Eagleton v Toscana (WA) Pty Ltd (ACN 008 965 991) as trustee for the Toscana Unit Trust
[2005] WASC 5
EAGLETON & ANOR -v- TOSCANA (WA) PTY LTD (ACN 008 965 991) as trustee for the TOSCANA UNIT TRUST [2005] WASC 5
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 5 | |
| Case No: | CIV:1895/2004 | 14 JANUARY 2005 | |
| Coram: | MILLER J | 21/01/05 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs' claim dismissed | ||
| B | |||
| PDF Version |
| Parties: | ANDREW GEORGE EAGLETON ANNETTE THERESE PHILLIPS TOSCANA (WA) PTY LTD (ACN 008 965 991) as trustee for the TOSCANA UNIT TRUST |
Catchwords: | Vendor and purchaser Contract for sale of land Special condition requiring vendor to seek approval to lesser development than that required under contract pursuant to which vendor acquired the property Implied term to do all that was reasonably necessary to enable purchaser to have benefit of the contract Whether vendor used best endeavours to fulfil the condition imposed Whether contract lawfully terminated Turns on own facts |
Legislation: | Nil |
Case References: | Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Butt v M'Donald [1896] 7 QLJ 68 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1985) 3 BPR 9657 Etna v Arif [1999] 2 VR 353 Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160 GK & NJ Sommerville Pty Ltd v Winbirra Developments Pty Ltd [2002] QCA 386 Grandchester Properties BV v Yabsley (1996) 7 BPR 14,842 Gregory & Bradshaw v MAB Pty Ltd (1989) 1 WAR 1 Hawkins v Pender Brothers Pty Ltd (1990) 1 Qd R 135 Jetcity Pty Ltd v Yenald Nominees Pty Ltd, unreported; SCt of WA (Owen J); Library No 990180; 9 April 1999 Lamshed v Lamshed (1963) 109 CLR 440 Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 Nullacourt Pty Ltd v Walker, unreported; FCt SCt of WA; Library No 950249; 19 May 1995 Paltara Pty Ltd v Dempster (1991) 6 WAR 85 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Secured Income Real Estate (Australia) v St Martins Investment Pty Ltd (1979) 144 CLR 596 Zieme v Gergory [1963] VR 214 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- ANNETTE THERESE PHILLIPS
Plaintiffs
AND
TOSCANA (WA) PTY LTD (ACN 008 965 991) as trustee for the TOSCANA UNIT TRUST
Defendant
Catchwords:
Vendor and purchaser - Contract for sale of land - Special condition requiring vendor to seek approval to lesser development than that required under contract pursuant to which vendor acquired the property - Implied term to do all that was reasonably necessary to enable purchaser to have benefit of the contract - Whether vendor used best endeavours to fulfil the condition imposed - Whether contract lawfully terminated - Turns on own facts
Legislation:
Nil
(Page 2)
Result:
Plaintiffs' claim dismissed
Category: B
Representation:
Counsel:
Plaintiffs : Mr T O Coyle & Ms N J Wigg
Defendant : Mr M J McCusker QC & Mr R Mancini
Solicitors:
Plaintiffs : Phillips Fox
Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Case(s) also cited:
Butt v M'Donald [1896] 7 QLJ 68
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Earle Cameron (Industrial) Pty Ltd v Comprador Properties Pty Ltd (1985) 3 BPR 9657
Etna v Arif [1999] 2 VR 353
Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160
GK & NJ Sommerville Pty Ltd v Winbirra Developments Pty Ltd [2002] QCA 386
Grandchester Properties BV v Yabsley (1996) 7 BPR 14,842
Gregory & Bradshaw v MAB Pty Ltd (1989) 1 WAR 1
Hawkins v Pender Brothers Pty Ltd (1990) 1 Qd R 135
Jetcity Pty Ltd v Yenald Nominees Pty Ltd, unreported; SCt of WA (Owen J); Library No 990180; 9 April 1999
Lamshed v Lamshed (1963) 109 CLR 440
(Page 3)
Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613
Nullacourt Pty Ltd v Walker, unreported; FCt SCt of WA; Library No 950249; 19 May 1995
Paltara Pty Ltd v Dempster (1991) 6 WAR 85
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Secured Income Real Estate (Australia) v St Martins Investment Pty Ltd (1979) 144 CLR 596
Zieme v Gergory [1963] VR 214
(Page 4)
1 MILLER J: The plaintiffs seek declarations that (a) a contract for the sale of land made between the plaintiffs and the defendant on 12 November 2002 was not properly terminated by the defendant on 30 July 2003 and remains on foot, (b) upon LandCorp discharging a caveat on completion by the defendant of development of the subject land, the defendant will be obliged to transfer that land to the plaintiffs.
