Graham v Blom - [2010] WADC 168

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: GRAHAM -v- BLOM [2010] WADC 168

CORAM: SWEENEY DCJ

HEARD: 20 AUGUST 2010

DELIVERED : 17 NOVEMBER 2010

FILE NO/S: APP 4 of 2010

BETWEEN: JAMES DAVID GRAHAM
LINDA MARIE DITRI
Appellants (Defendants)
AND
ROBERT MICHAEL BLOM
SHARYN BLOM
Respondents (Plaintiffs)

Catchwords:

Appeal against summary judgment - Construction of contract - Turns on own facts

Legislation:

Nil

Result:

Appeal dismissed

Representation:

Counsel:

Appellants (Defendants) : Mr I Morison
Respondents (Plaintiffs) : Mr D F Beere

Solicitors:

Appellants (Defendants) : McAuliffe Legal
Respondents (Plaintiffs) : Dennis Beere

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

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Casella v Hewitt (2008) 36 WAR 1
Codelfa Construction Pty Ltd v State Rail Authority (New South Wales) (1982) 149 CLR 337
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Fitzgerald v Masters (1956) 95 CLR 420
Government Employees Superannuation Board v Martin (1997) 19 WAR 224
Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165

SWEENEY DCJ: On 1 October 2008 the appellants, Mr Graham and Ms Ditri, offered to purchase a property at 69 Caves Road, Busselton owned by the respondents, Mr and Mrs Blom. The contract was a standard form Real Estate Institute of Western Australia contract for the sale of land. The parties also added conditions, some of which were contained in 'Annexure A' to the contract. Annexure A cl 1 related to termites and it was termites which ultimately saw the sale of the property fall through when the appellants - the buyers, to adopt the language of the contract - purported to terminate the contract.
The respondents – the sellers - commenced proceedings against the buyers for damages for breach of contract and, on 10 March 2010, Magistrate VC Edwards granted summary judgment to the sellers, leaving the issue of quantum of damages to be determined by further hearing. It is against that judgment that the buyers now appeal. It is necessary for them to establish error on the part of the court below.
No complaint is made about her Honour's appreciation of the principles applicable to summary judgment applications. The appeal turns upon the construction of Annexure A cl 1 and whether it was complied with before the buyers purported to terminate. For the reasons set out below, the appeal is dismissed.

The clause in question

Annexure A cl 1 provides:
This offer is subject to the Buyer within seven days of all other conditions precedent of this contract being satisfied, obtaining at the Buyer's expense, a Termite Certificate from a recognised and reputable Pest Control Company, certifying that the property is free from termite activity or damage occasioned by previous or current activity.
Should the Certificate disclose termite activity or damage, then a report from the Pest Control Company stating the nature and extent of the activity and or damage must be presented to the Seller by the Buyer within seven days of the inspection.
The Seller will then have fourteen days from the receipt of the report, to eradicate, rectify or remedy such activity and or damage as stated in the report or this offer will be at an end and all monies paid by the Buyer will be refunded without deduction.
If the Buyer does not have the inspection carried out or present the report to the Seller within the time specified above, then the Buyer shall be deemed to have waived the benefit of this clause.

