Fazari v Peat Resources of Australia Pty Ltd - [1999] WASCA 283

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE FULL COURT (WA)

CITATION: FAZARI & ANOR -v- PEAT RESOURCES OF AUSTRALIA PTY LTD [1999] WASCA 283

CORAM: IPP J
MURRAY J
STEYTLER J

HEARD: 1 DECEMBER 1999

DELIVERED : 13 DECEMBER 1999

FILE NO/S: FUL 89 of 1999

BETWEEN: TOMMASO ANTONIO FAZARI
CHRISTINA DIANA MICHELLE FAZARI
Appellants (Plaintiffs)
AND
PEAT RESOURCES OF AUSTRALIA PTY LTD
Respondent (First Defendant)

Catchwords:

Contract for sale of land - Vendor's representation that the use to which the land was put at the date of the contract was lawful - Land used for residential purposes - House contained features not approved by local government or otherwise contrary to law - Offences committed by person undertaking development - Order for rectification or removal might be made by local government - Contract for sale of land not breached - Interpretation of relevant clause

Legislation:

Nil

Result:

Appeal dismissed

Representation:

Counsel:

Appellants (Plaintiffs) : Mr M C Hotchkin
Respondent (First Defendant) : Mr S O Alteruthemeyer

Solicitors:

Appellants (Plaintiffs) : Hotchkin Hanly
Respondent (First Defendant) : Summers Partners

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

Daniele v Shire of Swan (1998) 20 WAR 164

Case(s) also cited:

Carpenter & Anor v McGrath & Anor (1996) NSW ConvR 55-788
Fletcher & Anor v Manton (1940) 64 CLR 37
Kadissi & Anor v Jankovic [1987] VR 255
Scanlon v American Cigarette Company (Overseas) Pty Ltd & Anor (No 1) [1987] VR 261

JUDGMENT OF THE COURT: This appeal arises out of the trial of an action before O'Brien J in the District Court. There the action involved a number of related defendants and a number of causes of action, four of which were pursued at trial. They were for breach of contract, fraudulent misrepresentation, negligence, and in respect of the entry into the contract there was a plea of common mistake.
The appellants did not succeed on any of those causes of action. Their claim was dismissed with costs. This appeal puts in issue the correctness of that judgment only in respect of the action for breach of contract, and then only in respect of one aspect of that claim.
The contract in question was one for the sale of a house and land in Kenwick by the respondent to the appellants. The contract is dated 24 January 1994. The appellants came upon the residential property by answering a newspaper advertisement. They inspected it and liked it. It appeared to meet their requirements as a place of residence. An attractive feature was an enclosed patio at the rear of the house. The appellants thought this had potential to be altered to become a games room or family room. Other structures associated with the house were a pergola, verandah and carport.
After the sale was completed and the appellants moved in, it appears that through a solicitor they corresponded with the relevant local government. It emerged that there were problems. The patio had been enclosed with brick walls and windows without Council approval. Had an application been made, in all probability the construction would not have been approved because of non‑compliance with the relevant building code. The connection between the bathroom toilet window and the patio did not comply with the Sewerage (Lighting, Ventilation and Construction) Regulations 1971. Floorwastes had not been extended as required by the model health local law or the relevant plumbing and drainage code. The addition of the front verandah had not been approved by local government. The carport had been approved in 1978, but had not been constructed in accordance with the approval obtained. The pergola had not been approved by local government.
It is not established, as we understand it, that any person connected with the respondent was responsible for any of those constructions being implemented in a way which did not comply with the law and without the appropriate approval of the local government, including those persons who were the former occupants of the house before it was purchased by the appellants.
The contract was recorded in a standard form of offer and acceptance which incorporated the 1991 Joint Form of General Conditions for the Sale of Land approved by the Law Society of WA and the Real Estate Institute of WA. The general conditions contain a representation by the vendor in cl 11(5) that, "The use to which the land is put at the date of the contract is lawful." By cl 22(1), the term "land" is defined, relevantly to this case, to mean "the freehold land… together with all buildings and other improvements thereon the subject of the contract".
The appellants' claim at trial was for the rescission of the contract and damages for its breach. They alleged a breach of the express term contained in cl 11(5) and the breach of an implied term "that all structures on the property had been lawfully constructed and were available for use". As we have mentioned, O'Brien J found against them on both aspects of this claim. It is only the first mentioned claim for the breach of cl 11(5) which is now in contention on the appeal. The effect of the grounds of appeal is to contend that her Honour erred in finding that "the fact that there were structures erected on the property which had been erected without or not in accordance with Council approval did not amount to a breach of the said cl 11(5)."
As developed in the argument put by counsel for the appellants, the proposition shortly stated is that although there is no suggestion that the use of the house and land for residential purposes was unlawful as at the date of the contract, the representation made by cl 11(5) applies to the land and the structures erected thereon and every part of them. It is a representation that each constituent part of the property the subject of the contract of sale was being lawfully used. That cannot be so, it is argued, if the land is used to support an unlawful construction and that, having been found to be the case, is sufficient to establish the breach of contract alleged. We cannot accept this argument.
The point centres around the lack of approval by local government for the work done in enclosing the patio and linking it to the existing house, to constructing the addition of the front verandah and to constructing the pergola, together with the additional point that the carport was not constructed in a way which complied with the approval obtained. For the purposes of the argument it may be accepted that in each of those respects there was a contravention of or failure to comply with the provisions of the relevant town planning scheme. In that event, that contravention or the commencement or carrying out of the development involved is an offence under the Town Planning and Development Act 1928 (WA) s 10(4). Further, under s 10(1), the local government may, after giving the prescribed notice (which has not occurred in this case), remove, pull down, or alter any building or other work which has been commenced or continued in contravention of the scheme, and it may do so at the expense of "the person in default": s 10(2).
It may be accepted that the carrying out of the work of construction or development is in that event unlawful, but the question in terms of the contract, cl 11(5), is whether, those contraventions of the law having been previously committed by somebody, the use of the land, including the relevant buildings and improvements, for residential purposes, was at the date of the contract lawful or unlawful.
The Town Planning and Development Act 1928, s 2(1), defines the "development" of land to mean "the development or use of any land, including any demolition, erection, construction, alteration of or addition to any building or structure on the land", but that is not to say of course that the word "use" in the contract is synonymous with the definition of development. Section 10 of the Town Planning and Development Act 1928 and the term "development" was recently discussed by this Court in Daniele v Shire of Swan (1998) 20 WAR 164. It was accepted that the use of land encompasses an activity carried on upon the land. In our view, the word "use" in the contract bears the same meaning.
As to the submission that the land was being used to support an unlawful structure, underlying it is the proposition that the buildings are distinct from the land. This is inconsistent with the definition of "land" contained in cl 22(1). As mentioned, this definition provides, in effect, that the buildings on the land are part of the "land" as defined. Further, the use of land to support a structure is not an "activity" in the sense to which we have referred.
Once that position is reached it may be seen that in this case no law prohibited the use of the land, including the house and other structures erected thereon, for residential purposes by reason of the fact that the development of the land which produced those structures might be said to be unlawful because it was in breach of the relevant local government town planning scheme. Some structures upon the land and being part of it might have been unlawfully erected and they might be liable to be altered or removed because of the breach of the law, but their use for residential purposes was not unlawful and cl 11(5) of the contract was not breached. Her Honour was right and the appeal should be dismissed.