CPG01 Pty Ltd v Kourinos
[2010] WASC 92
•5 MAY 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CPG01 PTY LTD -v- KOURINOS [2010] WASC 92
CORAM: HASLUCK J
HEARD: 9, 10 & 11 FEBRUARY 2010
DELIVERED : 5 MAY 2010
FILE NO/S: CIV 1513 of 2009
BETWEEN: CPG01 PTY LTD
Plaintiff
AND
KATRINA JAYNE KOURINOS
KEVIN LEONARD HUNT
RENEE HUNT
Defendants
Catchwords:
Contracts - Construction and interpretation of contracts - Sale of real property - Principles concerning the effect of the term 'and/or nominee' on a contract for sale of land - Whether contract is void for uncertainty - Whether contract on its proper construction extended the period for the Planning Commission's approval to be endorsed on the subdivision plan - Finding that contract is not void for uncertainty and that the plaintiff is entitled to an order for specific performance
Legislation:
Planning and Development Act 2005 (WA), s 135, s 141
Supreme Court Act 1935 (WA), s 32
Result:
Judgment for plaintiff
Counterclaim dismissed
Category: A
Representation:
Counsel:
Plaintiff: Mr S Penglis
Defendants: Mr G H Lawton
Solicitors:
Plaintiff: Freehills
Defendants: Lawton Lawyers
Case(s) referred to in judgment(s):
Acemount Pty Ltd v Sunlong Holdings Pty Ltd (No 2) [2009] WASC 391
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Bell Brothers Pty Ltd & Stewart v Sarich [1971] WAR 157
Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1
Condor Developments Pty Ltd v Helsby [2010] WASCA 16
Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305
Developments (WA) Pty Ltd v Whittle‑Herbert [2008] WASC 261
Fitzgerald v Masters (1956) 95 CLR 420
Harry v Fidelity Nominees Pty Ltd (1985) 41 SASR 458
Lord v Trippe (1977) 14 ALR 129
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
Parland Pty Ltd v Mariposa Pty Ltd (1995) 5 Tas R 121
Pourzand v Home Building Society Ltd [2004] WASC 127
Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603
Sargent v ASL Developments Ltd (1974) 131 CLR 634
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Tonelli v Komirra Pty Ltd [1972] VR 737
HASLUCK J:
Introduction
The plaintiff, CPG01 Pty Ltd, seeks specific performance against the defendants of a contract for the sale of land situated in a subdivision known as Drakesbrook Vista Estate near Waroona. On the plaintiff's case the sale was evidenced by a written agreement dated 9 July 2007 made between the plaintiff as vendor and the defendants as the buyers. The 2002 Joint Form of General Conditions for the Sale of Land were incorporated into the contract 'so far as they are not varied by or inconsistent with the express terms of this contract' (the 'General Conditions').
The defendants contend that they are not liable because the contract in question is void for uncertainty. Further, it is said that by reason of an alleged non‑compliance with certain time limits set out in cl 13 of the General Conditions concerning planning approval the contract has been terminated or is otherwise unenforceable.
Background
In late 2006 the plaintiff company purchased three properties in Waroona for the purpose of developing those properties into a residential estate to be called Drakesbrook Vista Estate. The properties were purchased by way of a private sale. The properties were 'englobo land', namely, large, undeveloped land parcels suitable for subdivision and development, and were purchased by way of a private sale. I will call the properties the subject of the proposed development the 'Waroona development'. This was the term used by the plaintiff's project manager, Michael James Fitzgerald, who gave evidence for the plaintiff at the trial of the action.
Mr Fitzgerald said that the Waroona development was originally designed by the plaintiff to comprise 42 'green title' allotments. He said that a green title lot is a conventional parcel of land not affected by owners of adjoining properties (for example, there is no shared land the subject of strata titles). The application for the subdivision of the Waroona land into 42 green titles was lodged with the West Australian Planning Commission or WAPC on 28 February 2007.
It appears that after lodgement of the application a laneway was included in the scheme plan. This laneway resulted in the creation of two so‑called 'super lots', being proposed lots 21 and 22. They were described as 'super lots' in that they were larger than other lots in the proposed subdivision and had the potential to be further subdivided into strata lots. The two so‑called super lots were each 1,457 sqm, but most of the lots in the subdivision were 801 sqm.
Mr Fitzgerald said that the Waroona development was marketed by the plaintiff on an 'off the plan' basis. In other words, it was a case in which the plaintiff company, as developer, was proposing to sell part of the englobo land parcel prior to the formal subdivision of the land and, therefore, prior to the issue of certificates of title for each lot comprising the development. Lots sold 'off the plan' are purchased by reference to the subdivision scheme plan.
Coldwell Banker Pro Property
In late 2006 Mr Fitzgerald met Ms Katrina Kourinos who was a land agent working with the firm Coldwell Banker Pro Property ('Coldwell Banker'). Ms Kourinos had become known to Mr Fitzgerald through her advertisements for properties she was marketing in North Yunderup. Between late 2006 and June 2007 he had various communications with her, both orally and by email, in connection with properties she was marketing in Busselton, North Yunderup, Ravenswood and Erskine. These properties were englobo land parcels being marketed 'off the plan'.
According to Mr Fitzgerald, the plaintiff formally appointed Coldwell Banker as its listing agent 'on or around 13 July 2007' for the purpose of finding buyers for the Waroona development. The trial bundle of documents includes an email dated Friday, 13 July 2007 from Mr Fitzgerald to Ms Kourinos attaching 'a selling authority for you' (page 113). The authority to sell is dated accordingly and in cl 9(f) (concerning the agent's authority and obligations) provides that the agent must, at all times, represent the best interests of the seller over the agent or the buyer but provide a reasonable duty of care to the buyer.
I note in passing that in the course of her evidence at the trial Ms Kourinos confirmed that in June 2007 she was employed by Coldwell Banker as a sales representative specialising in land sales. She said that Coldwell Banker was a licensed real estate agent. In the course of her employment with Coldwell Banker she learned about the Waroona development and was in communication with Mr Fitzgerald regarding the selling of the lots in the development. She said in evidence also that she holds a Bachelor of Business Degree and has completed a Real Estate Sales Representative Certificate. As at mid 2007 she had worked in real estate for less than two years.
It will now be useful to look at the circumstances leading up to the decision taken by Ms Kourinos and her fellow defendants to sign a contract for the purchase of 'proposed lot 21', being one of the two super lots in the Waroona development at Drakesbrook. The defendant Kevin Leonard Hunt is the brother of Ms Kourinos and as at mid 2007 the defendant Renee Hunt was married to and living with Mr Hunt. It emerged from the evidence at trial that at that time Renee Hunt was employed by Coldwell Banker also.
Other sales representatives at Coldwell Banker handling current subdivisions were Darren Blowes and Rondelle May. Ms Kourinos said in her evidence at trial that as to the Waroona development the standard lots were generally for sale ('off the plan') for $260,000. The two super lots were for sale for $500,000 each.
The Waroona development
Mr Fitzgerald said in evidence at the trial that in or around late May or early June 2007 he mentioned the Waroona development to Ms Kourinos during one of their regular conversations. Subsequently, on 13 June 2007, she sent him an email requesting information about it. In the subject email Ms Kourinos is described as 'Area Manager Southern Coastal Corridor Land Marketing' for Coldwell Banker. She said in respect of the Waroona development that she might have a couple of interested investors.
According to Mr Fitzgerald, he sent a short email to a number of people, including Ms Kourinos, on 14 June 2007 relating to the Waroona development. In that email he advised that the blocks were '800 odd square metres each' and that the town planning schemes allowed for the further subdivision of the blocks down the centre to a density of R30. Further, he outlined his company's motivation for bringing forward the Waroona development, namely, the anticipated expansion of the Wagerup Alumina Refinery (which was located 10 km south of Waroona) and the expected influx of construction contractors who would be involved in that project.
Attached to the 14 June email was the scheme plan showing the approximate size and dimensions of the proposed lots within the englobo land which had not yet been formally subdivided. Later that day, Mr Fitzgerald received an email from Ms Kourinos containing an enquiry as to the availability of titles for the Waroona development, namely, 'When are titles anticipated Mike'. He replied immediately by email as follows:
Hiya, titles not expected till early in Feb so it will be $7k or so down with the rest to come then.
Mr Fitzgerald said in evidence that he recalled having a more general discussion with her in respect of the time frame in which green titles were expected to issue. Although he could not recall when this discussion occurred, he recalled that Ms Kourinos said to him words to the effect that he might have been a little optimistic in his assessment of the time required to create the titles.
In her responsive witness statement Ms Kourinos said that she could not recall the conversation in question. She said that she was not privy to the details relating to the subdivision or planning timeframes except for indications provided by Mr Fitzgerald.
For the sake of an orderly exposition, it will now be useful to look at the statutory provisions bearing upon planning approval and the obtaining of title to lots within an approved subdivision. Contracts usually contain special conditions directed to these provisions.
Statutory provisions and special conditions
By s 135 of the Planning and Development Act 2005 (WA) a person is not to subdivide any lot without the approval of the Western Australian Planning Commission. The term 'lot' means a defined portion of land depicted on a plan or diagram deposited with the Western Australian Land Information Authority and for which a separate crown grant or certificate of title has been or can be issued or which is depicted on a diagram of plan of survey of a subdivision approved by the Planning Commission.
Section 136 of the Act provides that subject to s 139 and s 140 a person is not to sell or agree to sell land without the approval of the Planning Commission unless the land is dealt with as a lot. By s 138(1) the Commission may give its approval subject to conditions which are to be carried out before the approval becomes effective.
Provision is then made for the saving of certain agreements. By s 140(1) of the Act, where an agreement to sell any portion of a lot has been entered into without the approval of the Commission having been first obtained, that agreement is to be taken not to have been entered into in contravention of the statutory requirements if the agreement is entered into subject to the approval of the Commission being obtained and an application for the approval of the Commission is made within a period of three months after the date of the agreement. The agreement is not rendered illegal or void by reason only that the agreement was entered into before the approval of the Commission was obtained.
Section 140(3) provides that an agreement for the sale of a portion of a lot without approval has no effect unless and until the Commission gives its approval within a period of six months after the date of the agreement, or within such further period as is stipulated in that agreement.