Factual background

I have before me an affidavit of Mr Blom for the sellers, sworn 17 October 2009, and an affidavit of Mr Graham for the buyers, sworn 3 December 2009. Both affidavits were before her Honour.
There is a matter I must mention briefly: the buyers' termite report, upon which they relied to terminate the contract, was obtained from Busselton Pest Control. There is an issue between the parties as to the means by which an earlier report from Bayview Pest Control came into being. Mr Blom for the sellers deposes that the buyers obtained that report. Mr Graham, for the buyers, however, deposes that:
Without any prior consultation or consent, the Busselton Land & Estate Agency, the agents acting for the Vendor sought and obtained a termite inspection from Bayview Pest Control.
The report was forwarded to the buyers under cover of a letter from the sellers' real estate agent stating:
Please find enclosed your requested termite report on the above property. I have sent the account for this to your settlement agent for payment at settlement.
Mr Graham deposes that the purchasers did not pay the account, not having requested the report. They subsequently sought their own report from Busselton Pest Control.
In argument before her Honour it was accepted by both parties that her Honour should regard the report from Busselton Pest Control as the buyers' termite report. The sellers made this concession so as to avoid a factual controversy impeding their case for summary judgment. I mention this now because counsel for the sellers seeks to raise a new point, not argued on appeal, which relies upon the buyers' denial of any connection with the earlier Bayview Pest Control report. I will address the new point at the end of this judgment.
Putting the Bayview Pest Control report to one side, the buyers' report from Busselton Pest Control, in broad terms, did not give the property a termite free clean bill of health. It was sent to the sellers by the buyers' solicitors on 4 November 2008 and their accompanying letter stated:
We acknowledge that you have been provided with the Termite Certificate from Bayview Pest Control on 27 October 2008 in compliance with paragraph 1 of Annexure to the contract.
The certificate having disclosed activity, our clients have carried out a subsequent more detailed inspection by an additional firm Busselton Pest Control dated 31 October 2008. You have been provided with a copy which discloses in greater detail the termite problem.
It appears to our client that it may not be possible for the seller to repair the damage which is noted as extensive.
It may be necessary for an inspection by an independent builder at the expense of the seller to assess the extent of the damage and the cost to rectify or remedy the damage.
Our client is considering his position regarding the offer being at an end.
Detailed instructions are being sought.
In response to this letter, the sellers commissioned two separate investigations of their own to determine the extent of any termite activity or damage. These were conducted by Rob Davies Pest Control and Abby Pest Control on 6 November 2008. The sellers also commissioned Mr Ian Molyneaux, registered architect and former builder, to undertake a further review of the building to determine what, if any, works were required.
Because this appeal turns exclusively on the proper construction of cl 1 and whether or not, on the strength of the Busselton Pest Control report, the buyers were entitled to terminate, it matters not what the authors of those three reports concluded. There is no scope in cl 1 for the sellers to seek a second opinion.
For the same reason, any reference to termites in the contract for the sale of the property about seven months later to another buyer has no bearing on this appeal and nor does a later report from Bayview Pest Control generated around the time of the eventual sale.
On 20 November 2008, the sellers' lawyers wrote to the buyers' lawyer, contending that their letter of 14 November 2008 had constituted a wrongful repudiation of the contract, which the sellers were prepared to accept. The letter continued however that the sellers were ready, willing and able to settle and invited the buyers to reconsider their position and proceed to settlement. In reply, the buyers' lawyer maintained that the buyers had validly and lawfully terminated the contract.
The buyers instituted proceedings in the Busselton Magistrates Court seeking damages for breach of contract. Ultimately, the property was sold to another purchaser for a lesser price and the vendors filed a Form 23 application on 21 October 2009 seeking the sum of $68,000 by way of liquidated damages plus general damages of $4,579.50.