2 The plaintiffs seek an order consequential upon the second declaration sought whereby they be required to pay to the defendant an amount representing the reasonable costs of the supply of a transportable shed as depicted in the plans attached to the contract of sale.
3 The plaintiffs seek an order that the defendant specifically perform its obligations under the contract by lodging development plans with LandCorp that reasonably comply with the terms of a LandCorp contract, save as to the requirements under the schedule to the LandCorp contract in relation to development of a building. In lieu of the order sought for specific performance, the plaintiffs seek damages.
Factual background and pleadings
4 On 3 November 1997, the Western Australian Land Authority, trading as LandCorp ("LandCorp"), contracted to sell to the defendant the land situated at Lot 117 O'Connor Close, Hamilton Hill, which is more particularly described as Lot 117 on plan 22417, being the whole of the land comprised in certificate of title vol 2125, folio 988 ("the land"). The purchase price was $171,000. The LandCorp Standard Industrial Conditions (Robb Jetty (Industrial Subdivision Stage 1)) were made applicable to the contract. These conditions included a requirement for development of the land, the details of which were contained in a schedule. The development was stated to be:
"Minimun [sic] Building 440.40m2
Minimun [sic] Landscaping 220.20m2."
5 The development guidelines, which related to development of the land, including landscaping and car parking were the Coogee Precinct Development Guidelines 1997 (as amended). The latest date for commencement of construction and development was stated to be within 30 months from settlement date and the latest date for practical completion of the development was 36 months from settlement date.
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6 Although the defendant did not complete the development required by the contract within the time specified in it, certain extensions were granted by LandCorp and nothing turns on that fact.
7 By cl 10.6 of the conditions, the defendant was required to submit to LandCorp all proposed plans and specifications for development prior to such plans and specifications being approved by the Cockburn City Council and the defendant could not undertake development other than in accordance with such plans and specifications as finally approved by LandCorp and in accordance with any requirements of the Cockburn City Council or any other relevant public authority.
8 By cl 12.1 of the conditions, LandCorp was entitled to enter a caveat over the land in order to secure the defendant's contractual obligations.
9 By cl 9.3 of the conditions, whilst a caveat remained on the title, or until the defendant had completed the development (whichever was the later), the defendant was not at liberty to sell the land without first obtaining the consent in writing of the Minister for Lands and if such consent was given, then only subject to such conditions as might be imposed by the Minister. The papers reveal that on 11 January 2001, the defendant sought ministerial consent to sell the land without having fulfilled the development conditions, but after due consideration the Minister for Planning on 25 April 2001 refused that application. A six-month extension to the "development time-frame" was granted.
10 By letter dated 21 July 2001, the defendant submitted a development plan for the land which provided for the construction of a very substantial 875 m2 warehouse and a caretaker's 150 m2 dwelling. Approval was granted by LandCorp to that proposed development subject (inter alia) to a minimum landscaping requirement of 220.2m2. Meanwhile, and before any development as approved was undertaken, the defendant entered into negotiations with the first plaintiff in relation to the sale of the land. By letter dated 30 October 2002, the defendant advised LandCorp that it would submit a revised plan which would change considerably from the original plan submitted. In particular, it was now proposed to develop the land by the construction of a holding yard and small transportable unit.
11 This was reflected in a contract for the sale of land by offer and acceptance made between the plaintiffs and the defendant on 12 November 2002,whereby the plaintiffs offered to purchase the land for the price of $400,000, subject to certain terms and conditions, the following of which are relevant to this action:
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- "1. The vendor and purchaser reserves the rights to withdraw this acceptance in the event of the local authority or other government bodies not lifting the caveat and memorial.
2. The vendor has submitted plans for a proposed open storage yard as per the enclose drawing.
3. The purchaser will be responsible to supply a transportable shed as per the drawing."
12 Annexed to the offer and acceptance was a proposed site layout which showed a proposed 24m2 transportable shed, a large open storage hardstand and an area of landscaping.