It is a matter of common knowledge amongst real estate agents and sales representatives that contracts for the sale of land are usually effected in this State by arranging for the parties to sign an offer and acceptance form which provides for the General Conditions to be incorporated into the contract. Clause 13 of the General Conditions, under the heading 'Subdivision', contains provisions bearing upon the statutory provisions I have just described.
I will look at cl 13 of the 2002 General Conditions in more detail later. However, in essence, as to land that is not a lot at the contract date, it is said that the contract is conditional, first, on an application for the subdivision of the lot from the original land being lodged with the Planning Commission within three months after the contract date (being a provision that mirrors s 140(1)(b) of the Act) and, second, the Planning Commission granting approval for the subdivision within six months after the contract date or any longer period as specified in the contract or a subsequent agreement in writing between the parties (being a provision that mirrors s 140(3)(a) of the Act).
By cl 13.3 the contract is conditional also on the Planning Commission endorsing approval on a subdivision plan within six months after approval for subdivision by the Planning Commission and the subdivision plan being in order for dealing within three months after the date of endorsement of approval by the Planning Commission.
By cl 13.3(b) each of the periods just mentioned will, if applicable, be extended as specified in the contract or a subsequent agreement in writing between the parties. By cl 13.4 the seller is required to take various steps to obtain the approval of the Planning Commission as soon as practicable.
It emerges, then, that under cl 13 of the General Conditions it is open to the parties to extend the periods concerning planning approval by including in the contract special conditions directed to that matter.
Further events
It was against this background that in or around May or early June 2007, Mr Fitzgerald telephoned a solicitor, Mr Richard Rowick, of the law firm Dean & Rowick and gave him verbal instructions to prepare a set of special conditions which would form an annexure to the offer and acceptance contracts for the sale 'off the plan' of lots within the Waroona development. In the course of a further conversation a few weeks later in relation to the special conditions Mr Rowick enquired as to how much time Mr Fitzgerald would need to lodge the subdivision plan following receipt of the Planning Commission's subdivision approval. Mr Fitzgerald said words to the effect that he would need 21 months.
On the basis of that discussion, Mr Fitzgerald understood that the special conditions would accommodate a period of 21 months for the lodgement of the subdivision plan following receipt of the Planning Commission's subdivision approval. I note in passing that under cross‑examination Mr Fitzgerald said that he proposed the period of 21 months based on his previous experience with the land development process. He was unable to say when exactly the conversation concerning the period of 21 months occurred. However, he would have received the special conditions from Mr Rowick approximately three weeks after giving him instructions to prepare the documents. He was aware that an application for approval of the subdivision had already been lodged with the Planning Commission.
The crucial document was headed 'Annexure A Special Conditions: Waroona'. It contains in cl 1 and cl 2 provisions concerning warranties and the placement of survey pegs. Clause 3 acknowledges that the subject land is not a lot and contains provisions that purport to vary the periods of time specified in cl 13 of the General Conditions.
I will look at cl 3 of the Annexure A Special Conditions in more detail later. Suffice it to say for the moment that cl 3.3.2 of the Special Conditions purports to amend cl 13.3(b) of the General Conditions 'by extending the time to get Planning Commission approval to the subdivision until 21 months after the contract date'.
The contract documents
Mr Fitzgerald said in evidence that on 19 June 2007 he received an email from Ms Kourinos in respect of the Waroona development. In that email, she advised that she had discussed the further subdivision of the green title lots with a planner at Greg Rowe & Associates who indicated that under the Shire of Waroona Town Planning Scheme allowance was made for duplex subdivision but the council had given the impression that it would oppose such a step which meant it would go to appeal.
In that email, Ms Kourinos advised also that she had five to six lots sold provided that a further clause was included in the contract so that the offer to purchase was subject to the buyer being able to further subdivide the land into two lots prior to settlement. The plaintiff company was to sign the required documentation when ready (as the plaintiff was the owner of the lots until the issue of the green titles and the settlement of the purchase).
According to Mr Fitzgerald, he met with Ms Kourinos and two of her colleagues from Coldwell Banker, Mr Darren Blowes and a Mr David May, on 21 June 2007 at a coffee shop next door to Coldwell Bankers' office in Adelaide Terrace. Mr Fitzgerald was asked whether extra service connections such as sewer, water and an additional dome for electricity and telecommunications could be provided at the so‑called super lots 21 and 22. He said that the plaintiff company was happy to provide these extra services but only in the event that doing so would not hold up the green title subdivision of the Waroona development. He could not recall if he was aware that Ms Kourinos was intending to purchase a lot at this time, but he did recall being told that Mr Blowes was going to be purchasing one of the two super lots.
Following that meeting, Mr Fitzgerald received an email from Ms Kourinos confirming that she had buyers for the super lots 21 and 22, and lots 6 through to 11. She asked when contracts would be available for signing.
By an email dated 21 June 2007 Mr Fitzgerald sent to Ms Kourinos the pro forma contract documentation in respect of the Waroona development he had received from his solicitor, Mr Rowick, being a 'pro forma O&A' (that is, an offer and acceptance contract form) and the Annexure A Special Conditions mentioned earlier.
Thus, the trial bundle includes an email dated Thursday, 21 June 2007 from Mr Fitzgerald to Ms Kourinos concerning the Waroona development which is in these terms:
Hi Katrina,
As discussed, please find attached the pro forma O&A and annexure for the Waroona project.
Apart from the final lot configuration plan which I will get through to you this afternoon, I think this is all you will need to write up the deals as per our discussion.
As discussed, the $5,000 deposit is acceptable.
I confirm that 2 x the standard commission is payable in respect of the super lots (lots 21 and 22).
I also confirm that we will complete at our cost, the Detailed Area Plan for the two super lots. We will also put additional services in the ground to facilitate the strata development of these lots.
On 21 June 2007 Mr Fitzgerald sent to Ms Kourinos an email attaching a lot layout plan of the laneway between the super lots, as prepared by Greg Rowe & Associates. In that email he advised Ms Kourinos that the attached plan (being part of the plaintiff company's application for green title subdivision) would be lodged with the Department of Planning and Infrastructure for subdivision approval the following day.
This led to some further exchanges concerning the provision of extra service connections in the super lots. Mr Fitzgerald said in evidence that on or around 26 June 2007 he became aware of a cross‑referencing error in the Annexure A Special Conditions in that Special Condition 6 cross‑referenced cl IV of the schedule when it should have referred to cl III. The special condition in question related to the GST treatment of the blocks. It referred to an election that the buyer should address on signing the offer. This led to Mr Fitzgerald sending an email to Ms Kourinos attaching a revised Annexure A and noting her response that she would have the existing purchasers sign the revised Annexure A and forward it to him.
On 9 July 2007 the defendants - Ms Kourinos, Mr Kevin Hunt and Ms Renee Hunt - signed an offer and acceptance form in respect of 'super lot' 21 of the Waroona development with the Annexure A Special Conditions forming part of the documentation. The offer to purchase was accepted by the plaintiff company on 9 July 2007 so as to constitute, on the plaintiff's case, an enforceable contract for sale of land by offer and acceptance.
I must now turn to the contents and terms of the contract in question.
The terms of the contract
The printed offer and acceptance form refers to 'the buyer (full name and address)' and makes provision for the relevant details to be filled in. These were completed in handwriting as follows:
Katrina Jayne Kourinos (50% T.I.C.) and Kevin Leonard Hunt and Renee Hunt (50% T.I.C.) all care of 13A Somerton, Karrinyup, WA and/or nominee
The effect of the form is that the persons described as 'the buyer' offer to purchase 'the vacant land situated at and known as proposed lot 21' on the attached plan of subdivision for a price of $500,000 payable by a deposit of $5,000 with the balance to be paid on the settlement date prescribed by cl 13 of the general conditions.
Clause 3 on the printed form provides that 'the 2002 General Conditions are incorporated into this contract so far as they are not varied by or inconsistent with the express terms of this Contract'. These conditions cover matters of a kind usually associated with land transactions including provisions requiring the buyer to prepare and deliver a signed transfer to the seller and to pay the balance of the purchase price at settlement. Clause 5 provides that the Special Conditions Annexure A attached to the contract form a part of the contract.
Two handwritten clauses have been added to the printed offer and acceptance form as follows:
6.Nominee shall be WASP Developments Pty Ltd as trustee for the Hunt Family Trust.
7.The seller allows the buyers to make an application to further subdivide the land at the buyers' expense and the seller to sign all necessary documentation in order to do so.
Under the heading 'Buyer' the signatures of the three defendants appear. The Annexure A Special Conditions forming part of the purported contract have been initialled by the parties including an initialling of the correction to the cross‑referencing error in cl 6 of the Annexure A Special Conditions mentioned earlier.
In addition to the general conditions, the contract documentation includes a REIWA printed form 'Disclosure of Interest and Consent in Real Estate or Business Transactions' in which the proposed buyer/lessee of 'lot 21 Drakesbrook Vista Waroona' is described as:
Katrina Jayne Kourinos + Kevin Leonard Hunt + Renee Marie Hunt and/or nominee.
I note in passing that by the same form Ms Kourinos, as the agent, gave notice pursuant to the Real Estate and Business Agents' Act 1978 (WA) of an interest in the subject transaction.
On 12 July 2007 a deposit of $5,000 was paid by Ms Kourinos and processed by Coldwell Banker. The relevant trust account receipt appears at Trial Bundle page 99, and identifies 'K Kourinos' as the person making the payment.
Annexure A Special Conditions
It is not necessary for present purposes to describe the subject Special Conditions in their entirety. Suffice it to say that, in cl 1 and cl 2, they deal with warranties and survey matters (mentioned earlier). In cl 4 and following clauses they go on to prohibit the lodgement of any caveat and to address issues such as dividing fences, GST, adjustment of rates and taxes, address for service of notices, and the exclusion of certain clauses in the General Conditions.
An important aspect of the dispute in the present case concerns cl 3 of the Special Conditions which purports to amend cl 13 of the General Conditions. It is not necessary to set out the clauses in question in their entirety. However, it will be useful to begin by setting out the relevant passages of cl 13 General Conditions so as to set the scene for the amendments contemplated by the relevant passages of cl 3 of the special conditions.
The relevant passages of cl 13 of the General Conditions read as follows:
13.Subdivision
13.1When Clause applies
This clause applies only if the Land is not a Lot at the Contract Date.
13.2Contract 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.
13.3Further 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.
