Goldtaper Pty Ltd v Berela Pty Ltd
[2001] QSC 104
•10/04/2001
SUPREME COURT OF QUEENSLAND
CITATION: Goldtaper Pty Ltd & Ors v Berela Pty Ltd [2001] QSC 104
PARTIES: GOLDTAPER PTY LTD (ACN 010 588 815)
(first plaintiff)
HARACLIFF PTY LTD (ACN 010 820 809)
(second plaintiff)
KEMBROOK PTY LTD (ACN 010 839 933)
(third plaintiff)
v
BERELA LIMITED (ACN 010 671 315)
(Defendant) FILE NO/S: 10989/98
DIVISION: Brisbane Supreme Court Trial Division
PROCEEDING: Trial
ORIGINATING COURT:
Supreme Court Brisbane
DELIVERED ON: 10 April 2001
DELIVERED AT: Supreme Court Brisbane
HEARING DATE: 12, 13, 14 March 2001
JUDGES: Atkinson J
ORDER: Plaintiffs awarded damages in sum of $441,747.07.
CATCHWORDS: CONTRACT – CONSTRUCTION – Whether on proper construction of contract circumstances have arisen since signing of contract entitling Plaintiffs to payment under contract.
CONTRACT – RECTIFICATION – PRINCIPLES TO BE APPLIED – COMMON INTENTION – Whether mistake made by parties in expression of common intention so that contract does not embody that intention.
CONTRACT – IMPLIED TERMS – Whether implied term of contract that Defendant would do all things necessary to enable Plaintiffs to have benefit of the contract.
Arlenby Marketing Pty Ltd v Chief Executive of the
Queensland Department of Transport P & E Appeal No 39 of
1996, 4 November 1996, considered
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Australian Course Grains Pool Pty Ltd v Barley Marketing
Board [1989] 1 QR 499, considered
Australian Gypsum Ltd and Australian Plaster Co Ltd v
Hume Steel Ltd (1930) 45 CLR 54, followed
Barque Quilpué Ltd v Brown [1904] 2 KB 264, considered
Butt v McDonald (1896) 7 QLJ 68, followed
Codelfa Construction Pty Ltd v State Rail Authority of NSW
(1982) 149 CLR 337, considered
Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215, considered
Fowler v Fowler (1859) 4 De G & J 250, followed Liverpool City Council v Irwin [1977] AC 239, followed Mackay v Dick (1861) 6 App Cas 251, considered Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128
CLR 336, followed
Marshall v The Colonial Bank of Australia (1904) 1 CLR
633, followed
New South Wales v The Commonwealth (1990) 169 CLR 482, considered
Nullagine Investments Pty Ltd v Western Australian Club Inc, considered
Pacific Exchange Corporation Pty Ltd v Gold Coast City
Council and Anor, P& E Appeal No 32 of 1996, 29 October
1996, considered
Pukallus v Cameron (1982) 180 CLR 447, followed Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596, considered
Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR
359, followed
Slee v Warke (1949) 86 CLR 271, followed
COUNSEL: J.Bell QC for the Plaintiffs
P.McMurdo QC for the Defendant
SOLICITORS: Hopgood Ganim Lawyers for the Plaintiffs
Corrs Chambers Westgarth for the Defendant
[1] In 1993, the plaintiffs, Goldtaper Pty Ltd, Haracliff Pty Ltd and Kembrook Pty Ltd, owned property at Coomera (“the land”). The northern border of the land was the southern bank of the Coomera River. The southern border of the land was the Oxenford - Southport Road, also known as the Hope Island Road. It was zoned
“special facilities”. The area of the land owned by the plaintiffs was some
104 hectares. Fourteen hectares of that area was situated on higher ground which was flood free (“Stage 1”). The remainder was a flood plain which had been approved for canal development with extensive open spaces (“Stage 2”). The whole of the area was called the Riverlink Project (“Riverlink”).
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[2] On 3 December 1993, the plaintiffs applied to the Albert Shire Council (which has since merged with the Gold Coast City Council) (“the Council”) to subdivide the land in Stage 1. In the application for subdivision, one of the matters of concern in the development of the Riverlink Project was the cost of road works and access to the Oxenford - Southport Road which looped back to the north after it left the Pacific Highway and before it travelled east. The Main Roads Department had plans to bypass that road to create a more direct access to Hope Island. Two types of road works were proposed with regard to the Stage 1 development. In the first instance there would be internal road works which would cost $860,776.00. This would provide a temporary entrance to Stage 1 from the Oxenford - Southport Road.
[3] In addition, external road works for the land to serve both Stage 1 and Stage 2 by providing a permanent access from the Oxenford – Southport Road would cost
$2,295,653.00. It was proposed that the cost of the external road works would be covered by a pro rata contribution from the development of the land. The average cost per dwelling of the external road works was $2,014.00, discounted to
$2,000.00, per dwelling for the Stage 1 area with the balance to be paid in Stage 2. A report prepared by the engineers Burchill Bate Parker and Partners Pty Ltd
(“Burchill Bate Parker”) for the plaintiffs on 3 December 1993 which was submitted with the subdivision application said:
“As there will be no need for actual construction of the upgraded works to Hope Island Road for this first stage subdivision, other than at the intersection of the subdivision road, it is proposed that this amount of $2,000 per dwelling be paid by the builder applicants into a fund managed by Council, at the time of registration of the building plans for drawing upon at the stage 2 construction time.”
[4] On 23 December 1993 in Minute No P93.12B.105, the Council approved the proposed subdivision with a number of conditions including two conditions relating to road works. These conditions were the construction of a temporary entry road to stage 1 of the development and Condition 19, which provided that future development of these lots would require a contribution towards future upgrading of the Oxenford - Southport Road estimated at approximately $2,000.00 per dwelling.
[5] A plan submitted to the Council in January 1994 prepared by Burchill Bate Parker proposed the further subdivision of Stage 1 into 7 large lots ranging from 0.71 to
1.99 hectares in area with road works servicing each lot from the temporary access from the Oxenford – Southport Road. At that stage, the plaintiffs intended to sell each of the 7 lots to builders for further subdivision into smaller allotments after construction of the temporary access road and other services. A concept plan for the whole development of Riverlink was also presented to Council (the “Riverlink concept plan”). As a result of the submission of these plans, the Council approval was varied on 18 February 1994 in Minute No P94.02A.056.
