Churnin v Pilot Developments Pty Ltd

Case [2003] NSWCA 391
CITATION: Churnin & Ors v Pilot Developments Pty Limited [2003] NSWCA 391
HEARING DATE(S): 3 September 2003
JUDGMENT DATE:
22 December 2003
JUDGMENT OF: Handley JA at 1; Santow JA at 13; Foster AJA at 61
DECISION: (1) Appeals dismissed with costs; (2) Leave granted for the parties to submit orders, in agreed form, if consequential orders are now required in light of the orders made by Ipp JA on 31 July 2003.
CATCHWORDS: CONSTRUCTION - Interpretation of contract - Subdivision - Right to rescission - Vendor of apartments required to proceed with all due expedition to procure subdivision - The builder's failure to proceed diligently - Affect on vendor's obligation - Vendor's requirement to use 'best endeavours' to cause the work to be done - Proper and workmanlike manner - Time within which completion is required.
CASES CITED: Cavallari v Premier Refrigeration Company Pty Ltd (1952) 85 CLR 20
Hardy v Wardy (2001) 10 BPR 19,055; [2002] ANZ ConvR 261
Hawes v Cuzeno Pty Ltd (1999) 10 BPR 18,011
Hawkins & Anor v Pender Bros Pty Limited & Anor (Supreme Court of Queensland Court of Appeal, 29 August 1995, unreported)
Masters v Belpate Pty Ltd (2001) 10 BPR 18,527
Plumor Pty Ltd v Handley (1996) 41 NSWLR 30
Wardy v Hardy (2002) 11 BPR 20,227; (2003) NSW ConvR 56-034
Woodcock v Parlby Investments Pty Ltd (1988) 4 BPR 9568

PARTIES :

 Brian CHURNIN and Anor (First Appellants)
Richard GLOVER (Second Appellant)
Marcelle PEARSN and Anor (Third Appellants)
David BLACKMAN and Anor (Fourth Appellants)
David BLCKMAN and Ors (Fifth Appellants)
Brendan MASON and Anor (Sixth Appellants)
Grant CHEETHAM and Anor (Seventh Appellants)
Michael FITZSIMONS (Eighth Appellant)
PILOT DEVELOPMETNS PTY LIMITED (Respondent)
FILE NUMBER(S): CA 40622/03
COUNSEL: B WALKER, SC/ I FAULKNER, SC/ J NEAL (Appellants)
B W RAYMENT, QC/ S BALAFOUTIS (Respondent)
SOLICITORS: Picone & Co (Appellants)
Piper Alderman (Respondent)
LOWER COURTJURISDICTION: Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S): SC2031/00; SC2444/01; SC3283/01; SC3298/01; SC3300/01; SC3386/01; SC4025/01; SC4715/01
LOWER COURT
JUDICIAL OFFICER : 		Windeyer J


                          CA 40622/03
                          SC 2031/00
                          SC 2444/01
                          SC 3283/01
                          SC 3298/01
                          SC 3300/01
                          SC 3386/01
                          SC 4025/01
                          SC 4715/01

                          HANDLEY JA
                          SANTOW JA
                          FOSTER AJA

                          22 DECEMBER 2003
Brian CHURNIN and Anor & 7 Ors v PILOT DEVELOPMENTS PTY LIMITED
Judgment

1 HANDLEY JA: In these consolidated appeals I have had the benefit of reading the reasons for judgment of Santow JA in draft. His description of the facts and the history of the proceedings enables me to proceed directly to the questions of construction which arise.

2 Clause 9 of the contract is headed “Work”, and deals generally with the construction of a home unit building on the site “in accordance with the draft strata plan annexed” and “the requirements of all relevant authorities”. While the clause does deal with quality issues it also has a wider operation. The promise by the vendor in cl 9.1 that it “will use its best endeavours to cause the following work to be done in a…

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AGLC
Churnin v Pilot Developments Pty Limited [2003] NSWCA 391
Case
[2003] NSWCA 391
Decision Date

CaseChat Overview and Summary

Churnin and others (the purchasers) appealed to the New South Wales Court of Appeal against a decision of the primary judge concerning a contract for the sale of apartments off-the-plan. The purchasers sought to rescind the contracts, alleging that the vendor, Pilot Developments Pty Ltd, had failed to proceed with the subdivision of the land with due expedition. The dispute centred on the interpretation of the vendor's obligations under the contract, particularly concerning the timing and manner of the subdivision works.

The central legal issues before the Court of Appeal were whether the vendor had breached its contractual obligation to proceed with all due expedition to procure the subdivision, and whether the purchasers were entitled to rescind the contracts on this basis. The court also considered the meaning and effect of the vendor's obligation to use its "best endeavours" to cause the subdivision works to be carried out in a proper and workmanlike manner, and the timeframe within which completion of the subdivision was required.

The Court of Appeal, in dismissing the appeals, reasoned that the primary judge had correctly interpreted the contractual provisions. The court found that the vendor's obligation to proceed with "all due expedition" was not an absolute obligation to complete within a specific, implied timeframe, but rather an obligation to act with reasonable diligence. Furthermore, the court held that the vendor's "best endeavours" clause did not impose a higher standard than that of reasonable diligence, and that the evidence did not establish a breach of this obligation. The purchasers' claim for rescission was therefore unfounded.

Orders

Orders of the court

(1) Appeals dismissed with costs; (2) Leave granted for the parties to submit orders, in agreed form, if consequential orders are now required in light of the orders made by Ipp JA on 31 July 2003.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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