The relevant passages of cl 3 of the Special Conditions read as follows:
3.The Seller and the Buyer further covenant and agree that if at the Contract Date the Land is not described on a plan of subdivision registered at Landgate which is in order for dealings or, a separate Certificate of Title to the Land has not yet been issued by Landgate, then Clauses 3.1 to 3.4 and 3.7 inclusive below shall apply:
3.1The area of Land being acquired by the Buyer under this contract is that land shown cross hatched on the Annexure B plan attached hereto.
3.2The Land is not a lot as defined in the Planning and Development Act 2005.
3.3Condition 13 of the 2002 Revision of the Law Society and Real Estate Institute of Western Australia Joint Form of General Conditions for the Sale of Land ('the General Conditions') incorporated into this Contract shall be varied by:
3.3.1amending clause 13.2(b) by extending the time to get Planning Commission approval to the subdivision until 12 months after the Contract Date.
3.3.2amending clause 13.3(b) by extending the time to get Planning Commission approval to the subdivision until 21 months after the Contract Date.
I note in passing that on the plaintiff's case there is said to be an obvious error in cl 3.3.2 of the Special Conditions in that clause 3.3.2 ought to have referred to cl 13.3(a) of the General Conditions, such that the six month period referred to in Condition 13.3(a)(1) of the General Conditions is extended to 21 months after the contract date (9 July 2007). The error is said to be obvious because cl 13.3(a) specifies a period capable of extension while as cl 13.3(b) of the General Conditions (being the clause that is supposedly sought to be varied) does not refer to a period capable of extension, and is simply a machinery provision.
On the other hand, as to this aspect of the dispute, the defendants contend that no extension of 21 months was ever discussed and upon its proper construction the contract does not provide for such an extension. Ms Kourinos said in her witness statement that 'there was no suggestion from Fitzgerald, prior to the formation of the Agreement, that settlement of the purchase of proposed Lot 21 could not take place until 21 months' time or that title for the proposed Lot 21 would not be available in 21 months'. On the defendants' case, cl 13.3(a)(1) of the General Conditions meant that endorsement by the Planning Commission was due by 8 January 2008 (that is, within 6 months after the contract date) being an event that did not in fact take place. I will return to the construction issue later.
The following passages of cl 3, namely, the various sub‑paragraphs comprising cl 3.3.3, provide for the seller to terminate the contract if unacceptable planning conditions are imposed. Clause 3.4 to cl 3.8 deal with issues that may arise concerning the final survey or easements.
WAPC green title approval
Mr Fitzgerald said in his witness statement that on 9 July 2007 (being coincidently the day on which the defendants signed the contract) the Planning Commission approved the plaintiff's application for green title subdivision subject to certain conditions. The approval signed by the Secretary of the Planning Commission on that date was directed to Greg Rowe & Associates, being the planner who applied for approval on behalf of the plaintiff company. The document in question evidences that the Planning Commission 'is prepared to endorse a deposited plan in accordance with the plan date‑stamped 28 February 2007 once the conditions set out have been fulfilled'. This document appears at pages 90 to 94 of the Trial Bundle. The decision is said to be valid for four years from the date of the advice, which includes the lodgement of the deposited plan within that period.
Condition 1 of the 9 July approval required that the proposed lot layout be modified on the deposited plan in accordance with the attached plan date stamped 22 June 2007. Condition 7 required that the Detailed Area Plans be prepared and approved for the four proposed lots fronting the six metre laneway. It was said further in regard to Condition 7 that the specific location and area of land required was to be to the satisfaction of the Planning Commission on the advice of the local government and Western Power.
Put shortly, the 9 July planning approval required that Detailed Area Plans or 'DAPs' be prepared and approved by the Shire of Waroona for the proposed lots fronting the six metre laneway. Condition 7 affected the 'super lots' 21 and 22 that were to be purchased by the defendants and/or their nominee (Lot 21) and Darren Blowes (Lot 22).
Further communications
On 13 July 2007 Mr Fitzgerald received an email from Ms Kourinos asking him to confirm realistically when the plaintiff anticipated titles. In that email she said that 'we find that it is usually better to be pessimistic'. By email later on that date Mr Fitzgerald sent to Ms Kourinos the selling authority (mentioned earlier in these reasons for decision) and told her that he had received Planning Commission approval and that it contained a condition requiring detailed area plans for Lots 21 and 22 because the WAPC planners wanted to see the final layout of the four houses to be erected on each site. He went on to make these observations:
We are on target for September start to construction. So that will be done by Christmas, clearances are running at about a month, DLI three weeks late so late Feb/March is realistic timeframe for settlement.
Later that day he sent Ms Kourinos an email attaching the photographs of the proposed Waroona development taken two months earlier.
Mr Fitzgerald then referred in his witness statement to subsequent correspondence and preparation of the detailed area plans or DAPs. He said that Ms Kourinos and he would typically speak approximately once a week and meet around once every six weeks to discuss specifics in relation to the Waroona development. The issues for discussion generally included matters such as the conditions of the green title approval (in particular the DAPs), concept plans for the development of the super Lots 21 and 22, the fact that there was an increasing number of builders in the area and the state of the market in the region in which they were both active. He had cause to speak with Ms Kourinos also in relation to the ongoing marketing of the Waroona development following the appointment of Coldwell Banker as the plaintiff's listing agent.
Mr Fitzgerald said that on 6 August 2007 he received an email from Ms Kourinos asking if he were free to meet with her to discuss the DAPs and the further subdivision of the green title lots at the Waroona development. Following that email, he met with Ms Kourinos and Mr Blowes at midday on 7 August 2007. At the meeting, he discussed with them the DAPs and the design which they wanted for the development of the super lots. On 30 October 2007 he received an email from Ms Kourinos asking when he was expecting the titles. He responded immediately to advise that titles were due 'still early next year probably slipped to April now' (Trial Bundle page 137).
According to Mr Fitzgerald, he received an email from Ms Kourinos on 5 November 2007 making enquiries as to who the plaintiff was using as a surveyor and when the company intended to submit its applications to the Planning Commission in respect of the further subdivision of the green title lots. He received also a further email from her on 8 November 2007 asking him to clarify some concerns raised by Ms Darlene Formentin of the Rural Building Company regarding the duplex potential of Lot 21. In response, he forwarded to her and Ms Formentin an email from the plaintiff's planner, Mr Flugge, of Greg Rowe & Associates.
Mr Fitzgerald said further that on at least two occasions in the early part of 2008 he had occasion to meet Mr Blowes and Ms Kourinos to discuss the finer details of the DAPs. These meetings were necessary as the plaintiff had agreed to pay for the preparation of the DAP's, which would be developed in conjunction with the purchasers of the super lots (who would ultimately be developing the site). It was necessary for the plaintiff to manage the preparation of the DAP's as this was a condition of the Planning Commission's approval for the green title subdivision. If that condition was not satisfied, there was a risk that the green titles would not issue for the Waroona development.
Subsequent events
On 19 February 2008 Mr Fitzgerald sent an email to Ms Kourinos attaching the Planning Commission application forms for the purpose of the further subdivision of the lots purchased by her and her clients. However, he later realised that these forms were incorrect and on 21 February 2008 sent her a further email containing a link to the Planning Commission website where the correct strata application forms could be obtained. A month later, on 25 March 2008, he sent Ms Kourinos an email and enquired about her strata application. She responded to say that she would follow up on the strata application with Mr Blowes.
It seems that an application for the further subdivision of super Lot 21 (the lot purchased by the defendants and/or their nominee) was prepared by the planners Greg Rowe & Associates on behalf of Shimmer Enterprises Pty Ltd, being a company controlled by the defendant Renee Hunt, but that application was never lodged with the Planning Commission.
On 30 June 2008 Mr Fitzgerald received an email from Leanne McGuirk at Greg Rowe & Associates in relation to the subdivision application for Lot 520 (being super Lot 21) in which it was said that the clients seeking subdivision approval, namely, Shimmer Enterprises, had 'indicated that they may try to pull out of the purchase of the lot'.
In the meantime, as from January 2008, the construction of the Waroona development had commenced, following the completion of design works and the approval of engineering drawings by the Shire of Waroona. The construction work was completed in July 2008 with the result that the plaintiff engaged a surveyor for the purpose of preparing as constructed drawings and a deposited plan which would be lodged with the Planning Commission for endorsement.
The deposited plan 60381 was subsequently lodged with Landgate on 18 August 2008. In that form, the deposited plan still required WAPC and other approvals prior to endorsement. Those approvals included the finalisation and approval of the DAP by the Shire of Waroona and clearances from Western Power and Main Roads.
On 27 August 2008, following extensive correspondence between Greg Rowe & Associates and the Shire of Waroona, the latter confirmed that 'the modified DAP received … will satisfy the relevant WAPC condition of subdivision approval and will in due course be sufficient for council to clear that particular condition'.
It appears from the deposited plan exhibited at page 318 of the Trial Bundle that the Planning Commission endorsed its approval on the deposited plan on 10 December 2008. However, in the meantime, various events and exchanges between the parties had occurred bearing upon the question of whether the buyer of Lot 21 would proceed to settlement and complete the purchase in the manner envisaged by the terms of the subject contracts.
Before turning to the settlement issue, I am obliged to note that in her responsive witness statement Ms Kourinos took issue with some aspects of Mr Fitzgerald's evidence as to matters arising after the contract had been signed. She said that she had not understood that the DAPs for Lots 21 and 22 were required for subdivision approval. She thought that they would relate to a further subdivision of the super lots; that is, she did not realise that the subdivision approval was contingent on the preparation of the DAPs. She said that after the contract was signed discussion mostly revolved around selling the residual lots and the provision of information to prospective purchasers.
Put shortly, her understanding was that the DAPs for the super lots would be required at the point of further subdivision rather than at the point when the general estate was being subdivided.
I must now turn to the settlement issue.
Settlement issue
On 9 July 2008 the plaintiff's solicitors, Dean & Rowick, received a memorandum from Cally's Conveyancing being a settlement agency acting on behalf of 'Kourinos and Hunt' in respect of Lot 21 and on behalf of another buyer in respect of Lot 7. The agency sought advice concerning satisfaction of Condition 3.3.1 of the Annexure A Special Conditions. It confirmed 'that both contracts shall be registered with the Office of State Revenue for stamp duty purposes, as per their requirements'.