13 The plaintiffs contend that this contract ("the second contract") contained a number of implied terms. The first pleaded implied term is an obligation that the defendant do all things reasonably necessary to enable the plaintiffs to have the benefit of the second contract, including, inter alia, to procure LandCorp's approval to a development of the land substantially in accordance with the proposal set out in the plans annexed to the second contract. A second implied term is pleaded. It is that the defendant was obliged to take all reasonable steps to promptly perform its obligations under the terms of the LandCorp contract, save as to the requirements under the schedule to that contract in relation to building size and minimum landscaping area and to request from LandCorp extensions of time for the performance of any obligations where the agreed further time for performance of obligations had passed so that LandCorp would remove the caveat as contemplated by the first condition of the second contract.
14 A third implied term is pleaded. It is that the defendant could not terminate the second contract under the first condition unless and until it had fully performed its obligations under the development terms of the LandCorp contract and achieved practical completion of the development and LandCorp had then refused after a request by the defendant or failed within a reasonable time to remove the caveat.
15 A fourth implied term is pleaded. It is that the defendant could not elect to terminate the second contract under the first condition unless it had complied with its obligations under the second implied term.
16 The defendant, in its defence, admits that there was a term of the second contract implied by law that each party would do all things reasonably necessary to enable the other to have the benefit of the
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- contract, but otherwise denies that the first or second implied terms existed. It further pleads that, on a proper construction of the second contract, it was a condition of it that unless within a reasonable time LandCorp approved the development proposed by the site plan annexed to the second contract as meeting LandCorp's requirements for development and the Cockburn City Council also gave approval, thereby enabling the development proposed by the site plan to proceed to completion, either party to the second contract could terminate it. In the alternative, it is pleaded that such a condition is to be implied as being necessary to give the second contract business efficacy.
17 The defendant pleads that the third implied term is unreasonable and inconsistent with the second contract which, on its proper construction, only obliged the defendant to carry out a development of the land in accordance with the site plan if approved by LandCorp and the Shire within a reasonable time and for the plaintiffs to supply a transportable shed as depicted in the site plan for the purpose of that development. If, however, such approvals were not obtained within a reasonable time, it is contended that either party could terminate. The existence of the fourth implied term is denied.
18 By letter dated 31 March 2003, the defendant wrote to LandCorp advising that "time conditions and investment propositions have changed since we purchased the land due to the change of zoning and different market requests" and indicated an intention to amend the plans for the land to incorporate an open storage and display proposal. Drawings of the proposal were submitted with the letter and they reveal a proposed 24m2 office area with a large hardstand yard, an area of landscaping and an area for proposed future development.
19 By letter dated 3 April 2003, the first plaintiff followed up the defendant's letter with a request that LandCorp consider his submission. It noted that he owned Lot 118 O'Connor Close and he expressed interest in expanding to Lot 117, stating that he required an open area for storage of fibreglass moulds and various other light items. He said:
"I understand you may have a concerned [sic] regarding hard stand only but it would suit my purpose, as part of my existing business that already has 703 m shed, ample parking office but not much storage. A shed may be required at a later stage. Container refrigeration have a similar set up on my north side I support Pauls plan and have checked with Cockburn Council who have given me verbal approval."
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20 By letter dated 9 April 2003, LandCorp advised that the amended plans submitted by the defendant by letter dated 31 March 2003 did not comply with development requirements and guidelines as contained in the LandCorp contract for sale. It advised the defendant to amend the plans in accordance with the contractual conditions and resubmit them to LandCorp for approval as soon as possible.
21 Nothing further happened until, by letter of 16 June 2003, the defendant requested LandCorp to remove the absolute caveat on the land. Not surprisingly, by letter dated 1 September 2003, LandCorp advised that, pursuant to the conditions contained within the LandCorp contract, the absolute caveat could not be withdrawn until all development obligations were satisfied. The letter went on to impose the following requirements:
"1. Further detailed drawings on the proposed development including elevations including elevations and dimensions of proposed structures;
2. Landscaping plan including legend;
3. Explanation of what the land will be used for under the approved purpose and use;
4. Progress toward obtaining Development Approval and Building License [sic] ;
5. Timeframe and schedule for completion."
- These requirements related to the required development under the LandCorp contract; namely, the 440.40m2 building and 220.20m2 landscaping.
