Glenhurst Wines Pty Ltd v Drumcalpin Wines Pty Ltd & Sandow No. DCCIV-02-337

GLENHURST WINES PTY LTD
-v-
DRUMCALPIN WINES PTY LTD & SANDOW
[2002] SADC 78
Judge Anderson
Civil

This is the Plaintiff’s application pursuant to District Court Rule 25.01, seeking summary judgment against the Defendants. That judgment is sought to be in the form of a declaration and an order for specific performance of a Sale and Purchase Deed entered into by the Plaintiff and the Defendants on 15 February 2002. The application is supported by an affidavit which exhibits all relevant documents.
There are further affidavits both in reply and in support but it was agreed by counsel that there was no chronological dispute between the parties and that the application was principally a matter of construction in light of those facts and the documents.
It is convenient to take a summary of the facts from Part B of the Plaintiff’s outline of argument.
“B. THE FACTS
6.On 15 February 2002 a contract described as a “Sale and Purchase Deed Glenhurst Wines” (“the Deed”) was entered into by the plaintiff (“Glenhurst”), as vendor, and the first defendant (“Drumcalpin”), as purchaser, the second defendant (“Mr Sandow”), as guarantor and Bruce Graham Crowhurst and Deidre Susan Crowhurst, as directors of Glenhurst, for the sale and purchase of Glenhurst’s wine business and two parcels of land, situated at Hahndorf and Wrattonbully.
7.Subject to clause 3.2.3, the subject matter included the 2002 crop: clause 3.2.1.3. The Orlando Wyndham Group Pty Ltd (“Orlando Agreements”) had disclosed rights in that crop. Orlando’s consent to the transaction was required: clauses 2.30, 2.31, 4.
8.On 21 February 2002, Orlando provided its written consent to the assignment of certain grape sale and purchase contracts (“the Orlando Agreements”) from Glenhurst to Drumcalpin by two letters dated 21 February 2002 to Glenhurst (“the Orlando letters”) each with a draft Deed of Assignment attached. A copy of the Orlando letters and draft Deeds of Assignment was sent by facsimile direct from Orlando to Mr Sandow on 21 February 2002.
9.On 21 February 2002, Cowell Clarke sent the Orlando letters and draft Deeds by facsimile to Griffins Lawyers. Cowell Clarke requested Griffins Lawyers to provide their comments in relation to the Deeds of Assignment.
10.On 26 February 2002, Arash Amai from Cowell Clarke spoke to Adrian Tisato from Griffins Lawyers and asked him, inter alia, if he had any comments to make in relation to the Deeds of Assignment. Mr Tisato responded by saying that they were “fine”.
11.On 26 February 2002 Cowell Clarke wrote to Griffins Lawyers confirming certain issues regarding settlement.
13.On 27 February 2002 Bruce Crowhurst, director of Glenhurst, attended at the offices of Cowell Clarke and telephoned Mr Sandow, who is the sole director of Drumcalpin, and said, inter alia, that the Deeds of Assignment were not yet signed by Orlando but that Orlando had previously consented to the assignment of the Orlando Agreements by their facsimiles of 21 February 2002. Mr Crowhurst then stated that, if Mr Sandow had any doubts and wanted to satisfy himself that Orlando would sign the Deeds of Assignment, he should telephone Andrew Holly of Orlando which Mr Sandow said he would do.
14.On 27 February 2002 Cowell Clarke sent a draft settlement statement by facsimile to Griffins Lawyers.
15.Cowell Clarke sent a letter dated 28 February 2002 by express courier to Griffins Lawyers enclosing certain documents for the settlement and advising, inter alia, that settlement would be at 11.00 am that day at the Lands Titles Office.
16.On 28 February 2002 Griffins Lawyers wrote to Cowell Clarke by facsimile advising that it was not possible for Drumcalpin to effect settlement by 11.00 am that day and advising, inter alia, that Drumcalpin’s bank would not produce a bank cheque unless the Deeds of Assignment had been executed by Orlando.
17.On 28 February 2002 at 11.50 am Griffins lawyers sent a further facsimile to Cowell Clarke advising that the condition precedent pursuant to clause 4.11 of the Deed had not been fulfilled and that, pursuant to clause 4.3 of the Deed, Drumcalpin terminated the Deed and sought a return of the deposit and accrued interest pursuant to clause 4.4.1.
18.On 28 February 2002 Cowell Clarke responded to the letter from Griffins Lawyers by facsimile advising that the condition precedent was fulfilled by the facsimile from Orlando dated 21 February 2002. Cowell Clarke proposed a settlement at 3.30 pm that day. No one representing Drumcalpin attended at the 3.30 pm settlement.
19.On 28 February 2002 Cowell Clarke served on Drumcalpin a Notice of Default pursuant to clause 9 of the Deed. This notice required Drumcalpin to remedy its default within seven days.
20.On 28 February 2002 Cowell Clarke served on Mr Sandow a Notice pursuant to clause 37 of the Deed notifying him of the default of Drumcalpin and demanding that he effect settlement within seven days of 28 February 2002.
21.The Deeds of Assignment were in fact signed by Orlando on 1 March 2002. This fact was advised to the solicitors for Drumcalpin by facsimile from Cowell Clarke dated 1 March 2002.
22.There was further correspondence between Cowell Clarke and Griffins Lawyers dated 1, 4 and 5 March 2002.
23.On 8 March 2002, Glenhurst issued these proceedings.”
The content of paragraphs 8 and 13 are in issue to the extent that they support the propositions that firstly, consent in accord with the Deed was given, and, secondly that something less than an executed assignment was required by the Deed.
In his submissions, Mr McNamara QC of senior counsel for the Plaintiff described the “principal question” which was to be answered in this application as “whether or not clause 4.1.1 [of the Deed] had been satisfied as at 28 February”. (T10).
Clause 4 of the Deed is in these terms:
“4.    Conditions Precedent
4.1    The sale and purchase of the Business and the Land pursuant to this Deed is subject to:
4.1.1.Orlando giving its written consent to the assignment or novation of the Orlando Agreements from the Vendor to the Purchaser; and