[6] Geoff Burchill, who acted on behalf of the plaintiffs, was hopeful that the proposal to develop a new main road to Hope Island, south of Riverlink, would subsequently come to fruition and the temporary access road could become permanent because it would not be an access onto a major through road, but it was, he said, “still a nervous situation”. He was too concerned that Stage 1 be allowed to go ahead to
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attempt to change the situation with regard to road contribution at that time. He believed, however, that there was a possibility that the requirement for the
$2,000.00 contribution per dwelling would be relaxed in the future. That expectation was not realised until 1997. On 19 December 1997, the Council approved the relaxation of that condition for reasons that Mr Burchill had expected. However, in early 1994, Mr Burchill’s primary concern was to sell Stage 1. He was under pressure from his financiers, the Westpac Bank.
[7] On 23 March 1994, Mr Burchill on behalf of the plaintiffs approached Ron Borland who was the joint Managing Director of the defendant seeking the defendant’s participation in the development of Stage 1 of Riverlink. He attached the plan of Stage 1 which had been presented to Council. In this plan lots 1 and 2 were called Stage 1A and lots 3 – 7 were referred to as Stage 1B. A meeting took place on 24
March 1994 between Mr Burchill, Mr Borland and Timothy Wright from Agrifiscal. What was discussed was set out in a letter dated 25 March 1994 from Mr Wright to Mr Borland. Mr Wright was given authority by Mr Burchill to conduct negotiations on behalf of the plaintiffs.
[8] Mr Burchill is an engineer with extensive experience in the development and tourism industries. For 21 years until December 1994, he was Chairman and Managing Director of Burchill Bate Parker, which offered consultancy services in civil engineering and town planning. He was also personally involved in land development for the Burchill Project Group, a group of companies owned and controlled by Mr Burchill personally. One of those companies was the first plaintiff, Goldtaper Pty Ltd. Another was Golden 12 Pty Ltd. The second plaintiff, Haracliff Pty Ltd, was controlled by Patrick Gay. The third plaintiff, Kembrook Pty Ltd, was owned and controlled by the first and second plaintiffs. Mr Burchill had authority to act on behalf of all of the plaintiffs in the sale of the Stage 1 land.
[9] Mr Burchill and Mr Borland met again on 28 March 1994. At that meeting, Mr Borland told Mr Burchill that the maximum that the defendant was prepared to pay for Group Title lots in Stage 1 was $35,000.00 to $40,000.00 per lot. That was the maximum price that the defendant was prepared to pay for lots which were fully developed and ready to build on. Mr Borland wanted to subdivide Stage 1 in a manner and style that was suitable to the defendant. Accordingly, the defendant proposed to prepare a layout plan. Once that had been completed, Burchill Bate Parker were to prepare costs estimates for the Stage 1 development to quantify the cost of putting the land into the state where the defendant was prepared to pay
$35.000.00 to $40,000.00 per lot for it. These negotiations between the parties were recorded in a memorandum of understanding prepared by Mr Wright and signed by Mr Burchill on 13 April 1994 and Mr Borland on 14 April 1994.
[10] On 20 April 1994, after concept plans were developed by the defendant’s architects, Burchill Bate Parker produced detailed cost estimates for Stage 1. The estimates included all the costs of the road works for Stage 1 which included the cost of the temporary access from the Oxenford – Southport Road. Attached to the estimates were a number of notes and exclusions. Note 12 of the cost estimates dated
21 April 1994 provided:
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“Estimate provides for a contribution of $2,000/lot toward upgrading of the future main intersection. Subject to Council approval this may be deleted due to the intersection for Stage 1 being permanent.”
The cost estimates showed that the notional cost per lot of developing the land to the level where the defendant was willing to pay $35,000.00 to $40,000.00 per lot was $22,617.75, including the $2,000.00 per lot contribution to the permanent road works.
[11] Mr Burchill again met with Mr Borland on 22 April 1994 to discuss Stage 1 of Riverlink. They negotiated a price that the defendant was prepared to pay for Stage 1 based on the layout plans and the estimate of $22,617.75 development costs per lot. If the defendant paid $14,000.00 per undeveloped lot, the cost of each lot would be $36,617.75, which was within the $35,000.00 to $40,000.00 price range which the defendant was prepared to pay for developed lots. The parties calculated a price on the basis of 250 lots in Stage 1. The total price of $3,500,000.00 was arrived at by multiplying $14,000.00 by 250 lots. On 23 April 1994, Mr Burchill faxed to Mr Wright a handwritten copy of the key points that he and Mr Borland had agreed. He noted that the price had been agreed at $3,500,000.00. He also referred to a number of other agreed terms. One of those terms was:
“In the event that it is possible to obtain approval of Albert Shire for deletion of the requirement for 2000 per dwelling for external roadworks contribution then the cost saving benefit of the whole of this will go the Vendor.”
Mr Burchill said that this subject was specifically discussed and that it was left entirely at the plaintiffs’ risk. Mr Borland agreed that if the money was able to be saved, it should go to the plaintiffs. At that time it was agreed that the price which was negotiated reflected the fact that the defendant would be liable to pay
$2,000.00 per lot either to the Council, or if the condition was relaxed, to the plaintiffs. Mr Burchill’s note reflected this agreement.
[12] Mr Wright then drafted terms of agreement which were signed by Mr Borland on behalf of the defendant on 27 April 1994 and by Mr Burchill on behalf of the plaintiffs’ interests on 30 April 1994. It gives the details referred to earlier of how the price for the land was calculated. Recital “O” provides:
“An external roadworks contribution to the Albert Shire Council is included in. . . this agreement however such contribution may not be necessary. This roadwork contribution has no effect on the Stage 1 development however was a contingent item required by council to allow Stage 1 to proceed.”
