivision and upon the subdivision plan being in order for dealing within three months after that. This meant that the contracts could not continue, subject to WAPC approval for subdivision, or the progress of the subdivisional plan towards readiness for dealing, indefinitely. Adoption of the construction propounded by the appellant would have the potential for those time limits to be distorted very significantly. This is because that construction leads, in effect, to a self-extending period for compliance with the conditions of subdivision insofar as they are said to incorporate the 'sub-conditions' imposed by other authorities or utilities. Accordingly, the construction contended for by the appellant appears to me, with respect, significantly to undermine the structure of the other terms of the contracts insofar as they specify an objectively ascertainable timetable within which the requisite subdivisional approvals must be obtained or progressed, failing which the contracts will be at an end.

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136 It is pertinent also to consider in practical terms the effect of adopting the construction given to the contracts by the learned master, and for which the respondents contend. This construction appears, with respect, to have the advantage of certainty of the time or times within which the contracts might be terminated for non-compliance with the identified stages for obtaining or progressing with subdivisional approval. In short, general condition 13 has the effect of providing that the contracts will lapse for want of compliance with material conditions relating to the grant or progress of approvals for subdivision if conditional approval is not granted within, at most, nine months after the contract date; or if endorsement of that approval on a subdivisional plan is not granted within six months after approval for subdivision; or if a subdivisional plan is not in order for dealing within a further three months after the date of endorsement - subject always to the right of the parties by subsequent agreement to extend those periods. Accordingly, if any one of those periods were to expire, without the condition being fulfilled and without the parties agreeing to extend the application of that period, then the contracts would terminate. If this were to occur, the deposit or other moneys payable by the purchasers would be refundable and the vendor would be freed of any obligation to sell to those purchasers, notwithstanding that the vendor may, of course, persevere in attempts to obtain subdivisional approval and, perhaps, at some later time, eventually succeed. On the termination of the contracts of sale, for non-compliance with any of those conditions, the purchasers would, of course, be free to make further offers of purchase, but the vendor would not, of course, be obliged to sell.

137 Such an opportunity makes provision for fluctuations, if any, in the market value of the property after that lapse of time and this may be of benefit, either to the vendor or to the purchaser, depending upon whether or not the market value of the property increased or decreased, respectively. The longer the period of the delay, the greater is the risk of movement in the market price. Whereas, by specifying that all the requirements for subdivision be achieved within an ascertainable maximum period, there is a measure of protection, for both parties, against fluctuations in the market value. A construction of the contracts which would allow that period to extend significantly, would diminish that protection and may well be regarded as introducing an uncommercial element into the bargain.

138 The real difficulty in this case is that, by the adoption of the general conditions and, in particular, the time limit of 10 days specified in general condition 13.5 as being the maximum period for withdrawing from the

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contracts in the event of the imposition of a condition by the WAPC with which a party, acting reasonably, is unwilling to comply or considers to be prejudicial, the parties have left themselves with insufficient time to evaluate the impact of the requirements of other utilities or authorities whose satisfaction is essential to the fulfilment of conditions imposed by the WAPC.

139 This is certainly unfortunate and may not have been intended. However, the meaning of this limitation is plain enough and it does not appear to me to do violence to the commercial objectives of the contracts. The parties could have chosen to extend that period had they been aware of its significance but, presumably, the advisability of doing so was not appreciated by the appellant and, for that matter, the purchasers may not have been willing to grant a longer period.

140 All that, however, is really in the realms of conjecture because the result of this analysis, in my view, is that the objective meaning of the contracts can be ascertained from the language employed, set in its context. Further, this meaning is not unreasonable, absurd or repugnant to the commercial purpose of the parties.

141 The learned master was not oblivious to the desirability of a party to these contracts, when deciding whether or not to avail of the opportunity to terminate because of the imposition of an unacceptable condition by the WAPC, knowing in real practical terms the nature and extent of the burden or prejudice which the particular condition was likely to impose. Nor did the master conclude that the full burden or prejudice resulting from the imposition of a condition on subdivisional approval that electricity, or some other utility, be provided to the satisfaction of the relevant authority, could be assessed or evaluated before the terms stipulated by that authority were, in turn, disclosed.