The construction of Annexure A cl 1

The role of the court in a contractual dispute is to look to the objective intention of the parties as evidenced by the terms they voluntarily agreed to in the contract, rather than their subjective understanding: Codelfa Construction Pty Ltd v State Rail Authority (New South Wales) (1982) 149 CLR 337, 352 (Mason J). It is for that reason that evidence of what each of the parties to a contract believed or hoped it meant at the time of contracting is generally considered inadmissible: DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 429 (Stephen, Mason and Jacobs JJ).
The passage in question should be considered within the context of the whole document and be construed if possible in a manner consistent with the document as a whole. The court attempts to find the plain meaning of the words employed by the parties, imputing to the parties that intention, even if the result might appear unreasonable to one or both parties, because the court has no power to rewrite a contract which is plain enough in its terms merely to avoid an inconvenient or unjust result: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109 (Gibbs J).
If, however, a literal interpretation of the plain language employed in the contract leads to an absurd result, then the court will attempt to construe the contract in a way which avoids such a result: Fitzgerald v Masters (1956) 95 CLR 420, 426 – 427 (Dixon CJ and Fullagar J).
In the case of ambiguity in the words employed in a contract, the court should adopt a construction consistent with the commercial purpose and object of the transaction, to be ascertained from the terms of the contract as a whole and also, if necessary, looking to evidence of the surrounding facts known to both parties: Codelfa Construction Pty Ltd v State Rail Authority (NSW), 352 (Mason J), Australian Broadcasting Commission v Australasian Performing Rights Association Ltd, 109 (Gibbs J), Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 [22] and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40].
The sellers' case for summary judgment before her Honour rested predominantly upon a submission that the Busselton Pest Control report did not amount to a report 'stating the nature and extent of the activity and or damage' such as to enable the sellers, within 14 days from the receipt of the report, 'to eradicate, rectify or remedy such activity and or damage as stated in the report' and that, accordingly, there was nothing to be done on the part of the seller. That submission found favour with her Honour and the grounds of appeal complain that that was an error of fact and law. The buyers' submission was that the report did state the nature and extent of the damage and that the sellers' failure to rectify the same (and perhaps inability to rectify the same) entitled the buyers to treat the offer as having come to an end.
Much turns then on the meaning of the words 'stating the nature and extent of the activity and or damage' (emphasis added).
The scheme of cl 1 clearly is that, should the property not be certified 'free from termite activity or damage occasioned by previous or current activity' then the buyer has two options: the first being to proceed to settlement regardless of the termite issue and the second being to present the seller with a report from a pest control company 'stating the nature and extent of the activity and or damage'.
Notwithstanding that the buyer's offer is described as being 'subject to the Buyer … obtaining at the Buyer's expense, a Termite Certificate … certifying that the property is free from termite activity or damage occasioned by previous or current activity', the remainder of cl 1 makes it clear that failure to obtain either a termite certificate giving the property a clean bill of health, or a report describing the nature and extent of termite activity or damage, does not result in the offer lapsing, but rather results in the buyer losing the ability to rely upon that condition precedent. If, however, the buyer does, within time, present the purchaser with a report from its pest control company stating the nature and extent of the activity or damage, then the seller has 14 days to 'eradicate, rectify or remedy such activity and or damage', failure to do so resulting in the offer coming to an end and the refund to the buyer of his deposit.
As was submitted by the sellers, if presented with such a report by the buyer, the seller has a decision to make as to whether or not to 'eradicate, rectify or remedy such activity and or damage', or to accept that the offer will come to an end. He also has a time limit in which to carry out any tasks needed to comply with the report.
Nothing in cl 1 gives the seller any contractual right to seek a second opinion, or commission a report from a different sort of expert, such as a builder or an architect. He either meets the requirements of the buyer's report, or accepts that the offer will come to an end. It is for that reason, I infer, that the parties specified that the buyer must consult a 'recognised and reputable pest control company', because the requirements of that company are not subject to review or debate.
In order to 'eradicate, rectify or remedy such activity and or damage', the seller must be informed by the buyer's report of just what activity and or damage he is to address. He must be told which it is and where it is. In the case of activity, he must be informed of the nature of that activity, that is to say whether that is current activity from live termites which presently need to be eradicated, or past activity. In the case of damage, he must be informed what sort of damage has been observed and the degree of it.
That is surely the plain meaning to be attributed to cl 1. It is of no use to the seller to be told there might be damage to be located, if only he consults another expert, or several experts to conduct further investigations and provide him with their opinions. Not only does the seller have no contractual right to seek further opinions – he has no obligation to seek such further opinions. And he is on a time limit, mutually agreed.
The buyers argue that the words 'nature and extent' are descriptive words and therefore evidence of surrounding circumstances known to both parties at the time of contracting is admissible, citing Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160 [595]. In that case, which involved a complex set of reconstruction arrangements following an insolvency and in which numerous mining rights were described by letters and numbers and sometimes inaccurately, Kenneth Martin J considered the terminology 'EL20/209' to be both ambiguous and descriptive, such as would justify the admission of evidence of facts mutually known at the time of contracting to caste light on its meaning. His Honour also referred to the observations of Ipp J in Government Employees Superannuation Board v Martin (1997) 19 WAR 224, 236. In that case, Ipp J, construing a complex document described as 'Heads of Agreement' noted that he would regard evidence as admissible which identified the land and contracts referred to in the descriptive terms contained therein.
I do not regard either case as having application here. The words 'nature and extent of' are not terms of art or trade usage and nor are they descriptive. They are plain English words used every day in common parlance and their meaning is to be determined by looking at the context in which they appear.
The buyers' real submission, as I understand it, is that the buyers' report did state the nature and extent of any activity or damage but that, if it did not, that was only because their pest controller was unable to carry out the more invasive inspection required before he could be in a position to state the nature and extent of any activity or damage. The buyers submit that this obvious limitation on the buyers' pest control company ought to inform the meaning to be ascribed to the words: 'nature and extent of'. The buyers concede that the words are not ambiguous, but suggest nevertheless that this court should look to the surrounding circumstances known to the parties and the apparent purpose and object of the transaction to determine their meaning: Casella v Hewitt (2008) 36 WAR 1, 71 (Buss JA). Having done so, the buyers submit, the court should arrive at an interpretation of cl 1 to the effect that it 'did not require a report that was conclusive following destructive testing of the subject premises and that an indication of what appeared to be the nature and extent of termite damage was all that was contractually required' as asserted in the second ground of appeal.
In construing the words as part of a whole document, it really is inevitable that this court should look to the apparent purpose and object of the transaction. If, by the 'surrounding circumstances known to the parties', reference is being made to the limitations upon the buyers' pest controller in carrying out his task, I consider I am entitled to have regard to that fact and indeed must have regard to it in assessing to what extent the report does meet the terms of cl 1. Should there be any doubt about that, I should take a view in favour of the buyers, this being, after all, an appeal from summary judgment pronounced against them.
In the end, however, I do not consider these surrounding circumstances lead to an interpretation of the words 'nature and extent of' which assists the buyers. The surrounding circumstances are not limited to those circumstances serving the interest of the buyers. The plain purpose of cl 1 includes providing the seller with an opportunity to remedy an identified termite problem. It does not extend to imposing an additional obligation upon the seller to further investigate and identify the nature and extent of any termite activity or damage based upon concerns and questions raised by the buyer's report.