[13] Clause 2 of the agreement was that the purchase price of the land would be
$3,500,000.00 (equivalent to $14,000.00 per lot for 250 lots). Terms of settlement for progressive payment of the purchase price were set out in clause 3 of the terms of agreement. It was also provided, in clause 6 of the terms of agreement, that any savings in the cost of development would be shared equally between the parties. An exception was that, in the event that it was possible for the plaintiffs to obtain approval from the Council for deletion of the requirement for the $2,000.00 per
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dwelling for external road works contribution, the cost savings of the whole of this would be passed back to Mr Burchill’s company.
[14] On 27 April 1994, Mr Burchill on behalf of the plaintiffs wrote to the QIDC forwarding the terms of agreement. A copy of this letter was sent to the plaintiffs’ solicitors. It shows the significance of the cost saving benefit of a relaxation to the parties to the contract, particularly to the plaintiffs as vendor. Mr Burchill said with regard to the purchase price:
“In addition to the sale price of $3.5million, we point out that there is potential under Clause O, Page 2, for the Vendor to obtain further benefit out of the sale to the extent of $500,000. This will require obtaining approval of Albert Shire Council to the deletion of a subdivision approval clause pertaining to a contribution of
$2,000/dwelling towards External Road Constructions.
The origin of this condition lies in the former proposal for a temporary access intersection only to Stage 1, with ultimate access being by the principal entry point further along Hope Island Road to the east. As this stage access is permanent, there is no justification for Stage 1 to become involved in approved requirements for the balance of the project.”
On 28 April 1994, Mr Burchill instructed solicitors to draw up contracts for the sale of the Stage 1 land.
[15] On 4 May 1994, Mr Rapp of Bell, Rapp & Partners, solicitors for the vendors, sent draft contracts to Mr Burchill and to Perrin Pointon, solicitors acting for the defendant in the purchase of the land. The contracts acknowledged that the developer would use Burchill Bate Parker as consulting engineers, Bennett & Bennett as consulting surveyors and Neumann Contractors Pty Ltd as general contractor in the development (the “Team”). The plaintiffs, as Vendors, warranted the cost of development. Clause 2.13 of the Special Conditions of contract provided.
“2.13 The Purchaser agrees to use all endeavours reasonably available to it, with the assistance of the Team (to such extent as the Purchaser shall reasonably require), to obtain agreement from the Council to its abandonment of its proposed requirement as a condition of its approval of the Development, for contribution for external road works at the rate of TWO THOUSAND DOLLARS ($2,000.00) per dwelling. In the event that the Purchaser is successful in having the Council agree to abandon this requirement, or, to reduce the amount payable per dwelling, then the amount of such saving compared with the requirement of a contribution at the rate of TWO THOUSAND DOLLARS
($2,000.00) per dwelling, for the whole of the Development, shall be an amount claimable by the Vendor from the Purchaser as a liquidated debt.
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2.13.01If such saving is established prior to the Date for Completion hereof then the resultant amount of such saving shall be paid by the Purchaser to the Vendor at completion hereof with the monies otherwise payable at completion hereof.
2.13.01 [sic]If such saving is not established in time for completion hereof but is established later then forthwith upon the amount of such saving being established, the Purchaser shall pay the resultant amount to the Vendor.”
The contracts were dependent upon the plaintiffs’ obtaining approval for subdivision.
[16] Negotiations between the parties as to the terms of the contract continued. On
3 May 1994, Bennett & Bennett wrote a report on a proposed amendment to the subdivision approval (the “Bennett & Bennett report”). This report was attached to the final contract signed between the parties. It proposed submitting to Council that the approval be varied to “a subdivision yielding two management lots, one balance area and an area of new road to the requirements of the Department of Transport ie road widening as previously advised and allowed for in the project planning”. Stage 1 was to be divided into Lots 1 and 2. By this means, the applicant hoped to have a number of conditions of the existing approval deleted, being conditions 5, 6,
7, 8, 10 and 18. These conditions did not include condition 19 which, as previously set out,1 provided that future development of these lots would require a contribution towards a future upgrading of the Oxenford-Southport Road estimated at approximately $2,000.00 per dwelling. There was, it seems, no proposal to seek relaxation of this condition at that time. Bennett & Bennett commented in their report that:
“The Albert Shire Council, following its normal procedures would accept, consider and could conditionally approve an application by Berela Limited for the detail Group Title Subdivision of proposed Lots 1 & 2 in parallel with its consideration of the above proposed application.
Submission of such an application by Berela Limited, at the same time as the application for amendment to the existing approval, could weigh favourably with Council, but the absence of such an application is not considered to be a probable adverse influence on Council’s decision.”
On 5 May 1994, the revised subdivision plan was submitted to Council by Burchill
Bate Parker (the “May 1994 subdivision plan”).
See paragraph [4]
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[17] On 6 May 1994, Mr Burchill wrote to his solicitors saying, with regard to clause
2.13 of the draft contract:
“If I can get Council to waive condition of $2,000 per dwelling, when can I claim the amount? Berela will have to provide for this, perhaps at the same timing as would have applied to its payment to Council, ie just prior to sealing of Group Title subdivision plans.”
Mr Rapp did not get any immediate response from the defendant’s solicitors on the issues raised by Mr Burchill. Accordingly Mr Burchill wrote to Horace Thorpe, another director of the defendant on 11 May 1994. Mr Burchill told Mr Thorpe that the defendant had lodged a subdivision application without details of the Group Title subdivision that the defendant wanted. He continued:
“It will be necessary when you are in a position to do so, to lodge the group title subdivision application and at that time we request you give us the opportunity to put a case to Council in regard to the
$2,000 / lot contribution for external roadworks to be deleted.”
Mr Burchill wrote this because he was concerned that the defendant may not be “as energetic about seeking to follow up this matter as it should be”. This concern was confirmed, when at a meeting with Mr Wright and Mr Rapp, Mr Thorpe’s attitude was that the defendant would not be making any effort to seek a relaxation. Mr Burchill gave instructions to his solicitor with regard to the mechanism for making submissions to Council.