142 Indeed, this case provides a clear example of how the full economic impact, burden or prejudice of conditions imposed in a general way by the WAPC may not be known, or their impact on the interests of a contracting party assessed, until the details are revealed and specified by some other authority, such as Western Power, whose satisfaction with the supply of a particular commodity is itself made a condition of the WAPC subdivisional approval. As observed above, adopting the construction contended for by the appellant would mean that scope for great uncertainty, about whether or not the contract of sale might be terminated, would be introduced. The learned master addressed this potential for uncertainty by observing:

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Moreover, it was not the case that construing the clause to bear its plain meaning gave rise to any necessary commercial difficulty. Any commercial difficulties in the present case were of the defendant's [appellant's] own making. If the defendant was concerned at the open-ended nature of the condition in respect of the provision of electricity, he could have sought a reconsideration by the WAPC under s 24(5) of the

Town Planning and Development Act 1928

(WA) or exercised the right of termination under [general condition] 13.5 [14].

143 On this appeal, in response to this observation by the learned master, counsel for the appellant submitted that any attempt to withdraw from or terminate such a contract of sale within 10 days of the imposition of the conditions by the WAPC could not be regarded as reasonable without knowing in which respect the imposition of a particular condition was unacceptable or prejudicial to the party purporting to withdraw or terminate. There is some force in this argument. However, it is equally clear that the lack of specific content in the condition imposed by the WAPC (what the learned master referred to as the 'open-ended nature of the condition') meant that the effect of the condition would be to impose an obligation of unknown extent which might well prove to be extremely onerous. This uncertainty and its potentiality for dissatisfaction or prejudice would, itself, be a factor for consideration in deciding whether or not a party attempting termination was acting reasonably. This is especially so when such a decision to terminate, if it were to be taken at all, could only be taken within a 10-day period after notification of the imposed condition.

144 By no means insignificant, the problem confronting the appellant in the present case is the latent assumption in general condition 13.5 that the onerous or prejudicial burden of any particular condition imposed on the grant of subdivisional approval by the WAPC will be identifiable and, importantly, quantifiable, by the terms of the conditions imposed.

145 The parties, by their counsel, accept that the obligations imposed by condition 13 of the conditions of subdivision referred to in the contracts, and by condition 12 of the WAPC letter of 7 September 2005 requiring suitable arrangements being made with Western Power for the provisions of a power supply service, are common. It may be too much to say that this practice effectively delegates the formulation of the content of the conditions imposed on the grant of subdivisional approval to some other body and renders the extent of the obligation unknown until that other body discloses its requirements in the particular case. However, in a very real and practical sense, a party to a contract who needs to decide whether or not a condition imposes upon him or her an obligation with which he or

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she, acting reasonably, is unwilling to comply, or considers to be prejudicial, may not be able to make an objectively reasonable decision in this regard until the true measure of the burden of the obligation is specified or ascertainable by the disclosure by the relevant authority of its requirements.

146 That being the case, the terms of general condition 13.5, and in particular the time limit of 10 business days after notification of the conditions attaching to subdivisional approval, are likely in many instances to be quite inadequate for any party, who may be burdened or prejudiced by the imposition of a condition, to protect itself by terminating or withdrawing from the contract. The present case illustrates quite starkly how the terms of the general condition, construed in the manner decided by the master, are inadequate in a practical sense to give a party the protection of an informed ability to withdraw from onerous or prejudicial conditions in a timely manner.

