Grimley and Cableski World Pty Ltd v Thompson

[1995] QCA 193

IN THE COURT OF APPEAL	[1995] QCA 193
SUPREME COURT OF QUEENSLAND

Appeal No. 234 of 1994

Brisbane

Before McPherson J.A.
Pincus J.A.
Moynihan J.

[Grimley & Cableski World v. Thompson]

BETWEEN

GRIMLEY PTY. LTD.(ACN No. 006 565 019)

(First Defendant) First Appellant

AND

CABLESKI WORLD PTY. LTD. (ACN No. 010 862 012)

(Second Defendant) Second Appellant

AND

STANLEY WILLIAM THOMPSON

(Plaintiff) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 23rd day of May 1995

This is an appeal by the defendants Grimley Pty. Ltd. and Cableski Pty. Ltd. from a decision refusing their application to strike out pleadings delivered by the plaintiff Thompson in this action (no. 714 of 1994). Taking the pleaded allegations for present purposes as fact, what they disclose is that the first defendant Grimley was, and is, the registered proprietor of land at Runaway Bay on part of which the business of a ski park was operated by the defendant Cableski. In about February 1992 the parties entered into an informal agreement ("the original agreement"), of which a rough written memorandum was made, providing for a lease or perhaps a licence in favour of the plaintiff of another part of that land on which the plaintiff was to establish a golf course driving range and putting course. In the plaintiff's statement of claim declaratory relief and specific performance are sought in respect of the original agreement.

Having asserted that the original agreement was too uncertain to be enforceable and that the plaintiff had acted in breach of it, the defences delivered by each of the defendants went on to allege that on 18 February 1993 the parties had executed a deed of settlement varying the original agreement. The deed, according to its recitals, was intended to settle differences arising out of the original agreement which had resulted in other litigation (action no. 204 of 1993). In those proceedings Cableski as plaintiff claimed against Thompson as defendant declaratory relief and an injunction to restrain him from constructing the golf driving range, and the defendant foreshadowed a counterclaim for specific performance of the original agreement for a lease. The recited purpose of the deed was to settle all matters in the litigation and all claims arising out of that agreement, which is referred to in the deed as "the February agreement". According to an allegation in the statement of claim delivered by Thompson as plaintiff in action no. 714 of 1994, which is the action now before us, the defendants Grimley and Cableski sought, by notice dated 31 March 1994 from their solicitors, to rescind the original agreement as varied by the deed of settlement.

In para. 4(a) of each of the amended replies delivered by the plaintiff on 4 November 1994, it was admitted that the parties had entered into the deed of settlement. However, para. 4(d) of those replies also alleged that certain terms or conditions of the deed of settlement had not been performed or fulfilled. To understand the point at issue it is necessary to refer to the deed in more detail. After reciting the facts mentioned here, the deed provided in cl.1 that Cableski's action no. 204 of 1993 and Thompson's proposed counterclaim were settled "subject to and conditional upon the following ...". The matters that followed in cl.1 were (A) that Thompson would instal a safety netting fence to the driving range by 9 May 1993; and (B) that he would pay the appropriate application fee to the Council. Clause 2 provided that in default of performance of either of sub-cll. 1(A) or 1(B), the defendant should pay liquidated damages to Grimley of $250 per week; and cl.3 provided that on completion of the work in cl.1(A) Grimley and Thompson should enter into a lease of the subject land "currently occupied and as referred to in the February agreement". Clause 3 contained subclauses (a) to (e), which identified certain provisions of the original agreement, which were excluded or, in one instance, expressly undertaken by Thompson. There was provision for execution of a five year lease of the land on or from 9 May 1993, and a specification of the weekly rental that was to be paid by the plaintiff. There were other clauses in the deed to which it is not necessary to refer in detail.

Evidently the primary point argued at the hearing of the application before the Chamber Judge was that the effect the deed of settlement was to bring about an accord and satisfaction of the earlier claims, or at least an executory accord. But in whatever way the matter is approached, it remains clear that the validity or efficacy of the matter raised in the plaintiff's replies in the action turns on the proper interpretation of the provision in cl.1 of the deed that the differences of the parties were settled "subject to and conditional upon the following ...".

The plaintiff's contention was that those words introduced what was in effect a condition precedent to the efficacy or operation of the deed, which meant that unless the ensuing conditions in sub-cl.1(A) and 1(B) were satisfied, the deed did not come into effect, and the parties were relegated to their rights if any under the original agreement of February 1992.

