Gorman and Sons Pty Ltd v Earnshaw
[2000] WASC 108
•27 MARCH 2000
GORMAN AND SONS PTY LTD -v- EARNSHAW & ANOR [2000] WASC 108
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 108 | |
| Case No: | CIV:1732/1995 | 27 MARCH 2000 | |
| Coram: | TEMPLEMAN J | 27/03/00 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff succeeded on the question of liability | ||
| PDF Version |
| Parties: | GORMAN AND SONS PTY LTD DENNIS CHARLES EARNSHAW RONALD ROSS EARNSHAW |
Catchwords: | Contracts Construction Interpretation of contracts Contract for the sale of a fixture separate from the land, plaintiff as purchaser, first defendant as vendor Dispute over ownership of shed arising from a term of the contract of sale as to time limit for removal of shed Whether there was a time limit within which shed had to be removed Whether property in shed had passed to second defendant, the current owner of the land |
Legislation: | Nil |
Case References: | Abcos v Jones (1997) 150 ALR 488 Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221 Standard Portland Cement Co v Good (1983) 57 ALJR 151 Stanford v Bayne [1923] VLR 283 Trident General Insurance Co v McNiece Bros Pty Ltd (1987) 165 CLR 107 Australian Fast Foods Pty Ltd v Hethersett Pty Ltd, unreported; SCt of WA (Owen J); Library No 930084; 23 February 1993 Baumgartner v Baumgartner (1987) 164 CLR 137 Guimelli v Giumelle [1999] HCA 10 Hick v Raymond [1893] AC 22 Mills v Stohman (1967) 116 CLR 61 Muschinski v Dodds (1985) 160 CLR 583 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1 The Commonwealth v Verwayen (1990) 170 CLR 394 Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1998) 165 CLR 107 Vanstone v Malasor Pty Ltd (1988) 50 SASR 110 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
DENNIS CHARLES EARNSHAW
First Defendant
RONALD ROSS EARNSHAW
Second Defendant
Catchwords:
Contracts - Construction - Interpretation of contracts - Contract for the sale of a fixture separate from the land, plaintiff as purchaser, first defendant as vendor - Dispute over ownership of shed arising from a term of the contract of sale as to time limit for removal of shed - Whether there was a time limit within which shed had to be removed - Whether property in shed had passed to second defendant, the current owner of the land
Legislation:
Nil
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Result:
Plaintiff succeeded on the question of liability
Representation:
Counsel:
Plaintiff : Mr K S Pratt
First Defendant : Mr M S Macdonald
Second Defendant : Mr M S Macdonald
Solicitors:
Plaintiff : Fiocco Hopkins Nash
First Defendant : Macdonald Rudder
Second Defendant : Macdonald Rudder
Case(s) referred to in judgment(s):
Abcos v Jones (1997) 150 ALR 488
Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221
Standard Portland Cement Co v Good (1983) 57 ALJR 151
Stanford v Bayne [1923] VLR 283
Trident General Insurance Co v McNiece Bros Pty Ltd (1987) 165 CLR 107
Case(s) also cited:
Australian Fast Foods Pty Ltd v Hethersett Pty Ltd, unreported; SCt of WA (Owen J); Library No 930084; 23 February 1993
Baumgartner v Baumgartner (1987) 164 CLR 137
Guimelli v Giumelle [1999] HCA 10
Hick v Raymond [1893] AC 22
Mills v Stohman (1967) 116 CLR 61
Muschinski v Dodds (1985) 160 CLR 583
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Reid v Moreland Timber Co Pty Ltd (1946) 73 CLR 1
The Commonwealth v Verwayen (1990) 170 CLR 394
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1998) 165 CLR 107
Vanstone v Malasor Pty Ltd (1988) 50 SASR 110
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Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
(Page 4)
1 TEMPLEMAN J: This is an unusual and in many ways an unfortunate action. It is unusual because of the subject matter which is a very substantial shed, some 96 metres by 36 metres, located on a farm known as Manna Downs, at Darkan. There is a dispute over the ownership of that shed between the plaintiff, a family company which entered into a contract to purchase it from the then owner of the property, who is the first defendant, and his brother, the second defendant, who is now the owner of the property.