[18] Negotiations culminated in many terms of the contract being redrawn. The price was reduced to $3,250,000.00. In return the total payment was made at an earlier settlement date. A number of other changes were made. The plaintiffs no longer guaranteed development costs. Instead of the contract being dependent on the plaintiffs’gaining sub-divisional approval, it was subject to the defendant’s gaining such approval on satisfactory terms to a group title development called Riverlink Grove (Lot 1) and a residential subdivision subsequently known as Riverlink Gardens (Lot 2).
[19] No change was made to the question of who would have the benefit of a relaxation of the $2,000.00 per lot contribution to road works which would become payable on the sale of each lot. However a change was made to the way in which the application was to be made so that it was the plaintiffs, as vendor, who would be given the right to negotiate with Council about the relaxation and not the defendant as purchaser. Mr Borland said this was at the request of the vendors or their solicitors, he was not sure which, and, as it did not affect the defendant financially, they did not have a problem with it and agreed to it. Mr Borland also said he thought that the plaintiffs would make the application for relaxation before settlement and had not given any thought to what would happen if they made the application after that date. However, I do not accept that evidence. He was unconvincing in his manner of giving evidence on this point and it is much more likely that the defendant knew that the plaintiffs were entitled to the benefit of any relaxation they successfully applied for, whenever it was that they applied for it. As Mr Borland later said in cross-examination, of the negotiations leading up to the
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signing of the contract, “At that stage we were going to pay it, whichever way it went.” The contract was signed on that basis.
[20] Mr Thorpe said to Mr Wright that the defendant was not interested in being directly involved in obtaining the relaxation. It was to be Mr Burchill’s responsibility. Mr Thorpe said that they were not interested in the matter because there was to be no financial benefit for them. The defendant did not think that any relaxation would be given by the Council. Mr Thorpe said he thought the prospects of getting a relaxation were “minimal”. Mr Borland, in his evidence, said he thought there was only a little chance that the plaintiffs would achieve relaxation of the condition.
[21] On 27 May 1994, the plaintiffs’ solicitors sent a revised draft contract to the defendant’s solicitors. This followed discussions with Mr Wright. Mr Rapp said his interpretation of those discussions was that he “was still to include in the contract reference to the possibility of relaxation of this requirement of $2,000.00 dollars per lot on the basis that we the vendor would still have to do the work to get the relaxation, but it was still to be included in the contract on that basis.” There were never any instructions to the effect that the defendant would get the benefit of any relaxation. Amendments to the revised draft contract were suggested by the defendant’s solicitors and accepted by the plaintiffs.
[22] The final contract dated 6 June 1994 (the “contract”) was signed by the defendant on 31 May 1994 and by the plaintiffs on 4 June 1994. In that contract, Stage 1 and Stage 2, referred to in clause 4.08, both referred to parts of the land being purchased by the defendant which had previously been referred to by the parties as Stage 1. The contract was subject, inter alia, to the defendant’s gaining satisfactory sub- divisional approval. Appended to the contract were the Riverlink concept plan, the Bennett & Bennett report and the May 1994 subdivision plan.
[23] Clause 4 of the contract dealt with the contribution to external roadworks. It provided:
“4 ADJUSTMENT IN RESPECT OF CONTRIBUTION TO EXTERNAL ROAD WORKS
4.01The Purchaser acknowledges that the Purchaser is aware that the Council may, as part of the Approval Conditions,
(for the Purchaser’s subdivision as referred to in special condition 2) impose a requirement of a contribution to external road works on a per lot basis, hereinafter called
“Road Contribution”.
4.02Notwithstanding the provisions of special condition 2 hereof, the Purchaser agrees that the Purchaser will take no objection to such a requirement.
4.03It is further agreed that should such requirement on the part of the Council exceed the sum of $2,000.00 per lot
(relating to the number of lots in the Purchaser’s form of proposed Development) then the amount of such excess over Two Thousand Dollars ($2,000.00) per lot shall at
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completion be deducted from the monies otherwise payable by the Purchaser at completion.
4.04The Purchaser agrees that notwithstanding that the application made to the Council pursuant to special condition 2 hereof shall be the Purchaser’s application, the Vendor may and shall be afforded by the Purchaser the opportunity to make submissions to the Council supporting the relaxation in whole or in part of the Road Contribution. If required the Purchaser shall provide to the Council written consent and authorisation for such submission or submissions by the Vendor relating to the Road Contribution.
4.05In the event that the Vendor is successful in negotiating with the Council concerning a relaxation of the Road Contribution as evidenced by the terms and conditions of the Council’s subdivisional approval for the Land, either in whole or in part, then the amount of the aggregate value of such relaxation shall be a sum payable by the Purchaser to the Vendor. Such amount payable by the Purchaser to the Vendor shall not exceed Two Thousand Dollars
($2,000.00) per lot and where such relaxation is only partial shall be on a per lot basis, the sum obtained by subtracting from the sum of Two Thousand Dollars
($2,000.00), the amount of contribution required to be paid per lot.
4.06The total sum to be paid by the Purchaser to the Vendor as a consequence of such relaxation (if applicable) shall be the amount of saving per lot multiplied by the number of lots in the Purchaser’s proposed Development.
4.07In the event and whilst the Purchaser shall retain the Land and proceed with the Development, the said sum payable pursuant to this special condition by the Purchaser to the Vendor, shall be paid progressively and the amount of saving on a per lot basis shall be paid at the time of the completion by the Purchaser of any sale of any lot in the Development, whether as vacant land or as a house and land package. In the event that at any time the Purchaser shall sell all or part of the Development not as retailer of lots or all of the lots, as the case may be, then the sum payable to the Vendor pursuant to this special condition shall be paid at the time of completion of such sale and the amount payable shall be the saving on a per lot basis multiplied by the number of lots sold at the time.
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4.08The Vendor and the Purchaser acknowledge, as is set out in special condition 2 hereof, that subdivisional approval for the Development will be applied for in two (2) stages, namely Stage 1 and Stage 2. It is acknowledged that it is anticipated that the issue of Road Contribution shall be dealt with the Approval Conditions for Stage 1. It is agreed however that for the purposes of this special condition 4 the Approval Conditions for Stages 1 and 2 shall be read together and any conditions relating to the issue of Road Contribution shall be aggregated for the purposes of giving effect to the earlier sub-condition of this special condition 4.”