22 Meanwhile, by letter dated 30 July 2003, the defendant, by letter to the first plaintiff, terminated the second contract by reason of the fact that LandCorp had not approved the plans submitted to it by the defendant under cover of its letter of 31 March 2003. The letter was written by a representative of the defendant and does not in terms speak of termination, but the defendant admits that the letter was a letter of termination.
23 The defendant in its defence contends that the defendant's termination of the second contract on 30 July 2003 was a valid termination. It raises a number of pleas, including (a) a plea that, because the plaintiffs took no action to enforce the agreement following the notice
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- of termination of 30 July2003 until August 2004, the plaintiffs are guilty of laches; (b) if, which is denied, the defendant's termination of the second contract was a breach of it, the plaintiffs should not be granted specific performance nor the second declaration sought.
24 The defendant counterclaims for a declaration that the second contract was validly terminated on 30 July 2003 and for an order that the plaintiffs remove the caveat which they have lodged on the title to the land.
25 In a lengthy reply and defence to the defendant's defence and counterclaim, the plaintiffs contend that, at all material times up to and including 30 July 2003, LandCorp would have approved the plans submitted on 31 March 2003 "with minor adjustments" (as set out in the letter from LandCorp to the defendant dated 1 September 2003) and without any increase to the size of the proposed 24m2 shed depicted in those plans.
26 In the alternative, it is pleaded that if the 31 March 2003 site plan was not capable of being approved by reason of LandCorp's requirement for a building with a minimum floor area of 440.4m2, then the defendant's obligations under the pleaded first and second implied terms in the second contract would have required it to (a) inform the plaintiffs of any insistence by LandCorp that the development included building with a minimum floor area of 440.4m2; (b) submit amended plans to LandCorp that made provision for a building with a minimum floor area of 440.4m2, if the plaintiffs were prepared to supply such a building at their cost. For this reason, it is contended that the defendant was disentitled to terminate the second contract unless it had complied with these obligations and the plaintiffs were not prepared to supply such a building at their cost.
27 There is a difficulty with this pleading. It is raised for the first time by way of reply. Further, it flies in the face of the evidence, which is unequivocally to the effect that the plaintiffs, at all material times, entered into the second contract conditional upon approval by LandCorp of development which included a building with a minimum floor area of only 24m2. For reasons which will become clear, I am unable to accept that, under the second contract, the defendant ever had the obligations contended for in this plea.
28 The plaintiffs deny that they are guilty of laches, contending that the period of delay from 30 July 2003 to August 2004 was not sufficient in itself to constitute laches in relation to the prosecution of a claim for
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- specific performance of a contract for the sale of land. The plaintiffs further contend that, by correspondence commencing 10 September 2003, they, through their solicitors, informed the defendant that they considered the termination of the second contract by the letter of 30 July 2003 to be ineffective. Further, on 25 March 2003, they lodged a caveat against the title to the land to protect their interest in the land under the second contract, on 11 May 2004 commenced proceedings in this Court for orders extending the caveat (which orders were made on 15 September 2004) and (it is pleaded) at no stage did the defendant require the plaintiffs to make their position clear and/or commence proceedings for specific performance.
29 To complete the background to the matter, it is necessary to refer only to a letter written by the first plaintiff to LandCorp on 12 July 2004 which proposed the use of "a block in O'Connor Close Hamilton Hill" as a boat storage area. This was the land, but it was not identified as such by the first plaintiff in the letter. The first plaintiff sought to ascertain whether certain plans for development of the area would be acceptable to LandCorp and set out a proposal for what appears to be an 18m2 building, together with landscaping of something more than 60m2, an area of parking and open storage hardstand. No formal response was received to this letter, although it became clear in evidence from Mr John Silla, an officer of LandCorp, that LandCorp was not prepared to deal with the first plaintiff on the issue, as he was not an owner of the land in question.
Evidence called at the hearing
30 Two witnesses were called to give evidence before me. They were the first plaintiff and John Silla.
31 The first plaintiff testified that he and his partner, the second plaintiff, initially purchased Lot 118 O'Connor Close, Hamilton Hill in October 2002. It is leased to the proprietor of a boat-building business. Lot 117 (the land) is immediately adjacent to Lot 118 and, shortly after purchasing Lot 118, the plaintiffs decided to investigate whether they could acquire it. They could see that, with two adjacent properties, they could do more in terms of development or resale.