A month later, on 12 August 2008, Cally's Conveyancing sent a facsimile letter to Dean & Rowick requesting, in respect of Lot 21, a copy of the fully executed offer and acceptance. This was 'to be faxed or emailed to our office as a matter of urgency, as our copy does not have Michael Fitzgerald's (as agent for CPG01 Pty Ltd) signature witnessed'. A fully executed copy of the contract was provided by Dean & Rowick on 25 August 2008.
The plaintiff's solicitors then received a letter dated 26 August 2008 from Lawton Lawyers, being solicitors acting for 'the above named purchasers'; that is, 'Kourinos, Hunt and Hunt'. The 26 August Lawton letter included the following passage:
Our Clients instruct us to advise you of their immediate withdrawal from the contract ("Contract") for the sale of the above property dated 9th July 2007.
Our Clients accept that this action necessarily results in the forfeit of the deposit paid pursuant to the Contract to your client, and that your client will be entitled to pursue our Clients for default. However, our Clients advise that their current financial position is such that any future order from a Court that your client may seek to enforce against our Clients is likely to remain largely unsatisfied.
In recognition of this fact our Clients HEREBY OFFER the sum of $1,000.00 to your client on a purely commercial basis on the condition that your client agrees to terminate the Contract.
This offer is open for acceptance for a period of 7 days from the date of this letter.
We look forward to hearing from you.
I pause to note that the 26 August Lawton letter does not raise issues of the kind now relied upon by the defendants in this action concerning the efficacy of the contract. It does not suggest that the contract is void for uncertainty or contend that upon its proper construction the contract, by cl 13.3(a)(1) of the General Conditions, provided for the Planning Commission's approval to be endorsed on the subdivisional plan within six months after the contract date (that is, by 8 January 2008), being a date that had passed.
By letter dated 1 September 2008, the plaintiff's solicitors advised Lawton Lawyers that the offer contained in the 26 August Lawton letter was rejected. By a further letter dated 5 September 2008 Dean & Rowick advised Lawton Lawyers that the deposited plan 60381 had been lodged with Landgate and that they would advise when the plan was marked 'in order for dealings'.
As I indicated in earlier discussion, on 18 December 2008 the Planning Commission's approval was endorsed on the plan. At that time the plaintiff company obtained a separate certificate of title for Lot 21, being Lot 112 of deposited plan 60381 being the whole of the land in Certificate of Title Volume 2078 Folio 12. By letter dated 24 December 2008 Dean & Rowick then advised Lawton Lawyers that a separate certificate of title had issued for the subject property with the result that, pursuant to cl 13 of the General Conditions, settlement was due to be effected on 14 January 2009, being 15 business days after notification that a separate certificate of title has issued.
I pause here to note in passing that if the contract on its proper construction extended the period specified in cl 13.3(a)(1) for the Planning Commission's approval to be endorsed on the subdivision plan from within six months to within 21 months (as contended for by the plaintiff and its legal advisers) then the time limits had been complied with. In other words, the Planning Commission granted approval for the subdivision on the date the contract was signed, namely, 9 July 2007. The 21 month period for endorsement of approval on the plan therefore would not expire until 14 February 2009. Thus, on this view of the matter, an endorsement on 18 December 2008 was within time.
Notice of default
It appears common ground at the trial that in fact no steps had been taken by the buyer to prepare and submit a signed and stamped transfer to the plaintiff company as vendor in a reasonable time prior to settlement.
By letter dated 21 January 2009 the plaintiff's solicitors wrote to Lawton Lawyers referring to the earlier correspondence. They asserted that their client was ready, willing and able to settle in accordance with a previously enclosed buyer's settlement statement. They noted that the client of Lawton Lawyers had failed to settle the purchase by 19 January 2009 or make arrangements for settlement. It was said that if the matter did not settle within the period provided in cl 4.1 of the General Conditions the plaintiff would claim interest on the balance due at settlement at a prescribed rate.
Then, by facsimile dated 30 January 2009, Dean & Rowick served on Lawton Lawyers a notice of default directed to Ms Kourinos, Kevin Leonard Hunt and Renee Hunt (described as 'the buyer'). It was said in the notice that by cl 26.5(9) of the General Conditions each person named as buyer in the contract became jointly and severally liable to perform the contract. Reference was made to the obligation to settle within 15 days after the seller's notification of the issue of a separate certificate of title for the lot. The notice of default continued as follows:
5.The Seller gives notice that by failing to settle by the due date of 19 January 2009, you are in default of the Contract and that if you fail to remedy your default within 10 business days of service of this notice the Seller may:
5.1affirm the Contract and sue you for damages for default;
5.2affirm the Contract and sue you for specific performance of the Contract;
5.3claim damages for default in addition to or instead of specific performance of the Contract;
5.4terminate the Contract.
6.If the Seller terminates the Contract, the Seller may:
6.1forfeit the Deposit;
6.2Sue you for damages; and/or
6.3re‑sell the Lot and recover from you liquidated damages pursuant to clause 24.6 of the Joint Form of General Conditions for the Sale of Land.
7.The Seller has been ready, willing and able to settle since 19 January 2009.
8.If the Seller elects to affirm the Contract the Seller shall charge interest at the rate of $122.05 per day from 19 January 2009 until settlement occurs.
The notice of default was not complied with. On behalf of the plaintiff Dean & Rowick then advised by letter dated 27 February 2009 that they had instructions to commence legal proceedings upon the basis that the plaintiff would seek specific performance, or, alternatively, damages in lieu of specific performance.
The defendants by Lawton Lawyers denied that they were liable as alleged and sought repayment of the deposit. The defendants' stance is reflected in a letter dated 13 March 2009 from Lawton Lawyers to Dean & Rowick that reads as follows (omitting the inessential parts):
We have perused the Contract for Sale and note that it has chosen as buyer Katrina Jayne Kourinos and Kevin Leonard Hunt and Renee Hunt and/or nominee.
It is our view, therefore, that the Contract is either void for uncertainty as it is not clear who, if any one, is bound or alternatively the buyer is Wasp Developments Pty Ltd as trustee for the Hunt Family Trust as named in Condition 6.
In both instances, your past Default Notices are ineffective and/or meaningless and your proposed action against Katrina Jayne Kourinos, Kevin Leonard Hunt and Renee Hunt is misfounded.
As it is our primary contention that the Contract is void for uncertainty, we seek the immediate repayment of the $5,000.00 deposit held by Coldwell Banker Pro Property Reba Trust Account.
It will now be useful in summary form to look at certain passages of cross‑examination at trial of the sole witness for the plaintiff, Mr Fitzgerald, and the sole witness for the defendants, Ms Kourinos.
Cross‑examination of Mr Fitzgerald
Under cross‑examination Mr Fitzgerald was uncertain as to when exactly he spoke to his solicitor Mr Rowick about the preparation of the Annexure A Special Conditions. At that time he was aware that the application for approval of the subdivision had been lodged with the Planning Commission. His instructions in relation to the 21 months' period was drawn from his own experience with the land development process. He acknowledged that it may have only been days before the contract was signed on 9 July 2007 that he was speaking to Mr Rowick about the matter. However, as to that, I note in passing that Mr Fitzgerald's emails of 25 June seem to establish that the Annexure A Special Conditions were in existence at that time even if some adjustments had to be made to them due to the cross‑referencing error.
Mr Fitzgerald said under cross‑examination that when he emailed the Special Conditions to Ms Kourinos he could not be sure that he then knew she was a potential purchaser for one of the super lots. At the time the contract was signed on behalf of the vendor he could not recall whether he knew that approval for the subdivision had been given. He did know that the approval was imminent.
He was cross‑examined about what was said in emails following execution of the contract. He said that he honestly believed that February or March 2008 could be when a plan would be in order for dealing so that settlement could take place. He honestly believed it to be so when he said in his email dated 30 October 2007 that he expected to have titles 'still early next year probably slipped to April now'. A March date given to Darlene Formentin probably came from an earlier conversation.
He went on to say that as at December 2007 he had ceased to believe that the titles would be available by March 2008. He could not recall exactly when his view changed.
Cross‑examination of Katrina Kourinos
Under cross‑examination by counsel for the plaintiff Ms Kourinos was referred to her query by email dated 14 June 2007 as to when titles were anticipated. She said that at that time she knew that the lots were being sold off the plan. However, an informed purchaser often wanted to know when titles would be ready. She could not recall whether at that stage she wanted to know for herself (as a prospective buyer) or for a client. She could have been asking for the information in either capacity. It was relevant information in both capacities. She could not say exactly when she became interested in the land as a prospective buyer. It would have been within the period from 14 June 2007 until the contract was signed on 9 July 2007.
Having been taken to her email dated 19 June 2007 in which she said that she had five and potentially six lots sold, she accepted that, in her belief, she was one of the six prospective buyers being referred to. At that stage Coldwell Banker had not been formally engaged as selling agent for the development.
Ms Kourinos said that she came to see merit in the development as a good investment opportunity. She could not recall when exactly she told Mr Fitzgerald that she was one of the buyers. She agreed that the Annexure A Special Conditions enclosed with the email to her dated 21 June 2007 (which included reference to the 21 month period) were destined to become the Special Conditions forming part of the offer and acceptance she signed. She was reading incoming emails at that time and knew what they contained in broad terms but could not be sure how much she understood of what was placed before her. She agreed that she did not respond with any email querying what had been sent to her. She scanned what was sent to her but could not be sure that she read it in detail.
Ms Kourinos acknowledged that the documents were provided to help her sell lots in the subdivision and earn a commission. On her understanding it was for the buyer to take in the fine print. She acknowledged that in due course she signed a contract as a buyer. She was generally aware that special conditions were used by developers to vary the time limits within which certain steps had to be taken. She agreed that within three months of the contract being signed she was being described on the firm's brochures as a development sale specialist. However, she could not say categorically whether she knew planning approvals could be conditional or unconditional.
Ms Kourinos was pressed at some length as to whether she knew that the effect of the Annexure A Special Conditions was to extend time limits concerning planning approval that might otherwise apply. She expressed herself in various ways and not always consistently, but the tenor of her evidence was that she knew developers used special conditions to vary the time limits that might otherwise apply and thus, at the time she signed the subject contract, she knew an extension of the time limits had been effected.
She changed her position on a number of occasions during the course of the cross‑examination directed to this issue. However, the following exchanges bear upon the point:
This exchange occurred:
I am putting to you that you knew that these special conditions sought to vary the time for the granting of approval of the subdivision by the Planning Commission, from the time frame set out in the general conditions. You knew that, didn't you?---I would have assumed there was something in there that addressed that. (ts 162)
Cross‑examination continued and this exchange occurred:
I'm putting to you that when you received these special conditions you, to use your words, start from that, expected that whatever time frames were included in the general conditions relating to what the Planning Commission had to do, they would have extended them. Correct?---I believe that most developers do that.