2 The action is unfortunate because it is a dispute between people who are, in my view, on both sides, perfectly genuine people whose integrity is not in doubt. But yet, because the contract was not written or fully written and because it was made some 11 years ago, there is a perhaps understandable divergence of evidence as to precisely what was agreed.
3 The story starts in 1988. The property Manna Downs was then owned by the first defendant, Mr Dennis Charles Earnshaw. He carried on a farming business on the property. He had purchased the shed and had it erected for the purpose producing high-quality wool from merino sheep. However, he ran into financial difficulties. As he said, he was under some pressure from the bank because of that. Although there was no mortgagee sale pending, he realised that he would have to sell the property in order to overcome his financial difficulties.
4 The course which he followed, apparently on advice from the bank, was to sell the shed separately from the farm. He consulted his solicitors in relation to that course and was advised that the best way to achieve that objective was to ensure that the shed was sold and taken off the property before the property itself was transferred to the purchaser. That I think was very sound advice but, regrettably, it was not advice which Mr Earnshaw followed in the event.
5 Mr Earnshaw instructed Elders to act for him in the sale of the shed. Elders drew up conditions of sale which were put out to tender. Those particulars included a condition 20, which was headed "Demolition and Removal". I should say that what was to be sold with the shed were a number of lots which were in substance the contents of the shed. As I have said, the shed was used by Mr Earnshaw for sheep farming. It contained within it plant and equipment which had been acquired for that purpose.
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6 The conditions relating to demolition and approval were inserted as a result of the advice given to Mr Earnshaw by his solicitors. Condition 20A was in the following terms:
"The purchaser of lot 1 covenants that he will remove the lot by 17 March 1989".
7 The clause then went on to deal with other lots. However, it is common ground that all the other lots are subsumed in lot 1, which is ultimately the lot which the plaintiff purchaser contracted for.
8 The sale of the shed went out to tender towards the end of 1988. The plaintiffs then submitted a tender. The plaintiff is Gorman and Sons Pty Ltd which is the company owned by a farming family, the Gorman family, who are in Albany, some 350 kilometres away from Darkan.
9 The Gormans, through the plaintiff, tendered in the sum of $93,000 at the end of 1988 but their tender was not accepted and their cheque was returned to them.
10 As I have said, Elders was the agent instructed by the first defendant to sell the shed. The Elders manager in those days was Mr David Sinclair Jones who is known as Dudley Jones. He was the manager of Elders Real Estate in Western Australia, a position from which he retired in 1992. Elders' local agent at the time was Mr Michael Dew. He was located in Darkan. However, it was Mr Jones who had the initial contact with the plaintiff after the offer of $93,000 had been declined in 1988.
11 The contact Mr Jones had was by telephone to one of the Gorman sons, Mr Anthony Gorman, known as Tony Gorman. Mr Gorman's evidence was that he had a telephone conversation with Mr Jones on about 23 or 24 February 1989. The substance of the conversation was that the shed was once again on offer and Mr Jones was seeking an increased offer from the Gormans.
12 Mr Gorman said in his evidence that Mr Jones rang up to ask if they were still interested in purchasing the shed. Mr Gorman said they were. However, Mr Gorman knew from the original tender documents that lot 1 would have to be removed by 17 March 1989. This conversation was only two weeks or so before that date. Clearly, because the shed was a very substantial construction, it would not have been practicable to remove the shed by 17 March. Mr Gorman then said, in his evidence, that he raised with Mr Jones the point about the removal date and he told him that if the plaintiff was to proceed, it did not want to have a time limit.
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13 Mr Gorman's evidence, which I accept, was that he told Mr Jones, "We did not want a time limit in which to remove the shed." Mr Gorman said he could not remember Mr Jones' exact words in response, but the effect was that he, Mr Jones, could not see a problem with that.
14 As I say, I accept Mr Gorman's evidence. It is consistent with the evidence given by Mr Jones, whose recollection was not, I think, as good as Mr Gorman's. Mr Jones said he recalled there was no date tied to the dismantling of the shed, as he put it. He said that the Gormans, for reasons known best to themselves, wanted a later dismantling and delivery date of the shed.
15 Mr Jones would not of course have been authorised, and there is no evidence that he was authorised, specifically to agree to an open-ended delivery date or indeed any particular delivery date. It was a matter about which he would have had to take instructions. Mr Jones said that in broad terms, he recalled obtaining instructions from Mr Earnshaw, the first defendant, to the effect that a later delivery would be in order.