32 The first plaintiff discovered that the defendant was the owner of the land and the first plaintiff asked for a right of first refusal if the defendant intended to sell it. The first plaintiff met with Mr Paul Letari, whom he effectively regarded as the owner of the land, on a number of occasions and discussed work that might be required by way of development to have LandCorp remove its caveat. According to the first plaintiff, he told
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- Letari that his understanding was that sufficient development for the purposes of LandCorp and the Cockburn City Council would be to erect a small transportable shed of around 25m2 and for the balance of the block to be open storage with hardstanding with some car parking at the front and some landscaping. This understanding was based on his belief that two blocks immediately to the north of Lot 117, that consisted entirely of hardstand with no structure, had both received LandCorp and Cockburn City Council approval. Letari asked the first plaintiff to prepare some plans along these lines and they were prepared in rough draft.
33 In due course, Letari prepared and showed to the first plaintiff the plan proposed for submission to LandCorp. It is the same as that annexed to the second contract. The contract for the sale of the land was then completed by the plaintiffs and the defendant.
34 Subsequently there were discussions between the first plaintiff and Letari in relation to the progress of the matter, the details of which it is unnecessary to recount. By 25 March 2003, as the plaintiffs had received no satisfactory explanation from the defendant in relation to progress of the matter, they lodged a caveat over the land.
35 As I have already mentioned, by letter of 31 March 2003, the defendant wrote to LandCorp enclosing the amended plans for development of the land to include the 24m2 building. Thereafter, it became clear that LandCorp was not prepared to approve those plans. The proceedings in relation to the caveat followed and ultimately the first plaintiff took steps himself to communicate with Mr John Silla of LandCorp seeking his client's proposal for development on a site plan and landscaping for what was described as "a block" in O'Connor Close, Hamilton Hill.
36 The first plaintiff testified that he had obtained quotes for a shed of the size depicted in the site plan annexed to the second contract and, subject to the availability of contractors, he anticipated that a shed of that nature could be supplied within 30 days. From this evidence, I conclude that the first plaintiff never had any intention of complying with the original development condition imposed by LandCorp on the land; namely, the construction of a building with a minimum floor area of 440.4m2 and 220.20m2 landscaped area. The testimony of the first plaintiff does not support the contention in par 4.2 of the reply that if the site plan annexed to the second contract was not capable of being approved by LandCorp, the defendant, nevertheless, had an obligation to inform the plaintiffs of any insistence by LandCorp of the original
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- development and to submit amended plans to LandCorp that made provision for a building which complied with the original conditions if the plaintiffs were prepared to supply such a building at their cost.
37 During the first plaintiff's cross-examination, it was revealed that, in an affidavit sworn 22 November 2004 in support of the application to enter this case in the Expedited List, the plaintiffs have considered the possible disposition of the land if they become the registered proprietors of it. The first plaintiff deposed:
"At this stage, we have not resolved whether or not we should sell the land to Stockland, or possibly retain it for potentially some years. We have also discussed and may resolve to build our principal place of residence on the Land …
I am concerned that if the action is not entered on the expedited list, we may be confined to a claim for damages. Given our possible intentions in relation to the Land, this would not provide adequate compensation for the loss of the Land."
38 The reference to Stockland was a reference to Stockland WA Development Pty Ltd which, by letter of 19 August 2004 to the first plaintiff, had expressed interest in acquiring the land at a price of $1,200,000. There was also a proposition for the acquisition of Lot 118.
39 None of the options for use of the land contained within this statement of the first plaintiff suggests that any proposal for its future use supported by a business plan which called for a variation of the development conditions would be attractive to LandCorp. The relevance of such a submission, supported by a business plan, will become clear when I refer to the evidence of Mr Silla.
40 John Silla was called to give evidence by counsel for the plaintiffs. I was informed that LandCorp and Mr Silla had taken an entirely neutral position in relation to the proceedings between the plaintiffs and the defendant. Mr Silla had not provided any statement to the solicitors for the plaintiffs and counsel for the plaintiffs was unable to say what his evidence would be. It seems to have been anticipated that he would have given evidence that, because the owner of a neighbouring lot in O'Connor Close had been given approval to depart from the standard development conditions of a LandCorp contract for sale of land, the defendant could have expected to have been granted a variation of the development conditions imposed upon him under the LandCorp contract. Specifically, it seems to have been assumed that had the defendant made a concerted
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- effort by way of representations and written submissions to LandCorp to approve something less than the requirements of the development conditions, it would have occurred.