And you had that expectation when you received and read, or scanned, to use your words, these special conditions?---Yes, I imagine that I did. (ts 163)
There was a further exchange to this effect:
I will approach it another way, and finally. If someone told you, 10 minutes after you signed this contract, that the time for - whatever the time was in the joint form for planning approval to be obtained had been extended by the special conditions, that would not have come to you as any surprise, whatsoever?---It wouldn't have been a surprise, no. (ts 166)
The same point was pursued by the cross‑examiner and this further exchanged occurred:
I am going to put to you, one last time, that if someone had come to you 10 minutes after you signed this contract and said that all of the periods in the general conditions relating to Planning Commission approvals, the milestones or hurdles, or however you want to describe them - the time frames in the general conditions have been extended by the special conditions, you would not have batted an eyelid?---I would have thought that extensions or an extended time frame would be a normal thing. (ts 167)
Ms Kourinos was also cross‑examined about facts and matters bearing upon the involvement of Cally's Conveyancing and Lawton Lawyers. She said that she was not sure who amongst the defendants instructed Cally's Conveyancing to ask for a copy of the contract. She said that as at 12 August 2008 there had been no decision not to proceed. However, she acknowledged that the 26 August letter written by Lawton Lawyers communicating a desire by the defendants not to proceed was consistent with instructions given to the defendants' lawyers at that time. However, she could not recall seeing the letter before it was sent. She instructed the lawyers to proceed as set out in their letter.
I found Mr Fitzgerald to be a reliable witness, but the same cannot be said of Ms Kourinos, especially as to whether the timeframe set out in the General Conditions had been extended. As I have indicated, cross‑examination brought out a degree of equivocation on her part in regard to this issue. It is significant also that, contrary to her stance as to this and the question of whether the buyers regarded the contract as remaining in force, the 26 August Lawton letter, which I find was written pursuant to instructions given on behalf of the defendants, did not suggest that the relevant time limits had expired. For these reasons, as to disputed issues of fact, I can give little weight to the evidence of Ms Kourinos.
It will now be useful to look at the pleadings in this action.
The pleadings
The plaintiff's position on the pleadings is reflected in its amended statement of claim which is included within the amended papers for the judge dated 4 February 2010. The plaintiff in par 1 of the claim referred to the contract dated 9 July 2007 made between the plaintiff as seller and the defendants as buyer in respect of the subject land, now described as Lot 112 on deposited plan 60381. The express terms of the contract were said to include a provision whereby the defendants could make an application to further subdivide the land at the defendants' expense and that the plaintiff would sign all necessary documentation to allow that to occur. Settlement of the sale was to occur within 15 days of the plaintiff notifying the defendants of the issue of a separate certificate of title for the subject land. By cl 26.5(8) of the General Conditions each person named as a buyer in the contract was to be jointly and severally liable to perform the contract.
The plaintiff by its claim then described the relationship between the General Conditions and the Special Conditions before pleading at par 2D that, on the proper construction of Special Condition 3.3.2, the six month period referred to in cl 13.3(a)(1) of the General Conditions was extended to 21 months after the contract date. Alternatively, it was the common intention of the plaintiff and the defendants when entering into the contract that the six month period referred to in Condition 13.3(a)(1) of the General Conditions would be extended to 21 months after the contract date and Special Condition 3.3.2 had that effect. In the premises, if the Special Condition did not have that effect it ought to be rectified in order to give legal effect to the common intention by deleting the reference to 'clause 13.3(b)' and substituting it with a reference to 'clause 13.3(a)(1)' so that it reads:
Amending clause 13.3(a)(1) by extending the time for the endorsement of Planning Commission approval on a subdivision plan until 21 months after the contract date.
The statement of claim then sets out the various steps leading up to the notice given by the plaintiff on 24 December 2008 that a separate certificate of title had issued for the subject land with the result that the defendants were required to proceed to settlement on 19 January 2009. I note in passing that no issue arose at trial as to the plaintiff's inadvertent assertion in earlier correspondence that settlement was due on 14 January 2009.
It is said at par 8 of the claim that despite repeated requests by the plaintiff, and service of a notice of default dated 30 January 2009, the defendants had wrongfully failed and refused to settle the purchase of the lot on 19 January 2009 and were liable for penalty interest on the amount under cl 4 of the General Conditions. The effect of the prayer for relief is that the plaintiff claims a declaration concerning the construction of cl 3.3.2 of the Special Conditions contended for by the plaintiff as above or, alternatively, rectification of the Special Conditions.
The plaintiff claims also specific performance of the contract and consequential accounts, directions and enquiries or damages for breach of the contract in lieu of specific performance. The prayer for relief includes a claim for interest calculated pursuant to cl 4.1 of the General Conditions or, alternatively, at the rate of 6% per annum pursuant to s 32 of the Supreme Court Act 1935 (WA).
Defence and counterclaim
The defendants by their defence and counterclaim asserted that by Condition 6 of the contract it was agreed that Wasp Developments Pty Ltd as trustee for the Hunt Family Trust was the nominee. It is then said at par 2(d) that 'in the premises it is uncertain as to who the buyer was, and that the agreement was accordingly void for uncertainty'. Alternatively, Wasp Developments Pty Ltd as trustee for the Hunt Family Trust was the buyer under the agreement or, alternatively, that the defendants signed the agreement as disclosed agents of Wasp Developments Pty Ltd as trustee for the Hunt Family Trust.
The defendants pleaded at par 7 that by virtue of the operation of the General Conditions the contract was at an end because, pursuant to cl 13.3(a)(1) of the contract, endorsement by the Planning Commission was due by 8 January 2008. However, as the approval was not endorsed upon the subdivision plan until 10 December 2008, the contract was terminated pursuant to cl 13.7 of the General Conditions.
I note in passing that cl 13.7 of the General Conditions reads as follows:
13.7Termination of Contract
(a)If:
(1)any condition specified in this clause is not satisfied within the time specified for satisfaction of that condition;
or
(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 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.
The defendant pleaded at par 8, in the alternative to its par 7 plea concerning termination, that by virtue of the operation of s 141 of the Planning and Development Act 2005 (WA), as the transaction could not be completed within six months after the date of entering into the transaction because the land could not be dealt with as a lot, the contract was at an end.
The defendants admitted that notice of default was given by the plaintiff as alleged but denied that they wrongfully failed and refused to settle as the contract was void for uncertainty and, in any event, was unenforceable, having regard to the other matters relied on by way of defence as above.
The defendants denied that the plaintiff was entitled to the relief claimed or to any relief and contended by way of counterclaim that, having regard to the matters raised in the statement of defence, the plaintiff was obliged, pursuant to cl 13.7 of the General Conditions, to repay the deposit of $5,000. Alternatively, by virtue of the operation of s 141 of the Act, the contract was at an end and the plaintiff was obliged to refund the deposit to the defendants. It was said that notwithstanding a demand for repayment the plaintiff had failed to repay the deposit and was therefore obliged to repay the same with interest pursuant to s 32 of the Supreme Court Act.
The plaintiff's reply
In the course of its reply the plaintiff referred to various facts and matters which were said to constitute an extension of the time periods mentioned in the General Conditions. It was said also at par 2A of the reply that if (which was denied) the endorsement by the Planning Commission was due on 8 January 2008 the defendants, with knowledge of the circumstances which in law gave rise to the right to terminate, unequivocally elected, by their conduct, to affirm the contract and thereby waive their right to terminate it.
The particulars in support of this plea were that the defendants continued to participate (through Ms Kourinos) with the plaintiff in the preparation of the Detailed Area Plan. They also continued to participate (through Shimmer Enterprises Pty Ltd) with the plaintiff in the further subdivision of Lot 21, including the engagement of Greg Rowe & Associates in June 2008 for the purposes of preparing an application for further subdivision approval.
The plaintiffs pleaded at par 2B of the reply that the conduct of the defendants, which constituted an election to continue performance of the contract as at 8 January 2008, was inconsistent with the exercise of the right to terminate. In the premises, the defendants were now prevented from terminating the contract by reason of the Planning Commission's endorsement not having been received by 8 January 2008.
It was said further at par 3A of the reply that if (which was denied) the defendants were entitled to treat the contract as being at an end by virtue of s 141 of the Act on or about 9 January 2008, the defendants, with knowledge of the circumstances which in law gave rise to that right, unequivocally elected, by their conduct, to waive that right. They were therefore prevented from enforcing their entitlements pursuant to s 141 of the Act.
Issues
It emerges from this review of the pleadings that there were a number of discrete issues to be determined at the trial of the action. Counsel for the respective parties saw the matter in that light and the respective cases at trial were fought accordingly.
First, there was a question of whether the contract was void for uncertainty. Second, in the event of it being held that the contract was sufficiently certain, an issue arises as to the proper construction of cl 3.3.2 of the Special Conditions and as to whether the six month period referred to in cl 13.3(a)(1) of the General Conditions was extended to 21 months after the contract date. Third, if a ruling was made in respect to the construction issue that the six month period had not been extended as alleged by the plaintiff, it was necessary to determine whether the plaintiff had made out a case for rectification of the contract. Fourth, there was an 'election and waiver issue' as to whether the defendants, irrespective of any entitlement to terminate the contract, were bound to perform the contract. There was also a further, and more general issue, as to whether the plaintiff was in equity entitled to obtain the relief claimed.
It will now be useful to look at certain legal principles bearing upon these issues.
The uncertainty issue
In Bell Brothers Pty Ltd & Stewart v Sarich [1971] WAR 157 Burt J (as he then was) was concerned with an action for specific performance brought by a party nominated as purchaser under a contract of sale that was said to have arisen by the exercise of an option in favour of a certain party 'or nominee'. His Honour observed that when the expression 'X (the grantee of the option) or his nominee' is used in an option agreement it can have one of at least three different meanings. It may do no more than indicate that the offer, although made to X and no‑one else, may be accepted on behalf of X by a person to be nominated by X. If such be the case, and if the offer is accepted by a person so nominated, then the result is a contract between the offeror - the grantor of the option - and X. In such a case, the person nominated is not a contracting party. It is no more than X's agent with authority to communicate X's acceptance of the offer.