16 However, Mr Earnshaw, when it was put to him in cross-examination that the offer of $100,000 came with a condition that there would no time limit for the removal of the shed, said, "definitely not."
17 Indeed, he said that he had no discussions to that effect with Mr Jones at all. To the best of his recollection, he said the only time that there was talk about extension of the time for removal of the shed was at a meeting prior to signing the shed agreement, as I shall call it, or after or during the sale. I shall refer to that meeting in a moment. It took place on 4 March 1989.
18 I think that Mr Earnshaw is mistaken. I accept, as I have said, the evidence of Mr Gorman. I accept also that Mr Jones did take up that matter with Mr Earnshaw. I do not accept therefore that there were no discussions between Mr Earnshaw and Mr Jones. I am satisfied that whatever Mr Earnshaw said to Mr Jones when he took instructions, as he did between the discussion which Mr Earnshaw had with Mr Tony Gorman on about 27 or 28 February and the meeting on 4 March, nothing was said to any of the Mr Gormans to the effect that an open-ended contract would not be acceptable.
19 The next event is the meeting of 4 March 1989 on which the agreement was made for the sale of the shed by Mr Earnshaw to the plaintiff. The meeting took place at Manna Downs. It was attended by Mr Gorman senior, who has not given evidence (and I shall refer to that in
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- a moment) and by another of his sons, Mr Andrew Gorman. It was also attended by Mr Dew who, as I have said, was the local Elders agent and by Mr Earnshaw, the first defendant.
20 Mr Earnshaw said, and I accept, that he saw Mr Gorman senior and junior arrive in a car together with Mr Dew. He went to the shed and met them: and it was there that the agreement was signed.
21 The agreement is in the form of the tender document. There are two versions of that document in evidence. Each one contains some alterations which have been initialled by Mr Andrew Gorman and by Mr Dew. Each document is signed at the end by Mr Earnshaw, the first defendant, whose signature was witnessed by Mr Dew.
22 The documents are not identical in the sense that they do not each contain the same alterations: and not all the alterations are initialled in precisely the same way. However, I am satisfied that the two documents were signed in the shed on 4 March 1989 in the following way: I find that alterations were made to the documents as the parties worked through it so as to ensure that it reflected their true intention.
23 I should say that it is Mr Earnshaw's evidence that no alterations were made to the document on that day and that the only signatures which appeared on the two documents were his own and, I think, those of the two Mr Gormans appearing at the end of the document and Mr Dew's signature as a witness.
24 I have to decide this case on the balance of probabilities which is the basis on which I find all the material facts. If Mr Earnshaw is right then there is no explanation for the way in which the alterations were made to the documents and the initials of Mr Gorman and Mr Dew appended to them. It seems to me, with all respect to Mr Earnshaw, to be wholly improbable that the parties would have met on 4 March 1989 in the shed which was to be the subject of the sale, to reach agreement as to the conditions of sale and not then make the various amendments to the documents which gave effect to the agreement.
25 I note that Mr Dew did not give evidence. His absence is explained by the fact that he attended the Court under subpoena from the plaintiff who did not call him to give evidence. However, he could have been called by the first defendant, to support his evidence if it were the case that no amendments were made to the document on that day. But he was not called and gave, therefore, no such evidence.
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26 Mr Gorman senior did not give evidence either, he, as I have said, being present when the document was completed and signed. An explanation has been given for his absence, both by Mr Tony Gorman and by Mr Andrew Gorman. The explanation is that Mr Gorman senior is 80 years old and has had, I think, two strokes and three heart attacks (or the other way around) and is very frail.
27 I appreciate that there is no medical evidence to that effect. However, I believe both the Gorman sons in their description of their father: and I am satisfied that that is a reasonable explanation for his non-attendance as a witness. In those circumstances I do not think it appropriate to draw any adverse inference from the fact that he did not give evidence.
28 The tender documents, as I have said, contained, in their original form, cl 20A which related to demolition and removal. In each of those documents signed on the day, as I have found them to be, cl 20A has been struck out by four diagonal lines. In one document the striking out was initialled by Mr Dew, in the other initialled by Mr Dew and by Mr Andrew Gorman. As I have said, not all of the amendments are initialled by both representatives, but I see nothing sinister in that. There are a number of amendments. I think that in the process of passing the document back and forth for amendment and initialling some simply got overlooked. The question is, therefore, what is the significance of the deletion of cl 20A?