Did the Busselton Pest Control report entitle the buyers to terminate?

I return now to the termite report upon which the buyers rely to justify their purported termination of the contract.
The report of 31 October 2008, headed 'Visual Termite Inspection Report in accord with AS3660.2‑2000', relates to an inspection of the property on that date by Mr McCagh of Busselton Pest Control It is largely a 'tick‑a‑box' report on a pre‑printed form.
It indicates that the areas inspected consisted of the interior, the carport, trees, stumps, posts, fences and garden.
The areas which were not inspected or to which reasonable access for inspection was not available are listed as 'interior because access needs to be gained to the front wall', 'roof void because the roof is lined on the rake', 'garage because the garage was locked' and 'slab edge, which normally would be exposed because it would show any termite workings to the slab edge'. The report contains a caveat that, as no inspection could be made of these areas, termite damage may exist.
Three of those areas identified as not having been inspected, namely the interior (presumably a reference to the front wall only), the roof void and the garage, are identified as 'high risk areas' and the report recommends that access be gained to those areas.
At item 3.4 the report explains that, where external concrete slab edges are not exposed, there is a high risk of concealed termite entry and that, in the case of this property, the slab edge is not exposed. The report explains:
Where this is the case you should arrange to have the slab edge exposed for inspection. Concealed termite entry may already be taking place but could not be detected at the time of the inspection. This may have resulted in concealed timber damage.