His Honour said that another possibility is that the offer is made to X and to no‑one else but the offer is to agree to sell in the sense of convey to X or to such person as X should nominate. The acceptance of such an offer by X together with a nomination, if made, creates a contract between the grantor of the option and X whereby the grantor agrees with X that in exchange for the price to be paid by X he will transfer the subject property to the nominee and the contract to convey to the nominee can be specifically enforced at the suit of X.
Finally, his Honour said that there was a third possibility, namely, that by the option agreement the grantor promises X that for the agreed consideration he will, for the stipulated time, keep open an offer to sell the subject matter of the contract, such offer to be open for acceptance by X or by such other person as X might nominate so that if X should make a nomination and the offer be accepted by the nominee, a contract is thereby formed between the grantor as seller and the nominee as buyer, this being a contract which is enforceable, and in a proper case specifically enforceable at the suit of the nominee and without joining X.
In Lord v Trippe (1977) 14 ALR 129 at 143 Aickin J observed that it is common enough practice in real estate transactions for the contract itself to provide that the transfer is to be made to the purchaser or his nominee that gives a power to substitute or nominate a different transferee, not a different contracting party. The vendor becomes bound to transfer to the nominee upon the purchaser paying or procuring the payment of the purchase money and otherwise complying with the terms of the contract.
In Harry v Fidelity Nominees Pty Ltd (1985) 41 SASR 458 at 460 King CJ observed that the initial problem is to determine the legal effect of the words 'and/or nominee' in the description of the purchaser. The ordinary notion of nominee is a person who is nominated by another for a purpose. Is the effect of the words simply to empower the respondent to nominate another to take the transfer? If so, it is a usual and well understood transaction. Indeed, without any such provision a purchaser may nominate another to take the transfer and the vendor is required to transfer to that nominee for an ordinary contract of sale is not only to convey to the purchaser but to convey as the purchaser shall direct.
His Honour went on to observe that the notion of the vendor binding himself to accept an unknown nominee in place of the named purchaser as the party to whom he must look exclusively for performance of the contract is unusual. It is not a transaction into which one would expect a sensible vendor to enter. Indeed, it is by no means clear that such a provision could be made legally effective. The substitution could only occur if the nominee subsequently agreed, for fresh consideration or under seal, to perform the respondent's obligations under the contract.
In Acemount Pty Ltd v Sunlong Holdings Pty Ltd (No 2) [2009] WASC 391 at [139] to [147] I reviewed some additional authorities bearing upon this issue including Tonelli v Komirra Pty Ltd [1972] VR 737 in which it was held that the words 'and his nominees' in the sale note were not intended to state who were the persons thereby assuming the obligation of purchasers, but merely conferred a power upon the plaintiff to nominate the persons to whom, along with himself, the conveyance was to be made.
In the circumstances of the Acemount case I was prepared to hold that in a contract containing an 'and/or nominee' description of the buyer it was permissible for a notice of default to be directed to the third party named as nominee in a special condition attached to the contract upon the basis that the third party could be regarded as a party to the contract for that purpose. However, it is important to understand that Acemount cannot be regarded as a ruling bearing upon the question of whether a contract using such a description can be regarded as void for uncertainty.
I am of the view also that a previously decided case relied upon by counsel for the defendants, namely, Parland Pty Ltd v Mariposa Pty Ltd (1995) 5 Tas R 121 is not directly applicable to the circumstances of the present case. In that case it was held in circumstances where the words 'and/or nominee' were used in the description of the purchasers that the plaintiff was not merely the transferee of the property but was a contracting party in that the contract had been varied by substituting the plaintiff as the party entitled to exercise the repurchase option; or, alternatively, the contract between two prospective purchasers H and M should be regarded as having been discharged and a new contract between Parland Pty Ltd and the vendor substituted therefore.
However, in that case it is apparent from the reasoning of Green CJ that the nominated purchaser was known to the defendant and there was no question of the defendant having to look to the first plaintiff for performances of the contract as the purchase monies were already in the hands of the solicitors for the defendant when the contract was amended. It was for that reason that the circumstances militated in favour of a conclusion that the first plaintiff was not merely the transferee of the property but was a contracting party.
However, in the circumstances of the present case, it is important to keep steadily in mind that the party named as nominee in the contract, namely, Wasp Developments Pty Ltd, as trustee for The Hunt Family Trust, was not known to the plaintiff or its representative Mr Fitzgerald and there had been no discussion or consideration of any such party in the course of negotiations. As appears from the decided cases, the notion of a vendor such as the plaintiff binding itself to accept an unknown nominee in place of the named buyer as the party to whom the vendor must look exclusively for performance of the contract would be unusual. This view of the matter is reinforced in the circumstances of the present case by the fact that the contract documents were signed exclusively by the defendants in their personal capacities and there are no indications that they were not bound to perform their obligations under the contract.
I will return to this issue in due course.
The construction issue
In Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 the High Court 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. Reference 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: see also Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Condor Developments Pty Ltd v Helsby [2010] WASCA 16 [42].
The approach to be taken in construing the language of a written contract was discussed by Gibbs J in the following, oft cited passage, 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 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 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 LT 503 at 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 CLR 429 at 437). (109 ‑ 110)
In Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1 various canons of construction were referred to with approval. In essence, when interpreting a contract, 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 of the contract. If the language adopted by the parties is ambiguous or if the plain meaning of the clause rendered is inconsistent with some of the contractual provisions, 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 in the knowledge, common to the parties, forming a background to the formation of the agreement.
Further, it was said in Casella that the court should be astute to avoid absurd constructions of the language employed in contracts, notwithstanding that it might be plain or unambiguous. In the case of an absurd result stemming from the application of the plain meaning of the language, the court should construe the contracts, if necessary, by supplying, omitting or correcting words to avoid the absurdity.
Counsel for the plaintiff relied also upon what was said by Dixon CJ and Fullagar J in Fitzgerald v Masters (1956) 95 CLR 420 at 426 to the effect that 'words may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistency'.
However, it seems that in establishing the background facts emerging from how the parties dealt with each other, up to and at the point of execution of the agreement, care must be taken not to allow evidence of antecedent negotiations and communications to be used as aids to the proper construction of the agreement, in so far as they merely tend to establish what the subjective intentions of the parties were: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 606.
The rectification issue
The principles of law relevant to a claim for rectification were conveniently summarised by Pullin J in Pourzand v Home Building Society Ltd [2004] WASC 127 as follows:
(a)The court starts from the hypothesis that the written agreement is the true agreement of the parties: Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 351; Pukallus v Cameron (1982) 180 CLR 447 at 456;
(b)It is open to the court to rectify an agreement if, by mistake, its terms do not reflect the true intention of the parties. Evidence of subjective intention is admissible for the purposes of seeking rectification: Maralinga Pty Ltd v Major Enterprises Pty Ltd (supra) at 350 ff; Mincode Pty Ltd & Ors v Isa Pty Ltd (1996) 17 WAR 245 at 248 and 254;
(c)The subjective intention of a corporation will be proved by proving the intention of the person or persons who were relevantly its directing mind and will in the transaction: Anfrank Nominees Pty Ltd v Connell (1989) 1 ACSR 365 at 387-9;
(d)While it is not necessary for a party seeking rectification to prove the existence of an antecedent agreement, 'The … common intention … must be … manifested in the words or conduct of the parties, and not merely … [remain] … undisclosed.': Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1987) 78 ALR 193 at 254 per Gummow J; Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd (1995) 41 NSWLR 329 at 332; Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429 at 431. [61]
At the trial of the action there was considerable debate between counsel for the respective parties as to whether the reasoning reflected in subpar (d) of Pullin J's formulation could be regarded as a sufficient expression of the current law on this subject. It was said that caution is needed in evaluating the case law relating to the issue of rectification as to whether or not an outward expression of accord is needed.
In the end, I was persuaded that considerable weight should be given to the reasoning of Justice Campbell of the Court of Appeal in New South Wales in Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603 (660). His observations at 281 were as follows:
In my view, when the fundamental requirement for granting rectification is a continuing common intention of the parties, it is of more assistance to concentrate on what is needed before an intention of the parties to a negotiation counts as a common intention. In my view, when that intention relates to the terms upon which they will contract with each other, it is still necessary for them to know enough of each other's intentions for it to be said that there is a common intention. They might come to know of each other's intentions in this way through those intentions being directly stated, or they might come to know of them through the various other means by which one person's intention can become known to another person. Those means can sometimes involve a process of conscious and deliberate inference. Those means can sometimes involve simply perceiving a gestalt in a series of events. Those means can depend to some extent on the people involved sharing a common understanding of how particular bodies of knowledge or markets or social institutions they are operating in work ‑ the experienced surgeon, or the experienced chess player, can sometimes see what another surgeon, or chess player, is seeking to do, in a way that an inexperienced person cannot. What matters for present purposes is that for a negotiating party to perform actions or say words from which the other party can gather his or her intention is itself a form of communication. Negotiation of any contract takes place in a context in which various facts are known or assumed by the negotiating parties. Sometimes, for example, if a contract is negotiated in a context where there are well understood business practices and conventions, and nothing is said about those practices and conventions not applying, it can be legitimate to conclude that both parties to the contract intended to act in accordance with those practices and conventions, even if they did not expressly communicate to each other that they intended to act in accordance with those practices and conventions. This view of what is needed before an intention is a common intention, accords, it seems to me, with the Australian case law since Joscelyne.
Let me now turn to the issue of election and waiver.
Election and waiver
In the course of earlier discussion I mentioned that the plaintiff pleaded in its reply that the defendants with knowledge of the circumstances which in law gave rise to the right to terminate unequivocally elected, by their conduct, to affirm the contract and thereby waive their right to terminate it.
In Developments (WA) Pty Ltd v Whittle‑Herbert [2008] WASC 261 [60] McKechnie J noted that where a contract is voidable and a party at whose option it is voidable acts in such a way as to indicate that the person regards himself or herself as bound by the contract there is an affirmation and the person cannot afterwards avoid the contract.
There are also authorities to the effect that the operation of the doctrine of election requires both knowledge on the part of the elector and words or conduct sufficient to amount to the making of the election: Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, 326; Sargent v ASL Developments Ltd (1974) 131 CLR 634, 642.
The decided cases indicate that where an election is not shown to have been made consciously, the words or conduct relied upon to impute the election must be unequivocal.
Let me now return to the circumstances of the present case.