29 Mr Andrew Gorman gave evidence about that. He said that during the course of the meeting he made it clear that the plaintiff's offer was directly related to their ability to be able to remove the shed when it was suitable to them to do so: that is, when they were ready to re-erect rather than dismantling the shed and taking it down for storage.
30 Mr Gorman said his recollection was that he discussed that with Mr Dennis Earnshaw himself. He thought it was said to Mr Earnshaw, because he recalled Mr Earnshaw saying during that conversation, that he did not want only part of the structure removed; and that once demolition had been started, he wanted the whole of the structure removed in one go.
31 Mr Andrew Gorman admitted in a witness statement that he did not have a recollection of specific details of the conversation which took place on that day. That was explored with him in cross-examination when he said that he meant that he had not, for example, any recollection of what they had for lunch on that day. However, he was quite clear in his
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- evidence about that conversation with Mr Earnshaw. I am satisfied that that conversation did take place and I accept Mr Gorman's evidence.
32 It was Mr Earnshaw's evidence that he was requested by Mr Gorman (and he thought it was Mr Gorman senior) that there be an extension of time for removal of the shed of three months. He denied that there was any agreement between him and the Gormans that the time for removal of the shed was unlimited. Mr Earnshaw said he agreed to a three month extension.
33 It seems to me unlikely that that was the agreement. If it had been, then it would have been very easy to amend cl 20A; not by striking it out, but by simply inserting the date 4 June 1989 in place of 17 March 1989.
34 That was not done; and Mr Earnshaw was not able to explain why it was not done. I accept, of course, that it would have been equally possible to have written in a clause to the effect that there was no time limit for removal of the shed; and that that was not done. However, those involved on the day were not legal draftsmen and I think that the formulation of an unlimited time clause may have given more difficulty It certainly would have given more difficulty than simply inserting one date in place of another.
35 I think that, on the balance of probabilities, the fact that cl 20 was deleted in its entirety reflected the intention of the parties and an agreement between the parties that the time for removal of the shed was to be unlimited.
36 That is consistent with the evidence of both Mr Tony Gorman and Mr Andrew Gorman that the plaintiffs did not want to have to remove the shed until they had a particular use for it. And it is consistent, as I have said, with the evidence about the discussion between Mr Tony Gorman and Mr Jones and my finding that there was nothing said to the Gormans after that discussion to the effect that no such unlimited time would be allowed.
37 I think that the fact that no formal response was received from Mr Jones as a result of Mr Tony Gorman's telephone conversation on 27 or 28 February was the reason for the matter being raised when the meeting took place on 4 March. I think the Gormans raised it then because that was the only basis on which they were prepared to increase their offer from $93,000 to $100,000. And they wanted to be sure that they would have an unlimited time in which to remove the shed.
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38 That, I find, was agreed by Mr Dennis Earnshaw: and that was then the contract between them. Mr Earnshaw, as I have said, was under some pressure, as he quite frankly accepted in the course of his evidence. The Gormans' offer of $100,000 was, he said, some $20,000 or so more than the next highest offer. The Gormans were there with their chequebook ready to pay $100,000 which Mr Earnshaw needed somewhat urgently I think that in those circumstance he was prepared to accept the unlimited term in order to ensure that he received the money on that date, which indeed he did.
39 Before the contract for the sale of the shed was entered into on 4 March, Mr Earnshaw had entered into a contract to sell the Manna Downs property to his brother Donald Ross Earnshaw who is the second defendant. The contract was in the form of an offer and acceptance dated 19 February 1989.
40 The standard form has been completed in Mr Dennis Earnshaw's writing. In cl (v), relating to chattels including plant and equipment, Mr Earnshaw wrote:
"Land, house, plus two by 500-tonne silos excluding 36-metre by 96-metre sheep shed, plus 30-tonne silo."
41 The offer and acceptance was subject to finance which had to be obtained by 3 April 1989. Mr Dennis Earnshaw, in his evidence, referred to the offer and acceptance as an option because, as he said, his brother did have to find finance in order to proceed. However, in legal terms the document was not an option. It was a binding contract, subject to finance. The contract for the sale of the shed was therefore signed something like two weeks after the date on which Mr Dennis Earnshaw contracted to sell Manna Downs to his brother and, as I have said, it excluded the shed.