147 Nevertheless, with all respect, the language of general condition 13.5 in its proper context appears to me to be inexorable. The opportunity to withdraw from and terminate a contract because of the imposition of an unacceptable or prejudicial condition is specifically limited to a condition to the subdivisional approval granted by the WAPC. It does not extend to a requirement or obligation imposed, as a consequence of the WAPC's terms of conditional approval, by some other body or third person. If, as very frequently happens, the WAPC grants subdivisional approval subject to the satisfaction or compliance with the terms required by some other body, then it remains the fact that it is only the condition imposed by the WAPC which gives rise to an opportunity to terminate or withdraw from the contract pursuant to general condition 13.5. This may place a party to a contract, such as the appellant in the present set of circumstances, in an extremely invidious position. However, it cannot be forgotten that these are obligations to which the parties to these contracts themselves voluntarily agreed.

148 The offer and acceptance contains the provisions, already noted, that the general conditions are incorporated so far as they are not varied by, or inconsistent with, the express terms of the contract. As mentioned above, it was therefore open to this vendor, or to any of the purchasers, to specify, had they realised the potential need to do so, that the 10-day period for withdrawing from, or terminating, a contract in accordance with general condition 13.5 be extended to a longer period sufficient to allow evaluation and decision in the light of terms required by a body such as Western Power. For that matter, the parties might have expressly

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specified that the conditions imposed on subdivisional approval by the WAPC should be deemed to extend to conditions, terms or burdens specified by any other body or authority whose satisfaction with the proposed subdivisional works was made a condition of the grant of the subdivisional approval by the WAPC itself. In other words, the hardship or dilemma complained of by the appellant in the present case could have been avoided by the appellant negotiating different terms or specifying variations to the general conditions.

149 I appreciate that it may be cold comfort to parties such as the present appellant to be reminded that, if better informed at the time of contract, he might have avoided this dilemma, especially where the probabilities are that he believed that the terms of the general conditions were adequate to protect him against the problem which then arose. In truth, they were not. Indeed, the extent of the protection which they conferred may well have been misunderstood by the appellant. However, in the absence of any suggestion of misrepresentation or other factors which may independently give rise to a right to terminate the contracts while they were still executory, or to other factors justifying termination in these circumstances, there is really no escape from the language of general condition 13.5. In my view, it means that it is the conditions imposed by the WAPC and only those which may generate a right to terminate or withdraw from a contract because they are regarded as unacceptable or prejudicial by a party to the contract acting reasonably.

150 I accept that the root of the problem which has arisen in the present case is that the terms of general condition 13.5 do not address, adequately or at all, the realities that unacceptable or prejudicial terms for the securing of subdivisional approval may result from decisions of bodies other than the WAPC. That is the plain fact of the matter. But an equally plain, even if brutal, fact is that this will leave a contractual party, such as the appellant, with no redress in the event of the imposition of onerous requirements by authorities such as Western Power who need to be satisfied before the final approval of the WAPC can be obtained. I do not underestimate the extent of prejudice which this construction can produce. However, the meaning of a contract cannot be ignored in order to produce a beneficial construction which favours one party at the expense of another. The contracting parties are to be presumed to know and appreciate the terms upon which they agreed and effect must be given to them. That this case exposes potential inadequacies in the general conditions may be a matter of significance for other parties when contemplating the use or application of the general conditions, or how they might be varied. Indeed, it may also signal a need to consider

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whether or not these general conditions should, in these respects, be varied by their authors on the occasion of later revisions. All those are factors which, however, cannot be allowed to affect the construction of their language.

151 Accordingly, I am of the view that, when speaking of those conditions with regard to which a decision might be taken to withdraw from and terminate the contract under general condition 13.5 of the present contracts, the only conditions of that type are those imposed by the WAPC itself when it granted conditional subdivisional approval by its letter of 7 September 2005. While it is true that those conditions did not, by themselves, detail the full extent of the requirements (or for that matter the burden or prejudice of complying with the requirements) which were needed to satisfy Western Power, those latter requirements were not conditions imposed by the WAPC, at least for the purpose of general condition 13.5.

152 In my respectful opinion, the learned master was correct in the construction which he gave to general condition 13.5 and in making the declarations he did. I consider that this appeal should be dismissed.

Casella v Hewitt

[2008] WASCA 13

13 FEBRUARY 2008

CASELLA -v- HEWITT [2008] WASCA 13