None of these items amounts to stating the nature and extent of activity or damage. Rather, they warn of possible undetected activity or damage.
By item 2.1, the report indicates that 'active termites (live insects)' were found in the 'fences' and that the termites located 'have the potential to cause extensive to severe amounts of damage to timber including structural damage'. This is a clear indication of activity. It is the only clear indication of activity in the report. It indicates the nature of that activity as being the activity of live insects. In other words, it is present activity as opposed to past activity. So far, so good. It gives no indication, however, of the extent of the activity and whether any damage has resulted from that activity and if, so the extent of the damage.
In any event, however, in his affidavit Mr Blom for the sellers deposed that the damage to the gate/fence to the side of the house was rectified. That evidence was unchallenged. That was the only rectification work carried out by the sellers.
By item 2.3, the report indicates that there was 'visible evidence of subterranean termite workings and or damage located'. The report itself, then, draws a distinction between 'workings' and 'damage'. It certainly implies that workings may or may not be accompanied by damage. It does not indicate whether workings are associated with live insects or past insects. The author made a point of noting the fact when he found live insects in item 2.1. That is the only such reference to live insects, though workings were found elsewhere.
Item 2.4 then goes on to specify that 'termite damage and or workings were found mainly in but not necessarily limited to' the interior (again, perhaps limited to the front wall), trees, posts and fences. The report noted, next to the words 'VERY IMPORTANT':
[W]here any termite activity or damage is noted you must realise that further termite damage may be present in concealed areas.
It continues, 'Whilst we are not builders, the termite damage appears to be moderate to extensive'. The author has not, however, informed the reader, in relation to each of the four entirely different locations he has referred to, whether he has found workings or damage or both. The pre‑printed form does not distinguish and require the author to specify which. The blanket assertion that the damage appears to be moderate to extensive is insufficient when the location of any damage is not identified and when it is not made apparent whether the assessment of the extent of the damage relates to each item, or all of the damage as a whole. Unfortunately for the buyers, the pre‑printed form does not focus on the same terminology employed by the parties in the contract and the requirements that the buyers' report needed to address.
At item 2.10, Mr McCagh notes visible evidence of wood decay fungi on the 'post on the lean‑to of the garage'. The report explains that wood decay fungi is conducive to termites and that a builder should be consulted to find out what must be carried out to prevent further decay and to repair the damage. This comment indicates neither the presence of termite activity, nor damage from past activity.
At item 2.7 the report makes certain recommendations in relation to reducing the risk of termite activity, such as removing untreated timber in contact with the ground. The degree of risk of subterranean termite infestation to the overall property is described as 'extremely high'. Again, this comment indicates neither the presence of termite activity, nor damage from past activity.
Finally, under the category of 'additional information' Mr McCagh made the following comments:
1.There appears to be termite damage to the front wall of the house, sheeting needs to be removed at the owner's expense to determine the extent of termite damage.
2.Termite workings found to cupboard in 1st bedroom, also workings were found in the carpet straight edge in the 1st bedroom and lounge/dining room.
3.Active termites were found in the gate/fence to the side of the house.
4.There was no access to the garage, as it was locked, access needs to be gained to determine any damage or activity.
5.There is no access to the roof as it is lined on the rake, this is a concern as there appears to be termite damage to the front wall, the ceiling and timbers have been freshly painted.
6.No termite treatment has been carried out for ten years, as found by the treatment sticker in meter box.
7.Termite workings found in the front 1st bedroom and lounge/dining room, have only been dusted, these areas should have been drilled and injected along the wall in the slab to control further termite attacks.
8.We strongly recommend that a more invasive termite inspection be carried out, to determine the extent of termite damage at the cost to the owner, also a full termite treatment needs to be carried out on the perimeter of the house and to internal areas of the house.
Applying the most generous interpretation of the first item, it arguably does indicate actual observable damage, notwithstanding the use of the words 'appears to be termite damage', but what it does not identify is the extent of any damage. Rather, it recommends further investigation.
The second item refers to 'workings' only, with no indications of whether these workings were accompanied by damage or not. The same is true of the seventh item. Workings might amount to nothing more than the most superficial signs of past activity.
The third item is a repetition of the earlier item 2.1, giving an indication of the nature of the activity, but no indication of its extent or whether any damage has resulted from that activity and, if so, its extent. The evidence before her Honour was that the termite activity was, in any event, addressed by the sellers.
Nothing in the fourth, fifth, sixth or eighth items, or in the report generally, which amounts to advice that there is a risk of potential damage or activity or that further investigations should wisely be conducted constitutes a description of the 'nature and extent of the activity and or damage'.