41 There was, however, no evidence that the defendant, or Mr Letari, had any knowledge of any willingness on the part of LandCorp to depart from the standard development conditions. There was no evidence that the defendant or Letari knew of any concessions given to the owner of any neighbouring land. Nor was there evidence that the defendant or Letari had any knowledge of what type of submission might influence LandCorp to vary the standard development conditions.
42 Mr Silla was, at all relevant times, a senior project manager with LandCorp. Since June 2000, he has had a variety of duties, one of which has involved the approval of development proposals in relation to land sold by LandCorp. He was familiar with the sale of the land in question. He was asked whether, in every case, a development application had to comply strictly with every aspect of the contractual requirements. He replied that they did not, and added:
"The contracts require various development obligations in terms of building requirements and landscaping requirements …
and plans are approved or rejected on that basis. There have been instances where purchasers have brought forward a business case, if you like, to demonstrate the nature of their business and contractual requirements as to why perhaps a certain amount of building wouldn't be appropriate for their development. A good case in point may be the container refrigeration business that operated in O'Connor Close. In that instance their requirement was to transport containers to and from the port and distribute. It wasn't necessarily appropriate in their case to have buildings as such."
43 Although it was put to Mr Silla that landscaping requirements might also be varied, he replied that generally speaking in his experience landscaping requirements had never been in dispute and purchasers had never really varied from the landscaping requirement.
44 Mr Silla's reference to a particular case in which the purchasers had put forward a business case which justified a departure from the contractual requirements led to the following question from myself, with the answer shown:
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- "MILLER J: Let me try and get how it works. Someone sends in, such as in this case, a letter you receive, with proposal for something which is not the same. Do you then go back and say, look, if you want to vary it you had better give us a business case and it will be referred higher, or how does it work? How do they get the message that they have got to prepare a business case and come along and seek some sort of variation?---In this instance the initiative was very much taken by the purchaser and the owner of the land. The owner approached and said in this case he was aware that there was a minimum building requirement but he provided a whole lot of evidence, including contracts that demonstrated that he wanted to utilise the land for basically a load out and hard stand area and he packaged up a bundle of documents and contracts and evidence that he needed to in a very genuine way use the land and was seeking LandCorp's consideration not to withhold approval because of that reason.
So you don't invite them to do that?---No.
45 When cross-examined by Mr McCusker QC for the defendant, Mr Silla put the instance in which approval to a variation of contractual conditions had been granted in a very clear perspective:
"McCUSKER, MR: The position is this, isn't it, Mr Silla, if anyone had bought a lot under these contract conditions, put up a proposal for development which departed from the minimum specifications in the contract your position was that you would refuse it?---Correct.
On one occasion that you're aware of and one only occasion a buyer of one of the lots, lot 113 put up a special case on his initiative and that - or its initiative, whatever was the buyer a company or a - - -?---A company, yes.
- - - on the company's initiate it was a special case where the company pointed. among other things. to the fact that it, the company, was going to run its business and had contracts with suppliers and buyers I think you mentioned?---Correct.
It was established that it was a bona fide, that is the buyer of the lot was a bona fide conductor of a business on that lot?---Yes.
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- And that the size of the proposed - as specified, was too much for its particular business. It needed an area where it could put containers and take them away?---In this case I think, yes, vessels and so on, yes.
Importantly, would you agree the buyer of that lot 113 was the party who was going to carry on that business and explain in great detail its business plan?---Yes."
46 The conclusions to be drawn from the evidence of Mr Silla are:
(1) The development conditions imposed on LandCorp contracts for the sale of land are rarely varied.
(2) On the one occasion that Mr Silla knew of when there was a variation, application was made with the submission of a substantial business case by the owner of land who had a well established business in relation to which there were requirements for variation which were acceptable.
(3) The development conditions in relation to landscaping have never been known to be varied.
(4) The initiative for persuading LandCorp that the development conditions should be varied rests entirely with the owner of land and invitations are not issued to purchasers to prepare detailed submissions in this respect.