[24] The only significant amendment that had been made to this clause of the contract drafted by Mr Rapp on 27 May 1994 was to clause 4.05 which had provided:
“4.05 In the event that the vendor is successful and such anticipated requirement is relaxed, either in whole or in part, then the amount of the aggregate value of such relaxation shall be a sum payable by the Purchaser to the Vendor. Such amount payable by the Purchaser to the Vendor shall not exceed Two Thousand Dollars
($2,000.00) per lot and where such relaxation is only partial shall be on a per lot basis, the sum obtained by subtracting from the sum of Two Thousand Dollars
($2,000.00), the amount of contribution required to be paid per lot.”
[25] The purchaser’s solicitors, Perrin Pointon, had written to the plaintiffs’ solicitors in accordance with the defendant’s instructions on 31 May 1994 suggesting, inter alia, that clause 4.05 be amended so that the “words ‘an [sic] such anticipated requirement is relaxed’should be deleted and the words ‘in negotiating with Council concerning a relaxation of the road contribution as evidenced by the terms and conditions of the Council’s subdivisional approval for the land being acquired by the Purchaser’ inserted in their place”. The words were changed accordingly. Mr Burchill said of this clause in cross-examination that he did not think it contained a mistake. He said, “I would have assumed that as stated in the contract we were to take that initiative and the money was to come to us.” He believed there was no limit on when they might make submissions and that it “was just there for us to have if we were prepared to take the trouble.” His evidence continued, “As far as I was concerned it was a very straightforward issue, that if $2,000 a lot was to be saved, that we were entitled to it. If we failed to make an application to Council, . . . we got it eventually by it coming into the construction.” Mr Borland had the same view of the agreement.
[26] On 27 June 1994, Mr Burchill prepared a letter to Council for signing by Mr Parker, the town planning partner of Burchill Bate Parker, seeking relaxation of the
$2,000.00 contribution per dwelling to the external road works. The basis for the relaxation sought was that Council and Department of Transport had agreed that the intersection constructed for access to Stage 1 could be a permanent rather than a temporary access. The draft letter was not sent on the advice of Mr Parker, who
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took the view that the matter was too complicated for the Council, given the other matters then under consideration by Council with respect to Riverlink, such as rezoning and the establishment of a deed of agreement. Mr Burchill’s intention was to make the submissions once those matters were resolved. It is understandable that he would not want to take any steps which might jeopardise subdivisional approval and so threaten settlement of the contract.
[27] On 7 October 1994, the Council approved the proposed subdivision of the group title area of Riverlink Stage 1 by Minute Number P94.10A.070. Included in the conditions was a requirement to make a number of payments to Council at the date of building approval less any previously paid contributions. One of the contributions required to be paid was:
“An amount towards external road works (currently $2,000 per lot).”
On 27 October 1994, the Council gave approval in similar terms to the residential area of Riverlink Stage 1 in Minute Number P94.10B.106. These conditions were evidence of the Road Contribution required.
[28] Mr Burchill did not do anything about obtaining the relaxation during 1995 as, contrary to Mr Burchill’s expectations, the defendant did nothing to develop Stage 1. Mr Burchill did not feel obliged to hurry as the money was not yet payable pursuant to clause 4.07 of the contract and in any event the benefit would eventually go to the plaintiffs whether the condition was relaxed or the money was held for future road works.
[29] In 1996, Mr Burchill became aware that the Department of Main Roads was imposing a requirement in exactly the same terms as that imposed by Council. On
15 July 1996, the Department of Main Roads wrote to Burchill Bate Parker setting out its requirements for Stage 1A of Riverlink (Lot 1 on RP 880395). They included, in addition to road construction:
“(a) Payment of a monetary contribution calculated by individual assessment based on a transport impact analysis or on a per lot basis.
(b)The contribution on a per lot basis is $184,000 for 92 lots, assessed on the amount of $2,000 per lot as stated in the Council’s conditions of approval.”
[30] The first payment of the $2,000.00 contribution was made on 24 July 1996 when a
$24,000.00 payment was made by the defendant to the Council. A letter was immediately sent by the solicitors for the defendant to the Main Roads Department on 25 July 1996 seeking relaxation of the $2,000.00 contribution. No notice was given to the plaintiffs by the defendant that they were intending to make or had made such an application. On 27 August 1996, the Department of Main Roads wrote to Burchill Partners Pty Ltd (as Burchill Bate Parker became after Mr Burchill’s interest in it ceased) with regard to part of Lot 2 on RP 880395 in the following terms:
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“Queensland Department of Main Roads acknowledges that an unconditional Bank Guarantee for $79,422 has been issued to the Gold Coast City Council, on behalf of the Department for completion of external access roadworks by the Developer before final sealing of all subdivisional plans of the Riverlink Estate.
In addition to the unconditional Bank Guarantee of $79,422, the Department understands that Council has received Transport Infrastructure Contributions of $24,000 to seal subdivision plans for
12 lots only for Stage 1 of the Riverlink Estate.
Queensland Department of Main Roads agrees to the sealing of the subdivision plans for 12 lots only – Stage 1 of the Riverlink Estate, subject to Council transferring the Transport Infrastructure Contributions of $24,000 to Queensland Department of Main Roads
– South Coast Hinterland District.
For future sealing of the subdivision plans on the Riverlink Estate, the applicant is to make payment of the required Transport Infrastructure Contributions on a per lot basis to the Department of Main Roads.
Submission of the survey plan indicating the area of land dedicated to road reserve for the access requirements will be required prior to final sealing of all subdivisional plans of the Riverlink Estate.”