Resolution of the uncertainty issue
The buyers in the contract were shown as 'Katrina Jayne Kourinos (50% TIC) and Kevin Leonard Hunt and Renee Hunt (50% TIC) all care of 13A Somerton, Karrinyup, WA and/or nominee'. The offer and acceptance form includes a condition 6 to the effect that the 'nominee shall be WASP Developments Pty Ltd as trustee for the Hunt Family Trust'.
Counsel for the defendants submitted that it was not clear from these provisions whether WASP as the nominee specifically named in the contract was actually proposed as a buyer or as a possible buyer to the contract or whether it was the sole buyer or a joint buyer, with one or other or all of the defendants. It was said that the contract was therefore void for uncertainty.
As to this issue, I am of the view that it is necessary to keep steadily in mind that the signatories to the contract, under the heading 'Buyer', were the defendants as individuals. It is important to keep in mind also that the description of the buyer on the first page of the printed form contemplated that the full name and address of the buyer would be provided. The only address provided is the address 13A Somerton, Karrinyup, WA which clearly relates to the defendants as individuals and not to the trustee company WASP referred to in condition 6. Moreover, the disclosure of interest form accompanying the contract documents describes the buyer specifically as the three defendants 'and/or nominee' but without referring to WASP.
The decided cases recognise that in real estate transactions it is open to the parties to provide that the transfer is to be made to a purchaser or his nominee but in doing so the effect of the provision is to give a power to substitute or nominate a different transferee, not a different contracting party. In other words, the vendor becomes bound to transfer to the nominee upon the purchaser paying the purchase price and otherwise complying with the terms of the contract.
It is, of course, possible for the language of a contract as a whole to dictate that the power to nominate be taken to mean that a new party can be put in place of the original party. However, very clear language is required to achieve such a result.
In my view, the language of the present contract, having regard to the surrounding circumstances and the indicia I mentioned a moment ago, including the fact that it is the defendants who are the signatories to the contract, persuade me that this is not a case in which this language is sufficiently clear to establish that a new party, namely, WASP, was to be put in place of the individuals who signed the contract as 'buyer' and undertook the responsibilities assigned to the buyer.
In my view, the words in the present contract 'and/or nominee' were not intended to establish that WASP was a party who was to assume the obligation of buyer. The effect of the provision and the nomination in condition 6 was simply to nominate WASP as a person to whom the conveyance could be made. To conclude otherwise would be to empower the three individuals named as buyer to not only call for a transfer to their nominee but to go much further and by their own election to get rid of their own contractual liability and substitute another entity as buyer.
I am conscious that the defendants, by counsel, place some reliance upon my decision in Acemount in which I held that in the circumstances of that case the company, specified as the nominee (Newriver), should be regarded as a contracting party from the outset. However, it is important to understand that the Acemount case was not concerned with an issue as to uncertainty but an issue as to whether the notice of default in question was directed to a party (Newriver) who could be characterised as a party to the contract and therefore arguably as a party in default. It cannot be regarded as an authority bearing directly upon the question of whether a contract in which a description of the buyer includes reference to 'and/or nominee' can be regarded as void, and therefore unenforceable, for uncertainty. On the contrary, the reasoning in Acemount concerning the disputed notice of default proceeds from the premise that a contract, including a description of that kind, was in fact valid and binding upon the parties.
To my mind, in the circumstances of this case the various indicia I mentioned in earlier discussion suggesting that the defendants were to be the parties undertaking the buyer's obligations support the conclusion that, in this case, the effect of the words was simply to empower the defendants to nominate WASP to take a transfer of the land but without relieving them of the obligations of the buyer. I therefore conclude that the contract is not void for uncertainty.
Resolution of the construction issue
It emerges from earlier discussion that in construing a contract the court is required to ascertain the common intention of the parties by reference to what a reasonable person would understand the contract to mean having regard not only to the text, but also the surrounding circumstances known to the parties and the purpose and object of the transaction: Condor Developments Pty Ltd v Helsby [2010] WASCA 16.
The decided cases indicate that words may generally be supplied, omitted or corrected, in an instrument, where it is clearly necessary in order to avoid absurdity or inconsistencies: Fitzgerald v Masters at 426 ‑ 427.
To my mind, in the present case there is an obvious error in that cl 3.3.2 of Annexure 'A' Special Conditions in that the clause ought to have referred to cl 13.3(a) (rather than purporting to amend cl 13.3(b)) so that the six month period referred to in cl 13.3(a)(1) of the General Conditions would be extended to 21 months after the contract date.
The error in cross‑referencing can be characterised as obvious because cl 13.3(b) is simply a machinery provision dealing with the manner in which a proposed extension can be effected. It is only in the preceding cl 13.3(a) that one finds periods capable of extensions.
Counsel for the defendants submitted, in effect, that even if the court was minded to correct what appeared to be an error in cross‑referencing of the kind I have just described, it was not open to the court, having regard to the reasoning in the decided cases, to resolve a presumed error by speculation as to what the parties intended. It was said further that in the circumstances of this case where the preceding cl 13.3(a) contained two further sub‑paragraphs mentioning discrete periods (being six months for endorsement of the Planning Commission's approval on a subdivision plan in 13.3(a)(1) and three months after endorsement of approval in cl 13.3(a)(2)), the court would be forced to speculate as to which period was intended and was not at liberty to do so.
I am not persuaded to this point of view. It is important to remember that there are other indicia in the clause containing the obvious error as to which period was to be extended. In other words, the subject cl 3.3.2 is directed to 'extending the time to get Planning Commission approval to the subdivision until 21 months after the contract date'. This provision, in its terms, is clearly directed to cl 13.3(a)(1) which refers to 'the Planning Commission endorsing approval on a subdivision plan within six months after approval for subdivision by the Planning Commission'. It is true that the word 'endorsing' is not used but otherwise the special condition echoes the language of cl 13.3(a)(1) and thus, as a matter of interpretation, the effect of the amending provision clearly is to extend the period of six months to the period of 21 months specified in the amending provision.
It follows from all of this that, in my view, the proper construction of special condition 3.3.2 is that it operates to extend the six month period referred to in cl 13.3(a)(1) from six months to 21 months. In short, it must be construed as if the words 'endorsed on a subdivision plan' appeared before the words 'subdivision' and 'until 21 months'. It is significant also that there is no other cogent construction available. If that construction is not adopted, no meaning or effect can be given to cl 3.3.2 of the special conditions. The tenor of the decided cases is that the court should resolve any ambiguity by adopting the construction which accords with the commercial purpose of the agreement and allows for the words under notice to be read harmoniously with the document as a whole.
It follows from this conclusion that as at 26 August 2008 when the defendants, by their legal advisers, gave notice of their intention to effect their immediate withdrawal from the contract they were not at liberty to do so because the time for compliance with the planning provisions covered by cl 13 of the General Conditions (as amended by the Annexure 'A' Special Conditions) had not yet expired and the contract remained in force.
It is apparent on the evidence that as a consequence of what was said on behalf of the defendants on 26 August 2008, and of their decision at that time to withdraw, that they failed to complete their obligations as buyers and were in breach of the contract. The evidence before me establishes that the plaintiff remained ready, willing and able to settle within the prescribed timeframe and is therefore now entitled to insist upon specific performance and otherwise obtain the relief specified in the plaintiff's prayer for relief in the statement of claim.
The conclusions I have arrived at in respect of the uncertainty and construction issues are sufficient to dispose of the matter in dispute. However, for the sake of completeness, it is necessary for me to make determinations as to the remaining issues, and I will proceed to do so.
Resolution of the rectification issue
It emerges from earlier discussion that the principles concerning rectification were usefully summarised by Pullin J in Pourzand v Home Building Society Ltd [2004] WASC 127. That case was taken on appeal but not in a way which disturbs the summary his Honour provided. Principles referred to in that case can be summarised as follows.
First, the court starts from the hypothesis that the written agreement is the true agreement of the parties.
Second, it is open to the court to rectify an agreement if, by mistake, its terms do not reflect the true intention of the parties. Evidence of subjective intention is admissible for the purposes of seeking rectification.
Third, the subjective intention of a corporation could be proved by proving the intention of the person or persons who are relevantly its directing mind and will in the transaction.
Fourth, while it is not necessary for a party seeking rectification to prove the existence of an antecedent agreement, the common intention must be manifested in the words or conduct of the parties, and not merely remain undisclosed.
In earlier discussion I referred to a controversy concerning the fourth point. Thus, in Ryledar his Honour Justice Campbell indicated at [273] that there is an ongoing debate as to whether it is necessary for there to be an outward expression of accord before rectification can be granted.
In the end, I subscribed to the reasoning reflected in Ryledar at [281] that although it is necessary for the parties to know each other's intentions for it to be said that there is a common intention, it is open to the court to conclude as a matter of inference from what was said and done that both parties to the contract intended to act in a certain manner even if they did not expressly communicate to each other exactly how they intended to act.
It is against this background that I returned to the findings I made earlier concerning the credibility of the witnesses and the circumstances at the time the contract was executed on 9 July 2007.
Ms Kourinos was a reasonably experienced estate agent in the field of subdivision or sales and obviously knew that developers such as the plaintiff company were accustomed to extend the time periods specified in cl 13 of the General Conditions for compliance with various steps in the process of obtaining titles to subdivisional lots. I am of the view, and so find, that she read the Annexure 'A' Special Conditions when they were first received and at the time the contract was signed. She understood that the time for obtaining planning approval was to be extended from six months to 21 months, being the period that Mr Fitzgerald had put to his solicitor. It was open to Mr Fitzgerald to infer that she had read and understood the special conditions that he had submitted to her including the provision for an extension to 21 months. I am of the view, and so hold, that he arrived at that conclusion and acted accordingly. It follows from this, pursuant to the reasoning in Ryledar, that both parties can be said to have manifested a common intention that the operative period was to be 21 months.
I am therefore of the view (if I be wrong as to the construction issue) that the cross‑referencing error did not truly reflect the common intention of the parties and pursuant to the principles enunciated in earlier discussion the contract can be rectified in the manner contended for by the plaintiff so as to produce the required extension.
Resolution of the remaining issues
If it be held, contrary to my earlier reasoning, that the defendants were entitled to terminate the contract because the subdivision plan had not been endorsed by the Planning Commission on or before 8 January 2008, a further question arises as to whether the defendants can be said to have affirmed the contract with the result that they are bound to complete. In earlier discussion I referred to the rule that where a party at whose option a contract is voidable acts in such a way as to indicate that the party in question regards himself or herself as bound by the contract, there is an affirmation and that party cannot afterwards avoid the contract.