Mr McCagh recommended certain further investigations be made. In particular, he recommended that the edge of the slab be exposed and that sheeting covering the front wall of the house be removed to determine the extent of termite damage, that access be gained to the garage as it was locked, and that generally 'a more invasive termite inspection be carried out to determine the extent of termite damage at the cost to the owner'.
The difficulty is that there is nothing in cl 1 which contemplates the situation where the buyer's report contains a recommendation for further invasive investigations. Clearly the pest controller retained by the buyers had no right to damage or interfere with the property in order to carry out an invasive inspection. Nor is there anything in the contract obliging the sellers to conduct the further investigation recommended.
I do not consider that cl 1, by requiring the seller to 'eradicate, rectify or remedy such activity and or damage' places any obligation on the seller to discover just what that activity or damage is for himself, having been alerted to its possibility. And, for his part, the buyers' pest controller was not in a position to nominate the nature and extent of the activity or damage he could not see or investigate without fully and invasively inspecting the areas of potential damage or activity. He could not even state whether there was further activity or damage to be found.
There is no reason to conclude that the author of the inspection report could not have described the extent of any current termite activity actually observed by him, or the nature and extent of any termite damage actually observed by him. He should have been in a position to describe the nature and extent of any activity or damage in relation to the various 'workings' he observed, but did not do so.
He may have thought he did so but, except in the case of the post near the gate/fence, he used vague and ambiguous language which did not enable the seller to identify what, if anything, needed to be rectified.
Given the contents of the report, one can readily understand the buyers' concern. It may be that they subjectively understood that, unless they could be assured the property was termite free, they were not obliged to continue with the sale. That, however, is not the contract they entered into. The parties agreed their course of action should the property not prove free from termite activity or damage and that course of action placed the obligation of ascertaining the extent of the activity or damage entirely in the hands of the party who did not own the property and had no right to carry out any invasive investigation. The commercial purpose behind cl 1 was to ensure the buyers obtained a property free of termite activity or damage, but also to afford the sellers the opportunity to put their property in that condition it if was not already, so that the sale would not fall through on account of a problem which could be swiftly remedied.
The parties might instead have simply agreed that the offer was subject to the buyers obtaining a certificate or report certifying that the property was free from termite activity or damage. They might choose to waive that term if any activity or damage was of no real concern.
Or the parties might have agreed that the offer was subject to the sellers producing a certificate from a pest control company of the buyers' choice certifying that the property was free from activity or damage or, if activity or damage was found or reasonably suspected, providing proof that the seller had now carried out any further recommended inspection and had eradicated, rectified or remedied such activity or damage. This would involve a degree of trust not evident in the contract the parties entered into, and may be unpalatable to some, but would place the obligation of transferring an entirely termite free and undamaged property in the hands of the seller. There might be other approaches to tackle this issue.
The plain language employed by the parties did leave the buyers in the unfortunate position that, in the absence of a more invasive inspection which they had no contractual right to request, they had no assurance that there was not further undetected activity or damage in the property.
But the terms agreed between the parties have not lead to an absurd result. The situation the buyers found themselves in was not dissimilar to the situation a developer found himself in in Casella v Hewitt [2008] WASCA 13. In that case a number of purchasers agreed to purchase proposed lots on then unsubdivided land on the basis that the developer would achieve the subdivision, which included seeking town planning approval. One of the terms of the contract provided that, if the Western Australian Planning Commission granted approval for the subdivision subject to a condition which either party, acting reasonably, was unwilling to comply with or considered to be prejudicial, then the party could terminate the contract at 10 days notice. When the developer applied for approval to subdivide the land the Commission approved the subdivision subject to various conditions, including
suitable arrangements being made with Western Power for the provision of an electricity supply service to the lots shown on the approved plan of subdivision.
Planning commission approval was therefore granted, but granted subject to arrangements yet to be made with another party. The developer clearly could not know if those future arrangements would include conditions which he, acting reasonably, would be unwilling to comply with or consider prejudicial. When the arrangements were eventually made with Western Power, its requirements increased the cost of the development such that the developer claimed he could no longer make a reasonable profit and indeed was likely to make a loss. He therefore formed the view that Western Power's requirements were requirements he was unwilling to comply with and were prejudicial and he purported to terminate the contract within 10 days of being notified of those requirements. The purchasers instituted proceedings against him for breach of contract and were granted summary judgment.
The developer was clearly in quite an unsatisfactory position, because town planning approval was given on the basis of conditions set by another authority and yet to be formulated. EM Heenan AJA remarked [146]:
The present case illustrates quite starkly how the terms of the general condition … are inadequate in a practical sense to give a party the protection of an informed ability to withdraw from onerous or prejudicial conditions in a timely manner.
The majority of the court, however, including EM Heenan AJA, regarded the language of the contract as compelling the construction that the parties had agreed that the right to terminate the contract, in the case of an unacceptable or prejudicial condition, was limited to the conditions imposed by the Western Australian Planning Commission and did not extend to any such further conditions as might be imposed in the future by those bodies to whom the Western Australian Planning Commission had, in effect, delegated the imposition of conditions. As EM Heenan AJA commented [147]:
This may place a party to a contract, such as the appellant in the present set of circumstances, in an extremely invidious position. However, it cannot be forgotten that these are obligations to which the parties to these contracts themselves voluntarily agreed.
His Honour went on to suggest various means by which the parties to that contract might have avoided the situation before continuing [149] ‑ [150]:
I appreciate that it may be cold comfort to parties such as the present appellant to be reminded that, if better informed at the time of the contract, he might have avoided this dilemma, especially where the probabilities are that he believed that the terms of the general conditions were adequate to protect him against the problem which then arose. In truth, they were not. Indeed, the extent of the protection which they conferred may well have been misunderstood by the appellant. However, in the absence of any suggestion of misrepresentation or other factors which may independently give rise to a right to terminate the contracts while they were still executory, or to other factors justifying termination in these circumstances, there is really no escape from the language of general condition 13.5. …
I accept that the root of the problem which has arisen in the present case is that the terms of general condition 13.5 do not address, adequately or at all, the realities that unacceptable or prejudicial terms for the securing of subdivisional approval may result from decisions of bodies other than the WAPC. That is the plain fact of the matter. But an equally plain, even if brutal, fact is that this will leave a contractual party, such as the appellant, with no redress in the event of the imposition of onerous requirements by authorities such as Western Power who need to be satisfied before the final approval of the WAPC can be obtained. I do not underestimate the extent of prejudice which this construction can produce. However, the meaning of a contract cannot be ignored in order to produce a beneficial construction which favours one party at the expense of another. The contracting parties are to be presumed to know and appreciate the terms upon which they agreed and effect must be given to them. That this case exposes potential inadequacies in the general conditions may be a matter of significance for other parties when contemplating the use or application of the general conditions, or how they might be varied. Indeed, it may also signal a need to consider whether or not these general conditions should, in these respects, be varied by their authors on the occasion of later revisions. All those are factors which, however, cannot be allowed to affect the construction of their language.
In that case, as in this, potential inadequacies in the contract to deal with the practicalities which might arise left one of the parties in an invidious position. But cl 1 reflects the natural tendency of parties negotiating at arm's length to agree that the party who is desirous of certain information which may affect the attractiveness of its side of the bargain be the same party who is responsible for obtaining that information from a source he trusts, rather than trust the other party, who is best placed to obtain that information, to do so.
This is graphically illustrated in this case by the fact that the buyers refused to accept and pay for the first pest control report obtained from Bayview Pest Control which was forwarded to them via the sellers' real estate agents. They might have accepted this report had they chosen to do so, but instead commissioned their own report as cl 1 certainly entitled them to do. In saying this, I leave to one side of course the issue as to whether they were in any sense involved in the commissioning of that report.
But on the assumption they were not, the buyers clearly demonstrated that they were not prepared to act on information which had not been sought by themselves from a pest controller of their choice. But the buyers' desire, reflected in cl 1, to consult a pest controller of their choice carried with it certain obvious limitations on their ability to be fully informed. Those limitations might only have become obvious after the event, but it would have been clear enough to anyone who turned their mind to the issue that there would be limitations on the ability of the pest controller to carry out any invasive inspection if one was needed. As against that, the sellers also agreed to terms which might have produced what they considered an unjust result. They did not reserve to themselves the right to seek a second opinion and might well have been in the position of having to rectify damage said to be present by the buyers' pest controller and said not to be present by another, but they are the plain terms of the contract the parties agreed to.
I conclude that, however unsatisfactory a position the buyers in this case were placed in, it is a position which flowed from the terms they voluntarily agreed upon. Their report from Busselton Pest Control not having specified both 'the nature and extent of any activity and or damage' caused by termites, there was nothing for the sellers to eradicate, rectify or remedy and the buyers were not entitled to purport to terminate the contract. It follows that I consider her Honour made no error in finding for the sellers and granting summary judgment.