[31] On 26 August 1996, Council granted approval of a 92 lot Special Residential subdivision of Lot 1 on RP 880395, under Delegated Authority Number 352 on
26 August 1996 subject to conditions of subdivision dated 7 October 1997 (Minute
Number C96.0903.005). The defendant also gained subdivisional approval for 46
Special Residential lots on Lot 2 on RP 880395 subject to Council’s subdivision conditions on 28 June 1996 (Minute Number N96.0618.021), and approval for two Group Title Lots on 17 April 1997 under Delegated Authority Number 351. The road works contribution requirement remained in place.
[32] Towards the end of 1996, Mr Burchill took the view that “the Main Road Department levy was illegal.” Apparently this was the view taken by the development industry as a result of two decisions in the Planning and Environment Court, Pacific Exchange Corporation Pty Ltd and Treasure & Associates Pty Ltd v Gold Coast City Council and the State of Queensland2 decided on 29 October 1996 and Arlenby Marketing Pty Ltd v Chief Executive of the Queensland Department Transport3 delivered on 4 November 1996. It matters not for present purposes whether or not the view taken of those cases was correct. What is significant is that the Court ruled against the imposition of a per lot contribution to road works by the Council imposed at the behest of the Department of Transport as a condition of subdivision in these instances and the development industry, of whom Mr Burchill
P & E Appeal No 32 of 1996, Skoien SJDC, 29 October 1996
P & E Appeal No 39 of 1996, Skoien SJDC, 4 November 1996
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was part, took the view from newspaper reports of the decisions that imposing such a levy was generally illegal.
[33] On 19 November 1996, Bennett & Bennett, consulting surveyors for the defendant in the Riverlink Project, wrote to the Department of Main Roads with regard to the
“apparent overlap with both Council and Department of Main Roads requesting a contribution of $2,000 per lot for external road works.” A further $86,000.00 was paid for the contribution to road works on that date.
[34] On 8 July 1997, an internal Council memorandum from the Subdivision Engineer
(North) to the Special Administration Supervisor provided:
“I refer to a $2,000 per lot/unit contribution required from the Riverlink development which we discussed recently. This contribution was required for civil works along the frontage and within the estate and included:
1.Major intersection works on Oxenford – Southport Road for the major entry into the eastern part of the development
(not the currently constructed Anaheim Drive).
2.Roadworks along the remaining frontage along Oxenford – Southport Road to the east and along the future oval area.
3.Cross-road drainage associated with both the above roadworks.
4.Construction of the main entry road mentioned in point 1. above and an internal roundabout.
5. Construction of internal pedestrian footpaths.
The contribution was never questioned at the time as it was an agreed sum to act as security for works being actually constructed and also to ‘spread out the load’of such contributions over the entire development rather than one particular pocket of the development. In hindsight, the actual contribution should have been scrutinised in more detail, however the developers accepted the contribution as part of subdivision and rezoning conditions.
The breakup between future works required by the Department of Main Roads and those required by Council (internal road, roundabout and footpaths) is 90% and 10% respectively ie. $1,800 per unit for DMR related work and $200 per unit for Council related works.
Please note that this contribution is not a contribution required under the Transport Infrastructure Act by the Department of Main Roads and should not be paid into their account. (DMR however should be notified that such a contribution is currently being obtained for the
15
purposes mentioned.) It could be the case in the future that the contribution is paid directly to those who actually do the works as specified. Thus Council should continue requesting the contribution as originally requested and retain all monies until works are about to commence or have been completed, depending on what is agreed to at that time.”
[35] On 25 July 1997, the Department of Main Roads replied to the letter of 25 July
1996 from the defendant’s solicitors saying:
“It is advised that the condition of approval requiring the subject contribution payment was a Council condition. Main Roads Department has not been involved with this condition. As such, the monies have been collected by, and remain with, Gold Coast City Council. An application for review of a decision to collect such monies cannot be processed by this Department with respect to the payment of monies by your client in this instance.”
[36] On 14 October 1997, the defendant’s solicitors wrote to the Council asking for a review of the Council’s approval conditions seeking removal of “the requirement for the payment of any further payments or contributions whatsoever for external road works.” They also requested a refund of the $164,000.00 which had already been paid for this contribution. This was done without any notice to the plaintiffs on their representatives. The Council then wrote to the Department of Transport on
27 October 1997 seeking confirmation that the Department did not require the imposition of $2,000.00 per lot. That was confirmed in writing by the Department of Main Roads on 1 December 1997.
[37] The defendant’s solicitors repeated its written request to the Council on
4 November 1997 and threatened to commence proceedings if its demands were not met. It appears that the Council sought the advice of Burchill Partners Pty Ltd. Upon receipt of a letter from Burchill Partners Pty Ltd on 13 November 1997 and another request from the defendant’s solicitors on 28 November 1997 for a refund of $1,800.00 per lot and a future liability of $200.00 per lot, and the confirmation from Main Roads on 1 December 1997, the Council acceded to the defendant’s request.
[38] Before a submission was made to Council for relaxation of the external road works contribution by Mr Burchill, he discovered that relaxation had been obtained on
19 December 1997 as a result of submissions by the defendant and that the defendant intended to keep the benefit, which was $1,800.00 per dwelling. Before then, $164,000.00 had been paid and retained by the Council in trust. The Council paid $147,600.00 to the defendant as a result of its decision on 19 December 1997. The decision of the Council was in the following terms:
“That the subdivision conditions that refer to the contribution of
$2,000.00 per lot for external roadworks previously imposed upon the Riverlink Gardens and Riverlink Grove Estates (Minute Nos C96.0903.005, N96.0618.021 & N97.0902.011 & Delegated Authority No. 352, 26 August 1996 and No. 351, 17 April 1997) be deleted and a new condition be added to each of the above mentioned subdivision approvals to read:
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AThe payment to Council of $200.00 per lot for roadworks to oval frontage prior to the sealing of survey plans.
B The applicant is to receive a reimbursement of $1,800.00
per lot for any contributions paid to date in relation to the
$2,000.00 per lot for external works contribution, and no credits shall be given to this estate as a result of this amendment.”