4.1.2.the Minister under the Land Act granting his consent to the transfer of the Vendor’s right and interest in the Crown Lease to the Purchaser,
(“Conditions Precedent”)
4.2    The parties must use their best endeavours to fulfil the Conditions Precedent.
4.3    If:
4.3.1.the Condition Precedent set out at clause 4.1.1 is not fulfilled on or before 7 days from the date of this Deed; or
4.3.2.the Condition Precedent set out at clause 4.1.2 is not fulfilled on or before the Completion Date,
either party may terminate this Deed by written notice to the other.
4.4    If either party terminates the Deed pursuant to clause 4.3:
4.4.1.the Vendor must immediately repay the deposit and accrued interest (if any) to the Purchaser; and
4.4.2.neither party will have any further rights against the other party under this Deed, except in respect of a party not using its best endeavours to fulfil the Conditions Precedent.”
Mr McNamara also called in aid clause 27 which is in these terms:
“27. Further assurances
The parties will promptly do everything necessary or desirable even if not expressly stated in this Deed, to ensure that the terms of this Deed are fully carried into effect.”
There was much discussion, with reference to authorities, about whether clause 4.1.1 was correctly described as a condition precedent. However, in my opinion, that debate is not worth having as there is no doubt that there was a binding agreement between the parties and that performance of that agreement firstly required satisfaction of that clause.
The Plaintiff maintains that such satisfaction was forthcoming in respect of the two relevant agreements with Orlando on 21 February 2002 and, by implication, that it was received within the time specified in clause 4.3.1.
The two letters of that day, referred to in paragraphs 8 and 9 of the factual summary, were in the following form, (excluding formal parts);
(a) Re: Hahndorf:
“I confirm that Grower [Glenhurst] has notified OWG [Orlando] that the proposed purchaser of the Vineyard is Drumcalpin Wines Pty Ltd. In accordance with clause 9.1.1.2 of the Agreement the Grower is entitled to sell its interest in the Vineyard provided that Drumcalpin Wines Pty Ltd undertakes all of Growers obligations under the Agreement and such undertaking must be evidence in writing in a form reasonably satisfactory to OWG, such document entitled “Deed of Assignment” will be provided by OWG.”
(b)Re: Wrattonbully:
“Under clause 9 of the Grape Grower Agreement between Glenhurst Pastoral Co Pty Ltd (“Grower”) [Glenhurst] and Orlando Wyndham Group Pty Ltd (“OWG”) [Orlando] dated 28 February 1995 (“Agreement”), I confirm that OWG gives consent to the assignment of your rights and interest under the Agreement to Drumcalpin Wines Pty Ltd. Such assignment will be evidenced by a “Deed of Assignment” as provided by OWG and executed by the Grower, OWG and Drumcalpin Wines Pty Ltd.”
Plainly, Orlando provides consent in relation to Wrattonbully.
Mr McNamara submitted that the first letter was also a consent because of the words “..... such document entitled ‘Deed of Assignment’ will be provided by OWG”.
Mr Beazley of counsel for the Defendants submitted that particularly these words, and also the whole nature of the alleged consent given in relation to Hahndorf was but conditional consent because of the reference therein to the requirement that Deeds of Assignment be executed. Because of this, even if the letter is of the nature of consent, it has introduced a further qualification and so, in his submission, cannot be said to satisfy clause 4.1.1 so as to require performance of the agreement. He went further and submitted that notwithstanding the use of the word “consent” in the Wrattonbully letter reference to a further requirement for the execution of a Deed of Assignment was a like qualification.
Whilst I have some doubts as to whether that submission is applicable in relation to the Wrattonbully letter when regard is had to the words in clause 4.1.1, I agree that it is arguable that the Hahndorf letter offers nothing more than a conditional consent.
In addition, I am not of the opinion, as was submitted on the Plaintiff’s behalf, that, insofar as relations with Orlando were concerned, clause 4.2 conferred an equal responsibility upon both the Plaintiff and the Defendants. Because the Plaintiff was in an existing binding legal relationship with Orlando, I agree with Mr Beazley that it was in a better position to use its “best endeavours” with Orlando to fulfil the requirements of clause 4.1.1. I am not persuaded that this clause required of the Defendants or gave to them, in relation to the Orlando Agreements, the same locus regarding “best endeavours” as it did to the Plaintiff on this topic.
Whether or not what passed between the parties’ solicitors has relevance I doubt, but in any event that is an issue for another day in light of the conclusion I have reached relating to the ‘principal question”.
I am not of the view that it has been shown that the Defendants were not entitled to give a notice of termination. In relation to this topic, and generally, I am aware of what Mullighan J said in Reality Cinema Pty Ltd v Canbet Limited [2002] SASC 62 at paragraph 20 on the topic of a lengthy discussion of the facts with specific findings in an application such as this. I understand the nature of the alternative hypotheses put by the Plaintiff alleging that the Defendants were not in a position to deliver the notice of termination which they did on 28 February 2002, but do not agree that any one or more of them is sufficient to ensure the success of this application in light of my lack of satisfaction that the Plaintiff’s initial and principal proposition is such that there is “no real question to be tried”:Webster & Anor v Lampard (1992-1993) 177 CLR 589 @ 602 Mason CJ, Deane & Dawson JJ.
The Plaintiff’s application is refused. I shall hear counsel as to the question of costs and further directions.

[2002] SADC 78

5 June 2002