One final point not raised before her Honour

It remains only to mention the further submission made by the sellers. They now submit that, in accordance with cl 1, the buyers were only entitled to obtain a report 'stating the nature and extent of the activity and or damage' upon first obtaining 'a termite certificate from a recognised and reputable pest control company', and that, the buyers having disavowed any connection with the 'certificate' received from Bayview Pest Control via the sellers' real estate agent, they obtained no certificate and so lost the right to present any subsequent report to the sellers. The Busselton Pest Control report does not contain any certification and has the appearance of simply being a report.
That submission is raised for the first time on appeal. The buyers objected to its being raised at this late stage. Where a point is not taken in the court below and there is a possibility that evidence could have been given there which by any possibility could have prevented the point from succeeding, the point cannot be taken afterwards: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, 438 (Latham CJ, Williams and Fullagar JJ).

I have given it consideration in this judgment over the buyers' objection only because I am not persuaded by it to the required degree for a summary judgment application. The sellers need to establish that this new point is unarguably in their favour such that the buyers have no defence to it. I am not satisfied it is.
The certificate to which the buyers' offer is said to be subject is a certificate 'certifying that the property is free from termite activity or damage occasioned by previous or current activity'. If such a certificate is obtained by the buyer, the author of the certificate will obviously not prepare a report 'stating the nature and extent of the activity and or damage'.
Clause 1 does go on to provide a certain course of action 'should the Certificate disclose termite activity or damage,' which presents something of a contradiction, but there is no express obligation on the buyer to furnish the seller with the certificate, whether it gives the property a clean bill of health or otherwise. The certificate is purely for the benefit of the buyer, assuring them of the lack of activity or damage. If they do not arrange any inspection, they are deemed to have waived the benefit of the clause.
The clause provides that 'should the Certificate disclose termite activity or damage, then a report from the Pest Control Company stating the nature and extent of the activity and or damage must be presented to the Seller by the Buyer within seven days of the inspection'. That then is the same inspection by the same company which provided the certificate. There is no second inspection to be arranged upon satisfying the seller that one is necessary.
In argument it was suggested to me that the report from Bayview Pest Control constituted the only 'certificate' in this case and, as it was disavowed by the buyers, there was therefore no certificate. Unlike the report from Busselton Pest Control, it has the word 'Certification' on its last page, but that certification merely 'certifies' that the property has been inspected in accordance with the level of service requested by the client and certain guidelines. It does not 'certify' that the property is 'free from termite activity or damage occasioned by previous or current activity', or anything to the contrary for that matter. In all other respects, it is a report, much like the Busselton Pest Control Report. It no more fits the description of 'certificate' in cl 1 than the Busselton Pest Control report does.
It may be with further argument and possibly with evidence which was not put before the court below, or before me, that the buyers would persuade the court that the word 'certificate' is a descriptive word which has a particular trade usage. It may be that the word 'certificate' as used in cl 1 does not happily correlate to what the trade actually understands by a 'certificate'. It may be that, unless the property can be certified free of termite activity or damage, a report is prepared instead, given that there is no obligation to present the seller with any certificate. There is some ambiguity in the clause on this issue. Were I not otherwise dismissing their appeal, I would not have deprived the buyers of their right to have this issue determined at trial.
Further, the proposition that a buyer could lose the right to terminate a contract where a recognised and reputable pest controller has found termite activity and/or damage and has adequately set out in his report the nature and extent of the same and that report has been presented to the seller within time, but the same pest controller has not provided the buyer with a certificate, for the buyer's eyes only, to the same effect, is not an attractive one. That is not to say with full argument that it could not prove correct, but the correctness of it is not so obviously apparent to me that I am persuaded that the buyers have no arguable defence to that particular proposition.
But, for the reasons I expressed earlier, I am not satisfied that her Honour made any error in granting summary judgment against the buyers and consequently their appeal is dismissed.