To my mind, in the circumstances of the present case, pursuant to that rule the defendants are bound to complete the purchase. Through the eight month period commencing on 8 January 2008 until the defendants' formal withdrawal from the contract on 26 August 2008 the defendants proceeded upon the basis that the contract was still in force. The defendant Katrina Kourinos participated with the preparation of the Detailed Area Plan, being a condition of the approval for subdivision by the Planning Commission. Through Shimmer Enterprises the defendants continued with the plaintiff in the further subdivision of Lot 21, including the engagement of Greg Rowe & Associates in June 2008 for the purposes of preparing an application for further subdivision approval. This course of conduct is consistent only with continued existence of the contract and permits me to infer from such conduct, as I do, an election on the part of the defendants to affirm the same.
In my view, and I so find, that election, being inconsistent with an exercise of the right to terminate pursuant to cl 13.7 operates to prevent an effective election on the part of the defendants to terminate in respect of the plaintiff's alleged breach.
The plaintiff is therefore entitled to seek specific performance of the contract on this ground also.
Summary
For the reasons previously given, I am not persuaded that the contract was void for uncertainty as alleged by the defendants. That being so, the case turns upon the construction issue. It follows from my resolution of that issue in favour of the plaintiff that the defendants were obliged to complete their purchase of the subject land when called upon to do so and were in breach of the contract. It follows also that the plaintiff was not in breach and the defendants' counterclaim must be dismissed.
I am of the view, and so find, that the plaintiff is entitled to relief as pleaded including a declaration and an order for specific performance. In the absence of sufficient evidence to sustain a claim for interest pursuant to cl 4.1 of the General Conditions, and in circumstances where proceedings had to be instituted, the plaintiff will be allowed interest on the amount due pursuant to s 32 of the Supreme Court Act 1935 (WA) at the rate of 6% per annum as from 19 January 2009, being the specified date of settlement. I will hear from the parties as to the form of the orders to be made.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CPG01 PTY LTD -v- KOURINOS [2010] WASC 92 (S)
CORAM: HASLUCK J
HEARD: 9 FEBRUARY 2010
DELIVERED : 9 FEBRUARY 2010
SUPPLEMENTARY
DECISION :9 FEBRUARY 2010
FILE NO/S: CIV 1513 of 2009
BETWEEN: CPG01 PTY LTD
Plaintiff
AND
KATRINA JAYNE KOURINOS
KEVIN LEONARD HUNT
RENEE HUNT
Defendants
Catchwords:
Contracts - Construction and interpretation of contracts - Application by non-parties to intervene in trial proceedings - Discretion to permit intervention if it is in the interests of justice - Whether joinder of proposed non-parties affects issue estoppel - Finding of insufficient justification to allow intervention by non-parties
Legislation:
Nil
Result:
Application for leave to intervene refused
Category: B
Representation:
Counsel:
Plaintiff: Mr S Penglis
Defendants: Mr G H Lawton
Intervenor: Mr M C Hotchkin
Solicitors:
Plaintiff: Freehills
Defendants: Lawton Lawyers
Intervenor: Hotchkin Hanly
Case(s) referred to in judgment(s):
Levy v State of Victoria (1997) 189 CLR 579; [1997] HCA 31
HASLUCK J:
The application
The matter before me arises out of a chamber summons dated 24 December 2009 for leave for non‑parties to intervene in the proceedings.
The terms of that summons are an application on the part of the proposed interveners for the following orders: first, that Alicia Jane Wilson, Ace High Holdings Pty Ltd ('Ace High') and Wildsort Enterprises Pty Ltd ('Wildsort') have leave to intervene in these proceedings; second, pursuant to order 1, that Wilson, Ace High and Wildsort have leave to file written submissions on the proper construction of special condition 3.3.2 of the contract between the plaintiff and the defendants the subject of these proceedings with the court to make such programming orders as it deems appropriate; third, pursuant to order 1, that counsel for Wilson, Ace High and Wildsort have leave to appear at trial to make submissions on the proper construction of special condition 3.3.2 of the contract between the plaintiff and the defendants the subject of these proceedings.
Affidavits
The application I have just described is supported by the lengthy affidavit of Phillip Bruce Dobson sworn 24 December 2009. That affidavit includes various materials but, importantly, it includes copies of the contracts signed by Wilson, Ace High and Wildsort, being contracts apparently signed in June 2007 that are said to resemble the contract the subject of these proceedings; that is, CIV 1513 of 2009. I will come back to that aspect of the matter.
The evidentiary materials before me include also the affidavit of Samantha Bellini sworn 9 February 2010, being an affidavit filed by the plaintiff in opposition to the non-party's application to intervene.
Background
The present application comes before me on the eve of the trial of the action brought by CPG01 Pty Ltd as plaintiff against the defendants, Katrina Jayne Kourinos, Kevin Leonard Hunt and Renee Hunt. The trial in question is listed to commence before me as the presiding judge tomorrow, 10 February 2010. It is therefore necessary that the present application be dealt with immediately so that all parties with an interest in the matter will know how they stand procedurally at the commencement of the trial.
The background to the matter listed for trial (being CIV 1513 of 2009) is conveniently described in the plaintiff's outline of submissions dated 5 February 2010. I am referring to that outline simply in order to provide an orderly narrative. I am not in any sense accepting or making any findings as to the matters referred to in the submissions.
The action concerns an agreement for the sale and purchase of land in Waroona made between the plaintiff CPG as seller and the defendants as purchasers. The subject land was lot 21 on the relevant plan of subdivision (now described as lot 112).
I note in passing that in the agreement the buyer was described as the defendant parties I have just mentioned, but, importantly for present purposes, the description of the buyer included reference also to 'and/or nominee'.
Legal principles
The rules of court and certain passages in the outline I have mentioned allow for intervention where the interests of a non‑party will be indirectly affected by the determination of the court. The court has a discretion to permit intervention if such intervention would be in the interests of justice.
The present application is made essentially pursuant to such a precept, namely, that another party will be indirectly affected, and therefore it is a question of whether an intervention should be allowed.
This is recognised in the submissions concerning intervention advanced on behalf of the plaintiff. It is said in par 3 of those submissions:
The non‑parties may be indirectly affected by the decision in these proceedings because they have entered into a separate contract for the sale of land with the plaintiff incorporating the same special conditions as are incorporated in the contract the subject of these proceedings and in respect of which the same issue has arisen as to the proper construction of clause 3.3.2 of the special conditions.
In the plaintiff's submissions it is said, after some further discussion, that this Honourable Court ought not to exercise its discretion in favour of the non‑parties for various reasons which are then described. I refer particularly to this passage in the submission:
It is apparent that the non‑parties are seeking to intervene on the wholly unsubstantiated basis that those representing the defendants in these proceedings may not present fully the submissions on the issue of construction.
Reference is then made to what was said by Brennan CJ in Levy v State of Victoria (1997) 189 CLR 579; [1997] HCA 31 at 603 of the report as follows:
However, where a party having the necessary legal interest to apply for leave to intervene can show that the parties to the particular proceeding may not present fully the submissions on a particular issue, being submissions which the court should have to assist it to reach a correct determination, the court may exercise its jurisdiction by granting leave to intervene. The grant may be limited, if appropriate, to particular issues and subject to such conditions as to costs or otherwise as will do justice as between all parties. In that situation, intervention may prevent an error that would affect the interests of the intervener. Of course, if the intervener's submission is merely repetitive of the submission of one or other of the parties efficiency would require that intervention be denied.
It is therefore said in the context of this case by the plaintiff that this is a case where efficiency requires that intervention be denied. This is because the would‑be intervener acknowledges that the defendants are minded to adopt its submissions. It might be said, to use the vernacular, that the would‑be intervener would essentially be in the role of a 'safety net' in case some aspect of the case was not fully or properly put by or on behalf of the defendants. The plaintiff therefore submits that this is not a case where the exercise of the discretion where intervention should be allowed.
The point just mentioned might be regarded as sufficient to dispose of the application. However, it is said further in the plaintiff's submissions that there is a real prospect that the joinder of the proposed non‑parties in these proceedings may create real difficulties as to the application of issue estoppel.
In other words, the non‑parties accept, as they must, that if they intervene in these proceedings the doctrine of issue estoppel will apply as between them and the plaintiff. Real questions and perhaps difficulties would then arise as to what issue the parties are estopped from agitating in the District Court proceedings in which the plaintiff and the non‑parties are involved. The same special conditions apply in both cases of the contract, but the purchasers are different.
Moreover, as the proper construction of the special conditions is to be determined in these proceedings by reference to facts known by the parties as at the date of the contract, difficult issues may arise as to how a determination made in that context impacts upon the matters in dispute. Will this court's decision bind the parties as to the proper construction of the contracts the subject of the proceedings in the District Court?
Further observations
For all these reasons it is submitted by the plaintiff that not only does no proper basis exist to warrant the non‑parties intervening in these proceedings, but also to allow intervention will be positively inconsistent with the efficient disposition of the business of the Supreme Court in promoting a just determination of litigation and maximising efficient use of the available judicial resources.
It seems to be recognised by all parties that if intervention were allowed it would not complicate the hearing of the trial greatly because the role of the would‑be intervener could be confined to the making of submissions bearing upon the legal issues. I am conscious of that aspect of the matter and will bring it to account in deciding what is to be done.
Conclusion
Against the background I have described, I am of the view that a balance must be struck between the efficient disposition of the trial (which brings with it some hesitation in allowing undue complication of a trial) and the requirements of the rules of natural justice.
In certain circumstances those rules, in the exercise of the discretion, may favour the allowance of an intervention. However, in the circumstances of the present case, I have to say that I am persuaded by the submissions made by the plaintiff. It has not been made clear to me what additional line of argument might be put or advanced by the would‑be intervener which would be neglected, or might not be pressed with sufficient force, if the proposed intervention were not allowed.
That being so, the prospects are that the concerns of the intervener will be adequately met by the stance of the defendants in these proceedings as I have described it. I therefore do consider, in the exercise of the discretion in a case of indirect effect, as I have described it, that there is not sufficient justification to allow the would‑be intervener to intervene in the manner contemplated by the chamber summons. I therefore rule accordingly and the application in the subject chamber summons dated 24 December 2009 will be dismissed.
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