42 It was Mr Dennis Earnshaw's evidence that he, having reached agreement with the Gormans, went to his brother and told him, really as a matter of courtesy, as he put it, because he did not regard his brother as having any more than an option at the time, that he had extended the time for removal of the shed by three months. He said that his brother, Donald Ross Earnshaw, who is known as Ross Earnshaw, had no objection to that.
43 Mr Ross Earnshaw, as I will refer to him, said in his evidence that he recalled a conversation of that kind with Dennis in which a specific time was mentioned to him as being the time limited for removal of the shed, although he could not now recall what time that was.
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44 It is not necessary for me to make any finding as to what passed between Dennis and Ross Earnshaw about the time limit. It may be, for example, that although Dennis had agreed an unlimited time with the plaintiffs, he told his brother that there was a three month period. Or it may be that Dennis thought that perhaps three months would be the kind of time that the plaintiff would require and said something to that effect to Ross. I make no finding. It is not necessarily for me to do so. There is no contract between the plaintiffs and the second defendant, Ross Earnshaw, relating to the removal of the shed. The contract is only between the plaintiff and the first defendant.
45 Settlement of the contract for the sale of Manna Downs between the Earnshaw brothers took place in June 1999. Ross Earnshaw was registered as proprietor on 14 June. Thereafter the plaintiffs came to Manna Downs from time to time to remove the contents of the shed and a substantial part, if not all, of the flooring in the shed which appears to have been a good quality wooden floor which was recycled, as it were, and used for other purposes. It appears that the substantial work which was done of that nature was completed in 1990 or 1991. During that period the plaintiff kept some form of caravan on the farm in which they camped, I think, while carrying out removal work and kept their tools when they were not present. The caravan was removed sometime in, I think, 1991 and no further work was carried out thereafter.
46 It was Mr Andrew Gorman's evidence, which I accept, that he did from time to time call in on the property to see Mr Ross Earnshaw, the second defendant. He did so to maintain some kind of presence and to inform Mr Earnshaw that the plaintiffs were still around, as he put it. Before each visit by the plaintiff or their representatives, one of the Gorman sons would telephone to Mr Ross Earnshaw to say that they would be coming and that they would be wanting to carry out work. That was done, Mr Gorman said, as a matter of courtesy rather than to obtain permission, because the plaintiff was of the view that no permission was required because of the terms of the contract between it and Mr Dennis Earnshaw.
47 In 1994 there was apparently some meeting between members of the Gorman family at which Andrew Gorman put up a proposal concerning the shed. The proposal was that he be permitted to remove the shed and have it reconstructed or re-erected on an industrial site in Midvale near Midland for which purpose he would propose to pay the family the $100,000 which they had paid for the shed and then make out of it whatever profit he could.
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48 It was submitted in the course of submission by counsel for the defendants that those arrangements constituted an assignment of the agreement by the plaintiff to Andrew Gorman with the result that the plaintiff no longer had standing to sue. I do not accept that submission. The evidence of Mr Tony Gorman at page 41 of the transcript and Mr Andrew Gorman at page 63 does not persuade me that there was anything other than a proposal which, as Mr Andrew Gorman said, in general terms the family was happy with.
49 In any event, the proposal seems to have been subject to the availability of the shed. But very shortly after that, in circumstances to which I shall now refer, it became apparent that the shed was not available. However, my view is that there was no assignment of the contract to Andrew Gorman. There was merely a proposal within the family which was never given any legal clothing.
50 Following the family meeting, Mr Andrew Gorman decided to visit Manna Downs for the purpose of taking some photographs of the shed for the purpose which he had in mind: that is, his removing it and re-erecting it somewhere in the Perth metropolitan area.
51 As was his practice, he telephoned in advance and then called in at the property, this being, I think the evidence was, in November of 1994.
52 Mr Ross Earnshaw on that occasion told him in substance that the plaintiff had had long enough time in which to remove the shed and that he would not permit any further access to Manna Downs for that purpose.