Conclusions
47 It is clear that evidence relating to the factual background known to the plaintiffs and to the defendant at or before the date of the second contract, including the evidence of the "genesis" and objectively of the "aim" of the transaction, was admissible in these proceedings: Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 per Mason J at 348. I accept the submissions of the defendant that the genesis and objectively the aim of the second contract was:
(1) for the defendant to seek the approval of LandCorp of a transportable shed with a floor area of 24m2 and landscaping of 201.36m2 as the development for the purpose of the LandCorp contract;
(2) if LandCorp approved that proposal, the plaintiffs would, at their cost, provide the 24m2 shed, the defendant would
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- carry out landscaping and LandCorp would remove its caveat to enable the sale of the land to proceed;
- (3) if the proposal was not approved and the caveat was not removed, either party could terminate the second contract.
48 As a fact, LandCorp did not approve the site plan annexed to the second contract. It made this clear by a letter to the defendant dated 9 April 2003 and further by its letter of 1 September 2003.
49 I accept that there was an implied term in the second contract as pleaded by the plaintiffs by way of the first implied term. The question is whether the defendant in this case did all things reasonably necessary to enable the plaintiffs to have the benefit of the second contract. There was no provision in the second contract which required the defendant to negotiate with LandCorp for approval of some different site plan, nor to make submissions, to submit business plans or otherwise seek to persuade LandCorp that the proposed variation contained within the site plan, or any other variation, should be accepted. As I have already pointed out, there was no evidence to suggest that the defendant was aware that LandCorp might acceded to submissions by way of the presentation of a business plan on the part of an owner of a lot in O'Connor Close for some smaller development.
50 The evidence of Mr Silla made it clear that, on one isolated occasion and one only, the owner of a lot in O'Connor Close had persuaded the general manager of LandCorp (not Mr Silla) that there should be a variation from the standard development conditions. The reasons were not personally known to Mr Silla, but he understood from his position as an officer of LandCorp that the approval to the variation in the development conditions followed the submission of a detailed and comprehensive business plan in the circumstances which I have outlined. Importantly, the submissions made in relation to that lot came from an owner who had an established business to which the use of the lot in O'Connor Close was an important adjunct, the details of which were apparently contained within the business plan. The defendant was not in the same position. He was not proposing some alternative development of the land for his own purpose, nor could he put up any submission or business plan which would reveal that use of the land in the way he proposed was an important adjunct or ingredient of an existing business he conducted.
51 In any event, the fact that, on one occasion, LandCorp approved a variation of the standard development conditions does not establish that it
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- would do so again. No assurances were given by Mr Silla that variations could or would occur and there are no guidelines or directives of LandCorp which announce in any way that such variations to standard development conditions might be acceptable.
52 In my view, the second, third and fourth pleaded implied terms cannot be made out. There was no obligation placed upon the defendant to do more than submit to LandCorp the site plans annexed to the second contract and to seek the approval of LandCorp for those plans. The defendant had no obligation to request extensions of time for the performance of any obligations other than those contained within the original development conditions. There was no implied term that the defendant could not elect to terminate the second contract unless and until it had fully performed its obligations under the original development conditions and there was no implied term that the defendant could not elect to terminate the second contract unless it had complied with its obligations under the second implied term.
53 I agree with the defendant's submission that, to the extent that the reply and the pleadings generally contend that the defendant had an obligation to comply with the original development conditions by submitting amended plans making provision for a building with a minimum floor area of 440.4m2 and to carry out a development in accordance with those development conditions, the plaintiffs' case cannot be made out. I agree that to imply such a term in the second contract, would be contrary to the principles set out in the passage to which I have referred in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales. I agree also that such a requirement did not comply with the commercial realities of the second contract, the express terms of which provided for LandCorp to approve development by way of the erection of a small transportable shed, the provision of hardstand area and landscaping in accordance with the site plan annexed to the second contract. It was only if LandCorp approved such a submission that the sale of the land would proceed upon the removal of the LandCorp caveat and upon the other terms and conditions set out in the second contract.
54 In my view, it could not have been the case that there was an implied term that the defendant would, if the amended site plan was not approved by LandCorp, nevertheless at its own cost carry out the original development conditions, have the caveat removed, and transfer the land to the plaintiffs.
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55 I am, therefore, of the opinion that the plaintiffs have failed to make out their case for declaratory relief, specific performance or damages. The defendant has, in my view, made out its counterclaim and there should be a declaration that the second contract was validly terminated on 30 July 2003 with an order that the plaintiffs remove caveat number 1424889, lodged in relation to the land.
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