[39] The Council noted in its reasoning that the defendant had constructed its own road works at a cost of $386,000.00 and that the defendant’s land would not have access to the main intersection which had not yet been built. However, as previously set out in these reasons, the cost estimates had always included the cost of these road works in addition to the $2,000.00 contribution for the future main intersection. Mr Burchill had always been of the view that one of the reasons that this condition might be relaxed was because the defendant did not gain any benefit. Mr Burchill’s view that he would have been successful in obtaining a relaxation had he applied was not challenged and is a view that I accept. His expertise in town planning matters, also unchallenged, supports his view. The Council was unaware of the terms of the contract between the plaintiffs and the defendant.
[40] Since that time further dwellings have been constructed. The parties are agreed that the value of the relaxation has been $340,200.00. In addition, the parties have agreed that the amount of interest claimable4 is $98,716.12 to 14 March 2001 with
$104.85 per day (calculated at 11.25%5 on $340,200.00) thereafter.
[41] The plaintiffs’ claim is put in three alternative ways: firstly, the plaintiffs contend that on a proper construction of the contract for sale of land, the money is due in the events that have happened since the signing of the contract; secondly, the plaintiff seek rectification of clause 4.05 of the contract and payment in accordance with the rectified contract; and thirdly, the plaintiffs claim damages for breach of contract.
Money Claim
[42] The plaintiffs have properly conceded that on a proper construction of clause 4.05 of the contract, the circumstances entitling them to payment under the contract have not arisen. Clause 4.05 provided for payment from the defendant to the purchasers,
“[i]n the event that the Vendor is successful in negotiating with the Council concerning a relaxation of the Road Contribution … then the amount of the aggregate value of such relaxation shall be a sum payable by the purchasers to the Vendor.”
Interest has been calculated from the date of the Council refund on 19 December 1997 or the date of settlement of the lots which ever is the later in each case.
Pursuant to Item O of the contract referred to in paragraph 9 of the Further Amended Statement of
Claim.
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[43] However, as the relaxation by the Council was not made upon the plaintiffs’ application, the vendor was not successful in negotiating with the Council concerning such relaxation. The occasion does not arise therefore under the contract for the payment of the aggregate value of the relaxation by the defendant/purchaser to the plaintiffs as vendor.
Rectification
[44] The plaintiffs also claimed rectification of clause 4.05 of the contract so that it would read as follows:
“In the event that the Council, in its initial approval or by way of
amendment thereof, imposes no requirement for contribution to road
works, or a contribution less than $2000, or otherwise in the event
that the vendor is successful in negotiating with Council concerning
a relaxation of the road contribution as evidenced by the terms and conditions of the Council’s subdivisional approval for the land, either in whole or in part, then the amount of the aggregate value of such relaxation shall be a sum payable by the purchaser to the vendor… ”
The underlined words would be added if the plaintiffs were successful in their rectification case.
[45] At one time, the parties had to show that there was an antecedent concluded contract before rectification would be ordered. That is no longer necessary.6 Now the plaintiff must show that the parties made a mistake in the expression of their common intention at the time of entering into the contract so that the contract does not embody that intention. As Brennan J held in Pukallus v Cameron:7
“… it is necessary to show a concurrent intention of the parties, existing at the time when the written contract is executed, as to a term which would have been embodied in the contract if the parties had not made a mistake in expressing their intention.”
Proof of such an intention is necessary to “displace the hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties.”8 The plaintiff is required to show “exactly and precisely”9 the terms in which the contract ought to be to give effect to the expressed common intention of the parties.
Slee v Warke (1949) 86 CLR 271 at 280; Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128
CLR 336
(1982) 180 CLR 447 at 456
Maralinga Pty Ltd v Major Enterprises Pty Ltd (supra) at 351
Fowler v Fowler (1859) 4 De G & J 250 at 265 [45 ER 97 at 103]; Australian Gypsum Ltd and Australian Plaster Co Ltd v Hume Steel Ltd (1930) 45 CLR 54 at 64; Maralinga (supra) at 349; Pukallus v Cameron (supra) at 452, 457
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[46] In this case, as the plaintiffs submitted, by the time the contract was signed, the parties made a distinction between who would get the benefit of the relaxation and how the relaxation would be achieved. On neither matter, however, was there a mistake in the contract. The parties both agreed that the plaintiffs would get the benefit of any relaxation whenever that was achieved and secondly, that the plaintiffs as vendors would make the application for relaxation. The precise terms of words used had been suggested by the defendant’s solicitor and the words did, in fact, as I have found, represent the parties’ intention at the time of signing the contract. As Mr Burchill said in evidence, “… as stated in the contract we were to take that initiative and the money was to come to us.” The linkage between the two was not unintended. There is therefore no ground on which rectification of the contract could be ordered.
Damages
[47] The third basis of the plaintiffs’ claim is damages for breach of contract. In this they should be successful. The intention of the parties at the time of making the contract, as expressed in the contract, was that the plaintiffs would have the opportunity to apply for the relaxation and that they would have the benefit of the relaxation made on their application whenever it occurred. Clauses 4.04 and 4.05 provide that it was the plaintiffs as vendor who would make the application for relaxation and there was no express time limit on when they might make that application. This is not surprising in view of the fact that the moneys for Road Contribution would not become payable until the sale of each lot pursuant to clause
4.07 of the contract.
[48] The Road Contribution was to be “evidenced by the terms and conditions of the Council’s subdivisional approval for the land” as provided by clause 4.05 of the contract. It can be seen by clause 4.01 that it was not yet certain whether the Council would impose a condition in the Approval Conditions requiring a contribution to external road works on a per lot basis. If such a condition were made in the Approval Conditions it would be called the “Road Contribution”. The Approval Conditions would provide evidence of the “Road Contribution”.
[49] The defendant submitted that there was a limit on the time when such a submission could be made. The submission had to be made and relaxation achieved by the time the approval conditions were given. The contract was conditional on the defendants gaining sub-divisional approval from the Council on terms that were satisfactory to it. However, the defendant expressly agreed, in clause 4.02, that it would take no objection to any requirement in the Approval Conditions for a Road Contribution. Clause 4.03 provided that if the Road Contribution required payment of more than
$2,000.00 per lot then the excess would be deducted from the monies otherwise payable by the purchaser at completion.