53 That attitude was maintained subsequently. A letter was written by Mr Gorman senior on 20 December 1994 to Mr Ross Earnshaw, seeking permission to enter the property between then and the end of February to remove the shed. There was a response on 9 January 1995 from Mr Earnshaw, saying that the plaintiff had no permission whatsoever to enter the property.
54 The action was commenced sometime in 1995. For reasons which have not been explained the matter has now, some nearly 5 years later, come to trial.
55 What is the legal analysis of the facts as I have found them to be? The defendants' case is a simple one; that the contract between the plaintiff and the first defendant for the removal of the shed required the removal either within three months of 4 March 1989 or within a reasonable time thereafter.
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56 On any view, it is submitted, a reasonable time must now have elapsed, with the result that the plaintiff's contractual right to remove the shed has come to an end. It is submitted that as a result, the second defendant was within his rights in refusing entry to the plaintiff for the purpose of removing the shed.
57 That defence cannot stand in the light of my finding that the contract was for the removal of the shed without any time limit being imposed. The result is therefore that as between the plaintiff and the first defendant, the plaintiff is entitled at any time to enter on the land and remove the shed.
58 That is subject to the qualification which I think also became a term of the contract, that the shed could not be removed piecemeal: but that once removal had commenced, that job must be completed in one exercise.
59 That is, of course, the position as between the plaintiff and the first defendant: but the first defendant no longer owns the property in which the shed is located.
60 What is the position as between the first and the second defendant? It will be recalled that the second defendant took a transfer of the property from which the shed had been excluded. The shed is a fixture. It is clear from the photographs which are in evidence that it is a substantial structure which is set in concrete. That is to say, the skeleton of the shed, the framework, is set in concrete and is therefore very much a fixture.
61 That being so, the shed forms part of the land until it is removed. The result is that the legal title to the shed passed to the second defendant on 14 June 1989 when he became the registered proprietor. However, he is not the beneficial owner of the shed because it was excluded from the contract. That is something which he acknowledges. Indeed in his defence he pleads expressly that he did not object to the plaintiff entering the land to demolish and remove the shed because he knew that the first defendant had sold the shed and that someone would be entering the land to demolish and remove it.
62 The position as between the two defendants is, I think, very similar to that which arose in a case decided by the Privy Council, Standard Portland Cement Co v Good (1983) 57 ALJR 151. In that case there was a contract for the sale of in industrial site on which stood a cement mill known as the "O Mill". It was a substantial cement mill with weighed 100 tons and it was a fixture. The shed is therefore analogous to the O Mill.
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63 As in the present case, it was the intention in the Standard Portland Cement case that the O Mill should be excluded from the sale and that it should be removed, albeit by the vendor. There was a special condition of the contract which related to the removal. That was special condition 9. As a matter of construction of the contract, it was held that the O Mill had to be removed by a certain date and that was not done.
64 The question was whether the vendor, who had excluded the O Mill from the sale, was entitled to come into the property after the date for removal had expired, and to remove it. The purchaser, a Mr Good, took the view that the mill had become his because it had not been removed within the contractual period.
65 The opinion of the Privy Council was given by Lord Templeman. He referred to the judgment of the trial Judge, Waddell J, and said this:
"In his judgment Waddell J rightly came to the conclusion: 'It is perfectly clear that the O Mill was to be excluded from the sale.' Nevertheless he also concluded that after 3 December 1980, 'If [Mr Good] is able to dispose of the mill profitably [he] is entitled to do so as the owner.' Their Lordships are unable to agree with this view.
If the O Mill was excluded from the sale, Mr Good never became the owner. Special condition 9 is only consistent with the exclusion of the O Mill from the land sold to Mr Good and ex abundanti cautela the appellants are entitled to the rectification which they seek and which makes clear that which is expressed in the correspondence and implicit in the contract.
If the O Mill is excluded from the sale, the appellants have at all times been and still are the owners of the O Mill. That ownership could not and did not pass to Mr Good on 4 December 1980 merely because the O Mill had not been removed by that date. If ownership of the O Mill remains with the appellants, they are entitled as an incident of that ownership to enter and remove the O Mill. Mr Good is protected because he can require the appellants to remove the O Mill; he has never sought to do this or objected to the continued presence of the appellants' O Mill on his land."
66 It is to be noted that although there had been a specific date for removal of the O Mill, which had passed, the result was that the property
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- in the mill did not then pass to the purchaser of the land because at all times the vendor had remained the owner.