In considering the weight to be given to this contention, it must be stressed that sub-cl.1(A) and 1(B) imposed obligations on the plaintiff Thompson that it was for him to perform. In para. 4(d) of each of the plaintiff's replies delivered on 4 November 1994, it is specifically alleged that he did not carry out the works referred to in sub-cl.1(A) of the deed by 9 May 1993. The case is therefore one in which the plaintiff seeks to rely on his own default in performance of a condition in order to mount an argument that the deed of settlement has never come into force. There is a consistent line of authority in Australia interpreting a contractual formula like that in cl.1 of the deed of settlement as imposing not a condition precedent to formation of the contract as such, but at most as a condition precedent to the obligation to perform the contract. See the discussion in Perri v. Cooloongatta Investments Pty. Ltd. (1982) 149 C.L.R. 537, 541-546. What is more important for present purposes, it is well settled, irrespective of which interpretation is adopted, that it is not open to a party to rely upon a suspensive condition of that kind if non-fulfilment of the condition has been due to default in performing obligations which the contract imposes on the party who claims to rely on it. See Suttor v. Gundowda Pty. Ltd. (1950) 81 C.L.R. 418, 441; Gange v. Sullivan (1966) 116 C.L.R. 418, 429-430; Perri v. Cooloongatta Investments Pty. Ltd. (1982) 149 C.L.R. 537, 545. In the present case it is the plaintiff by his own admission, who, in failing to perform the obligation imposed by cl.1(A) has been responsible for non-fulfilment of cl.1 of the deed of settlement. It is therefore not open to him to rely on that circumstance in order to argue that the deed of settlement has not come into effect or is now not binding on the parties.

From this it follows that, at the very least, the matters that are pleaded by way of reply in para. 4(d) of each of the replies delivered by the plaintiff can provide no basis in law for the further contention in para. 4(e) that the earlier action no. 204 of 1993, or the plaintiff's prospective counterclaim in those proceedings, "have not been extinguished or impaired". It would perhaps have been more accurate if the pleader had referred in para. 4(e) to the causes of action giving rise to those claims rather than the proceedings themselves; but the meaning and the result are clear. In either event, the interpretation of cl.1 which we adopt here carries the clear consequence that this part of para. 4 of the replies is irrelevant or unnecessary and so must be struck out. If this were done, it would be difficult to discover in the plaintiff's pleaded reply and counterclaim, as amended and delivered on 4 November 1994, any matter to which effect can be given as constituting a response in law to the allegations in the defences delivered in the action.

Mr Muir Q.C. who appeared for the defendant appellants in this Court was inclined to argue that the deficiencies in the plaintiff's pleaded case were such that the amended statement of claim ought also to be struck out. He submitted that the settlement deed of 18 February 1993 had entirely superseded the original agreement of February 1992, and that the plaintiff is consequently not entitled to rely on that earlier original agreement to justify any a claim against the defendants. It is, however, not entirely clear that the effect of the deed of settlement was not simply to vary, rather than entirely supersede, the original agreement, and the defendants' own statement of defence expressly pleads the deed as having varied the original agreement. The plaintiff has now delivered a further set of pleadings in the form of a further amended statement of claim and further amended replies. The former now adds a claim under the Trade Practices Act and the latter an assertion of estoppel related to expenditure (which is said to have amounted to $140,000) outlaid by the plaintiff in constructing the golf driving range on and improving the subject land.

This version of the pleadings was, according to the date they bear, delivered on 17 November 1994, which was the day after the subject applications were heard by the Chamber Judge. There is nothing to suggest that leave to deliver them has ever been granted or agreed to, and they are accordingly not before us in a way that could affect the outcome of the present appeal. It may, however, be not unhelpful to the parties, and particularly to the plaintiff who appeared unrepresented in the Court, if we proceed to state our tentative impression of the possible consequences in law of all the material which is now before us. It is apparent that at one time in 1992 or 1993 Thompson had an arguable case that the defendants Grimley and Cableski had agreed that he should have a lease for five years of the subject land on which to construct and establish a golf driving range. Having on his own admission failed to perform the condition or obligation in cl.1(A) which might have led on to execution and registration of that lease, he is not now at all likely to obtain an order for specific performance of that agreement. The defendants claim to have terminated any tenancy that might thereafter have sprung up in his favour. It thus becomes difficult on the material now before this Court to discover any basis on which he can claim to remain in possession, thus making it likely that in the end he will have to vacate the land. If, as he claims, he has outlaid considerable expenditure in making improvements on or to the land, he is not entirely without prospect of recovering something on that account as equitable restitution for his expenditure. See Lexane Pty. Ltd. v. Highfern Pty. Ltd. [1985] 1 Qd.R. 446, 455-456, 459- 460, where some of the relevant authorities are considered.