[50] In clauses 4.05 and 4.06, the defendant agreed to pay to the plaintiffs the aggregate value per lot of any relaxation multiplied by the number of lots in the defendant’s proposed development. Clause 4.07 set out that the payment would be made progressively whether at the completion of the sale of the individual lots or of the lots as a group. It is significant that payment was to be made progressively because it suggests that the Road Contribution which would be evidenced by the Approval Conditions might be relaxed at any time before completion of sale of all of the lots
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by the defendant. It differed from the time when any excess in the road contribution over $2,000.00 might be paid.
[51] The defendant submitted that in clause 4.05, the phrase “as evidenced by the terms and conditions of the Council’s subdivisional approval for the Land” qualifies the word “relaxation”, rather than the words “Road Contribution” which immediately precede it. The phrase is, however, a participial phrase used adjectively10 to qualify the noun “Contribution” which it immediately follows rather than the word
“relaxation”. On a plain reading of the clause, it is the Road Contribution which is to be evidenced in the terms and conditions of the sub-divisional approval. This meaning is semantically as well as grammatically correct. The Road Contribution would be evidenced by those terms and conditions because it would be a term or condition whereas a relaxation would not, ex hypothesi, be a term or condition.
[52] If, contrary to this view, the clause of the contract is ambiguous, then the rest of the contract supports this interpretation, as do the extrinsic facts in the sense used by Mason J in Codelfa Construction Pty Ltd v State Rail Authority,11 ie “the objective framework of facts within which the contract came into existence, and . . . the parties’presumed intention in this setting.” This evidence shows that the plaintiffs, as vendor, would get the benefit of the relaxation whenever it occurred and that the payment of that benefit would be made progressively after settlement of the contract between the plaintiffs and the defendant. There is no extrinsic evidence which suggests that the objective intention of the parties was that the plaintiffs were restricted to making application for relaxation before settlement and that the
“relaxation” must be evidenced in the approval conditions given prior to settlement. There was no express or implied agreement that the plaintiffs would be restricted to seeking and obtaining relaxation of the Road Contribution requirement prior to the Approval Conditions being imposed.
[53] In clause 4.04, the defendant expressly agreed that the plaintiffs might, and should be afforded by the defendant, the opportunity to make submissions to the Council supporting the relaxation, in whole or in part, of the Road Contribution. The express promise made in the contract, as Dixon J held in Shepherd v Felt and Textiles of Australia Ltd,12 “necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose.” This is an implied term which is a legal incident of this type of contractual arrangement.13 The plaintiffs would not be able to have the benefit of this term of the contract if the defendant made application for relaxation and so obtained the financial benefit of relaxation which the parties clearly intended by clause 4.05 should go to the plaintiffs.
10 See New South Wales v The Commonwealth (1990) 169 CLR 482 at 498
11 (1982) 149 CLR 337 at 352
12 (1931) 45 CLR 359 at 378
13 Liverpool City Council v Irwin [1977] AC 239; Codelfa Construction Pty Ltd v State Rail Authority of NSW (supra) at 345.
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[54] In these circumstances, there was an implied term that the defendant would do all things necessary to enable the plaintiffs to have the benefit of the contract. As Griffith CJ held in Butt v McDonald:14
“It is a general rule applicable to every contract that each party agrees, by implication, to do all such things as are necessary on his
[or her] part to enable the other party to have the benefit of the contract.”
Implication of this term necessarily implies that the defendant would not do anything that would impede the plaintiffs’ obtaining the benefit of the contract.15
As Griffith CJ explained in Marshall v The Colonial Bank of Australia:16
“Now, all contractual relations impose upon the parties a mutual obligation that neither shall do anything which is calculated to hamper the other in the performance of the contract on his [or her] part. This rule was recently expressed by Vaughan – Williams, LJ, as follows:-
‘In this contract, as in every other, there is an implied contract by each party that he will not do anything to prevent the other party from performing the contract. . . I agree that generally such a term is by law imported into every contract’[17].”
[55] It was not a matter of concern to the defendant when the plaintiffs made an application because under the contract the road contribution of $2,000.00 per lot would have to be paid by the defendant either to the Council, or, if it was relaxed in whole or in part, to the plaintiffs. It was not a payment which it had to make at the time of settlement of its contract with the plaintiffs. The timing of its relaxation was of no moment to the defendant and so it is unsuprising that no time limit is made in the contract for the plaintiffs to apply for relaxation of the Road Contribution condition. Even the plaintiffs would not have the benefit of a relaxation of road contribution condition until the settlement of lots sold by the defendant. A relaxation of the condition would not affect the purchase price at settlement, but rather the identity of who would receive the $2,000.00 road contribution once it became payable. The only term which might be implied is that the plaintiffs make their application within a reasonable time. Yet the application for relaxation was made by the defendant at a time when it was still reasonable to expect that the plaintiffs would make an application for relaxation.
14 (1896) 7 QLJ 68 at 70-71; see also Mackay v Dick (1861) 6 App Cas 251 at 263; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 659; Fitzgerald v FJ Leonhardt Pty Ltd (1997) 189 CLR 215 at 219.
15 Australian Course Grains Pool Pty Ltd v Barley Marketing Board [1989] 1 QR 499 at 507
16 (1904) 1 CLR 632 at 647
17 Barque Quilpué Ltd v Brown [1904] 2 KB 264 at 271
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[56] As the plaintiffs submitted, the defendant breached the terms of the agreement by making application to the Council for the relaxation. The plaintiffs thereby suffered damages, in that they were prevented from successfully negotiating with the Council for the relaxation themselves and thereby bringing the relaxation within the scope of clause 4.05 entitling them to payment. The relaxation would have been achieved whether made by plaintiffs or the defendant. The only reason which prevented the plaintiffs’ successful application for relaxation was the successful application by the defendant.
Conclusion
[57] The plaintiffs should be awarded damages for breach of contract in the sum of
$441,747.07, being $340,200.00 plus interest of $98,716.12 until 14 March 2001
and $2,830.95 until the date of judgment.
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