67 That position is a fortiori, in my view, where, as here, there was no time limit as between the plaintiff and the first defendant: and would apply in any event even if there was a time limit as between the first and second defendant. In other words, under the contract for the sale of the land between the first and second defendants, as against the second defendant, the first defendant still has the right to enter and remove the shed. That is the right which he granted to the plaintiff under the contract for the sale of the shed and which, it seems to me, may still be exercised either by the first defendant or by the plaintiff on his behalf.
68 Counsel for the defendants submits that the decision of the Privy Council in Standard Portland Cement case is not good law. Counsel relies on a decision of the Full Court of the Supreme Court of Victoria in Stanford v Bayne [1923] VLR 283. In that case there was a sale of land on which certain pine trees were growing.
69 The vendor entered into a contract to sell the land to the original purchaser in which he reserved the right of removing at his own expense the pine trees from the property. The contract was entered into on 26 January 1920. On 20 May 1920 the land was transferred not to the original purchaser but to his sons: but the transfer did not refer to the contract between the vendor and the original purchaser. The original purchaser was not a party to the transfer and there was no reservation in the transfer of any right in the vendor to remove the trees.
70 Up until 22 October 1920, which was some 5 months after settlement, the vendor had not severed or removed the trees. He was then notified by the sons of the original purchaser that the time for removal of the trees had expired.
71 The issue before the Full Court was whether the vendor still had the right to go onto the land and remove the trees. The case was decided against the vendor by a majority, but it was decided on the basis that as a matter of construction the plaintiff's contractual rights were limited to 1 May 1920. In other words, as the plaintiff had not exercised his contractual right by that date he had lost the right thereafter to remove the trees. As Cozens J said at 288:
"The plaintiff's contractual rights to the pine trees must either be unlimited as to time or must be limited to a reasonable time or to 1 May 1920."
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72 The first suggestion, that is the unlimited time, was not relied on. The choice was therefore between the other two: and as a matter of construction the learned Judge preferred the latter, that was 1 May 1920.
73 In the present case, of course, the time was unlimited as I have found it: that is, as between the plaintiff and the first defendant.
74 I note that Cozens J referred to the fact that neither in the court below nor before the Full Court did the plaintiff rely on a proprietary right in the pine trees considered as part of the land. The plaintiff's claim there was for damages for breach of a contractual obligation. Therefore, his Honour did not discuss the matter from any other aspect: although he thought the result would in either case be the same. Schutt J was of a similar view. The case is not therefore at odds with the decision of the Privy Council in the Standard Portland Cement case where the proprietary ownership of the O Mill was considered, the matter not simply turning on the question of construction of the contract.
75 I should mention also that questions relating to or arising from sales of land separately from fixtures are the subject of an article by Mr Peter Butt in the March 2000 edition of "The Australian Law Journal", volume 71, pp 130 to 131 where the Standard Portland Cement Co decision of the Privy Council is referred to as being good law. The Stanford v Bayne decision is not, I think, referred to; but there is no reason it should have been referred to because that case turned on the question of the construction of the contract.
76 There is reference in that article to a number of tax cases in which attempts have been made to achieve certain results from a taxation point of view where there have been sales of chattels separate from land, chattels which in some cases have been affixed to land. But those cases, I think, turn on the relevant tax legislation and do not detract from the common law position which is the subject of the decision in the Privy Council case.
77 The plaintiff puts its case not only on the contractual basis on which I have decided it, but also initially in any event on an estoppel. The estoppel is said to arise out of a conversation said to have taken place between Mr Tony Gorman and Mr Jones to the effect that Mr Jones told Mr Gorman that there would be written into the sale of the farm from the first defendant to the second defendant a term that the shed was not sold with the farm but that it was the plaintiff's. In case it is necessary for me
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- to do so I accept Mr Gorman's evidence and find as a fact that that conversation did take place.
78 However, I do not think anything turns on it. In the first place, of course, there was written into the contract for the sale of the Manna Downs property a term that the shed did not pass with it, although it was not there stated expressly that the shed had been sold to the plaintiff. In any event, I am not persuaded that that conversation itself could give rise to an estoppel because it is equivocal. It is equally consistent with the defendants' case that the shed had to be removed within a reasonable time of the shed agreement as it is with the plaintiff's case that the time was unlimited. In the end I think that estoppel argument was not pursued.