If a claim to that effect is to have any prospect of success, it will need to be pleaded in the statement of claim as an alternative or in addition to any other relief to which the plaintiff is in law entitled. At present the matter of expenditure is referred to in the undated version of the amended statement of claim apparently delivered at some time before the hearing below, and also in amended versions of the reply and the reply and answer dated 4 November 1994. In the former the allegation of expenditure is related to the claim added under the Trade Practices Act; in the case of the former it is tied in with the allegation of estoppel. If a claim for equitable relief in the form of restitution in respect of expenditure is to be made, it will have to be alleged in the statement of claim and separated from those other new allegations.

It is difficult at present to see how the plaintiff can expect to succeed in a claim for relief based directly on the original agreement or on that agreement as varied by the deed of settlement. It is equally difficult to avoid the conclusion that the whole process of pleading needs to be gone through yet again from the beginning.

In these circumstances the preferable and we think the proper course is to make the following orders:

1.   Allow the appeal with costs and order that the respondent pay the appellants' costs of the hearing on 16 November 1994 including reserved costs, if any, of that application.

2.    Order that the amended reply and answer and the amended reply of the respondent both delivered on 4 November 1994 be struck out.

3.   Further order that all parties have leave within the times specified by the Rules for pleading in an action to deliver further amended pleadings in the action, provided, however, that the respondent is not, without further leave in that behalf, to be at liberty to withdraw admissions already made which are to the following effect:

(a)	in paragraph 4(a) of the amended reply and answer and amended reply both delivered on 4 November 1994, that on 18 February 1993, the plaintiff, the first defendant and the second defendant entered into a deed of settlement dated the said date; and
(b)	in paragraph 4(d) of that reply and answer and that reply, that the plaintiff did not carry out by 9 May 1993 the works referred to in clause 1(A) of the deed of settlement.

If in the end the only real issue between the parties is likely to be the plaintiff's right to recoup the expenditure outlaid in making improvements to the subject land, and the amount outlaid, it may not be out of place to recommend that they submit to mediation to resolve those questions.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 234 of 1994

Brisbane
[Grimley & Cableski World v. Thompson]

BETWEEN

GRIMLEY PTY. LTD. (ACN No. 006 565 019)

(First Defendant) First Appellant

AND

CABLESKI WORLD PTY. LTD. (ACN No. 010 862 012)

(Second Defendant) Second Appellant

AND

STANLEY WILLIAM THOMPSON

(Plaintiff)	Respondent
McPherson J.A. Pincus J.A. Moynihan J.

Judgment delivered 23/05/95
Reasons for judgment by the Court

1.   ALLOW THE APPEAL WITH COSTS AND ORDER THAT THE RESPONDENT PAY THE APPELLANTS' COSTS OF THE HEARING ON 16 NOVEMBER 1994 INCLUDING RESERVED COSTS, IF ANY, OF THAT APPLICATION.

2.    ORDER THAT THE AMENDED REPLY AND ANSWER AND THE AMENDED REPLY OF THE RESPONDENT BOTH DELIVERED ON 4 NOVEMBER 1994 BE STRUCK OUT.

3.   FURTHER ORDER THAT ALL PARTIES HAVE LEAVE WITHIN THE TIMES SPECIFIED BY THE RULES FOR PLEADING IN AN ACTION TO DELIVER FURTHER AMENDED PLEADINGS IN THE ACTION, PROVIDED, HOWEVER, THAT THE RESPONDENT IS NOT, WITHOUT FURTHER LEAVE IN THAT BEHALF, TO BE AT LIBERTY TO WITHDRAW THE ADMISSIONS ALREADY MADE TO THE FOLLOWING EFFECT:

(A) IN PARAGRAPH 4(A) OF THE AMENDED REPLY AND ANSWER AND AMENDED REPLY BOTH DELIVERED ON 4 NOVEMBER 1994, THAT ON 18 FEBRUARY 1993, THE PLAINTIFF, THE FIRST DEFENDANT AND THE SECOND DEFENDANT ENTERED INTO A DEED OF SETTLEMENT DATED THE SAID DATE; AND

(B) IN PARAGRAPH 4(D) OF THAT REPLY AND ANSWER AND THAT REPLY THAT THE PLAINTIFF DID NOT CARRY OUT BY 9 MAY 1993 THE WORKS REFERRED TO IN CLAUSE 1(A) OF THE DEED OF SETTLEMENT.

CATCHWORDS	APPEAL - CONTRACT - Application to strike out pleadings - Informal agreement for lease or license and subsequent execution of deed of settlement - Whether contract imposed condition precedent to formation or condition precedent to obligation to perform - Perri v. Cooloongatta Investments Pty. Ltd. (1982) 149 C.L.R. 537 - Plaintiff seeking to rely on own default to argue the deed of settlement never came into existence.
Counsel:	J.D.M. Muir Q.C. for the appellants Respondent in person
Solicitors:	MacGillivrays for the appellants

Hearing Date: 3 May 1995