79 The plaintiff also runs an argument based on unjust enrichment arising from some observations made obiter by Gaudron and Brennan JJ in Trident General Insurance Co v McNiece Bros Pty Ltd (1987) 165 CLR 107, in particular at 175 to 176. In particular Gaudron J said:
"Where the consideration is wholly executed in favour of a promise or under a contract made for the benefit of a third party a rule that the third party may not bring action to secure the benefit of the contract permits it the possibility that the promisor may be unjustly enriched to the extent that the promise is not fulfilled."
80 I think the point which is taken here is that the contract between the first and second defendants for the sale of the land excluded the shed which the second defendant knew was being sold elsewhere and for which, presumably, he made no payment.
81 It is said that the second defendant would be unjustly enriched if he was now permitted to retain the shed, not having paid for it. There are difficulties with that submission. First, it is not clear what, if any, value the shed has to the second defendant. On the face of it, it has no value to him because in his evidence he said that if the shed had been removable he would have taken it to the tip.
82 There has been no evidence of the value of the shed; although, clearly, it is of value to the plaintiff. But the fact that it is of value to the plaintiff does not mean that it is necessarily of value to the second defendant.
83 The second difficulty with the unjust enrichment argument arises from the fact that, at least until now, unjust enrichment, or the
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- circumstances in which there has been a finding of unjust enrichment, have involved cases falling within an appropriate category such as mistake, duress or illegality. That is what the Full Court of the Federal Court said in Abcos v Jones (1997) 150 ALR 488 at 541 in explaining the decision of the High Court Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221.
84 Counsel for the plaintiff may be right from a jurisprudential point of view, in submitting that a finding of unjust enrichment could be made in circumstances such as those of the present case, but I am not persuaded that I should come to that conclusion on the evidence as I have found it, particularly as it is not necessary for me to do so, having regard to my principal finding which is based on the construction of the relevant contracts.
85 The matter has come before me as a trial of a preliminary issue as ordered by Master Sanderson. That is the issue of liability, the order being that the issue of damages be tried subsequently as may be directed by the trial Judge. The position is, in summary, that I find that the first defendant is liable to the plaintiff in this sense: that the first defendant has an outstanding contractual obligation to permit the plaintiff to enter onto the land for the purpose of removing the shed, such removal, as I have said, to be undertaken as one exercise and not on a piecemeal basis.
86 The first defendant can, of course, only perform his contractual obligation with the concurrence of the second defendant. As between the defendants themselves I find that the second defendant is liable to provide access to the first defendant for the purpose of allowing him or his representatives to enter onto the land and remove the shed. I have no difficulty with the fact that the liability extends to permitting the first defendant and his representatives to carry out that work. It cannot have been contemplated that the first defendant himself, alone and unaided would enter onto the land and remove the shed. It is far too substantial a construction to be taken down on a do-it-yourself basis by one man. Therefore it seems to me, whether the first defendant came onto the land with a team of contractors or whether he authorised the plaintiff to come onto the land is of no consequence to the second defendant and he could not object in either of those cases.
87 The relief sought by the plaintiff in relation to liability is an order against the first defendant for delivery up of what is now in effect the shed: and against the second defendant, a declaration that the plaintiff is entitled to enter onto the premises for the purpose of demolition and
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- removal of the shed. Against both defendants a declaration is sought that the plaintiff is entitled to and is the lawful owner of the shed.
88 I think that the relief will need to be formulated somewhat differently in the light of my conclusions. I will in due course hear from counsel, but it may be that a declaration or declarations will be sufficient.
89 There may also be a question of whether any injunction should be sought to restrain the second defendant, for example, from preventing the first defendant or the plaintiff from entering onto the land.
90 Of course the plaintiff's right is only taken through the first defendant. If therefore the first defendant declines to perform the contract, it would then be a matter for damages, but that, I think, is something which will need to be considered by the first and second defendants. Although it seems to me that they may have had conflicting interests, they were represented by one counsel, I was told, on independent advice. But at this stage it may be that conflicting interests do arise and will therefore need to be taken into account. Those are matters which need to be worked out.
91 For all those reasons I think the plaintiff should succeed on the question of liability on terms to be formulated.
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