Havenbar Pty Ltd v Butterfield

[1974] HCA 24

HIGH COURT OF AUSTRALIA

Menzies, Stephen and Jacobs JJ.

HAVENBAR PTY. LTD. v. BUTTERFIELD

(1974) 133 CLR 449

25 June 1974

Vendor and Purchaser

Vendor and Purchaser—Contract of sale—Description of land sold—Certainty—Condition subsequent—Contract to be cancelled if satisfactory plan not prepared by stated date—Election to affirm.

Decision

June 25.
THE COURT delivered the following written judgment: -
This is an appeal from the judgment and order of the Supreme Court of Queensland (Matthews J.) dismissing the plaintiff's action in which it sought specific performance of a contract for the purchase by it of thirty acres of land near Brisbane. (at p452)

2. The learned trial judge dismissed the plaintiff's action upon the ground that no concluded agreement had been arrived at between the parties concerning the identity of the land which was to be the subject of the sale. (at p452)

3. The relevant contract of sale is an unsatisfactory document; to a printed form of contract, as adopted by the Real Estate Institute of Queensland, have been added a number of typed conditions together with a plan. It was these additions which the learned primary judge regarded as revealing an absence of agreement as to subject matter. (at p452)

4. The vendor, Butterfield, owns some forty-seven acres of land in the Parish of Capalaba known as Portion IV. Part only of his land was to be sold to the purchaser and the form of contract of sale, in its opening paragraph, describes what is sold as a property

"containing 30 (thirty) acres NIL roods NIL perches, be the same a little more or less and being the land described as Being part of Portion IV. Area being approximately 30 acres, as outlined in Red on Plan attached hereto."

(The typed insertions in and additions to the printed form are printed in italic.) (at p452)

5. The attached plan consists of a copy of the printed parish plan of Capalaba on which Portion IV appears as rectangular in shape, its longer sides running roughly north-south. The southern two thirds or thereabouts of the Portion, as appearing on the plan, has been enclosed by a rectangle drawn on the printed plan, one of the four sides of which, the northern boundary, thus cutting the Portion into two unequal parts. This northern boundary of the superimposed rectangle takes the form of a dotted line whereas the other three sides are drawn as solid lines. A closer examination of the printed parish plan shows that Portion IV is not, according to its external measurements, a true rectangle; although its opposing sides running north-south are of equal length its two sides running east-west are of different lengths, that forming the northern boundary of the portion being three links longer than the southern boundary. The parish plan is devoid of bearings but an original survey plan of the land, obtained from the Surveys Office and tendered in evidence at the trial, shows the two pairs of opposing sides to be precisely parallel while at the same time showing the northern boundary of the portion to be three links longer than the southern boundary, a geometrical curiosity no doubt explicable by some minor inaccuracy of survey. (at p453)

6. The relevance of all this emerges from the terms of the typed conditions of sale which were added to the printed form before the contract of sale was executed by the parties. There were originally four such typed conditions numbered 1(a) to (d) but this appeal was conducted by the parties upon the footing that the whole of condition 1(c) had been deleted from the contract when it was executed. In those circumstances it is unnecessary to describe how it apparently came about that in the purchaser's copy of the contract of sale part only of that condition is shown to have been deleted at the time of execution. (at p453)

7. Conditions 1(a), (b) and (d) read as follows: -

"(a) The Purchaser having paid by way of an initial deposit the sum of $50.00 (Fifty dollars) on the signing of this contract of sale, shall pay a further deposit of $2,950.00 (Two Thousand Nine Hundred and Fifty Dollars) into the Trust Account of Andy de Vries within 14 (Fourteen) days from the date of this contract of sale and the balance of the purchase money namely $27,000.00 (Twenty Seven Thousand Dollars) shall be paid within 14 (Fourteen) days after the registration of the relevant plan of subdivision in exchange for a transfer of the said land duly executed by the Vendor in favour of the Purchaser and fit for registration in the Office of the Registrar of Titles free from all encumbrances. (b) Should the relevant plan not be registered by the 31st July, 1973 then this sale shall be cancelled and all moneys paid by way of deposit by the Purchaser shall be refunded to him. (d) The Purchaser agrees to pay his own surveyor the costs involved for the survey. Such survey to have Northern Boundary at right angles to the subject land, as on attached sketch. If such proposal plan is not satisfactory to both parties by the 12th (Twelfth) December, 1972 then this sale shall be cancelled and all moneys shall be refunded to the Purchaser."

In condition 1(d) the words "to be satisfactory to both parties" originally appeared after the word "survey" in the second sentence of that condition but were deleted prior to execution. The words "as on attached sketch." and "by the 12th (Twelfth)" have been added in ink. Nothing appears to turn upon these alterations. (at p453)

8. The learned trial judge rejected a submission on behalf of the plaintiff that the final sentence of condition 1(d) was meaningless and might be ignored. He regarded that sentence as providing to the parties an opportunity to agree as to the precise land which was to be sold, an opportunity of which, as he found, they did not avail themselves, the vendor never expressing satisfaction with any "proposal plan". It was because he also concluded that at the date of execution of the contract there was no agreed definition of the land to be sold that he held that, because of want of certainty of subject matter, there existed no binding agreement between the parties. (at p454)

9. In our view, there was no uncertainty of subject matter. What was to be sold was so much of Portion IV as contained thirty acres and lay to the south of an east-west line to be drawn across the Portion so as to be "at right angles to the subject land". The location of this land would, of course, be critical but the contract, by specifying two factors relevant to its location, provided all that was necessary for its precise identification and, in consequence, for the identification of the subject matter of the contract. (at p454)

10. First, the line had to be such as to form, together with the existing southern boundary of the Portion and with parts of its eastern and western boundaries, a rectangle comprising the thirty acres being sold and for which the purchaser was paying $30,000, no doubt calculated upon the basis of $1,000 for each of those thirty acres. Secondly, the line had to be "at right angles to the subject land". Had the eastern and western boundaries of the portion been precisely parallel this expression could have given rise to no difficulty. The very slight discrepancy in length between the northern and southern boundaries of the portion, and the inference arising from this that the eastern and western boundaries are not parallel, can occasion no real difficulty; the position of the northern boundary is still specified with precision because it is required to be "at right angles to the subject land". This expression, inelegant as it may be, clearly enough calls for a line, not necessarily at right angles to either the eastern or the western boundary, but at right angles to the general north-south axis of the land as a whole, that is to say, at right angles to a line running north and south midway between the eastern and western boundaries of the Portion. (at p454)

11. Thus understood, there is no uncertainty about the position of the northern boundary of the land agreed to be sold; only a line in one particular position will meet the two requirements, that 30 acres should be enclosed and that the northern boundary should be at right angles to the north-south axis of the land. (at p454)

12. A survey of the land would be required both to mark on the land itself the location of the northern boundary and to enable registration at the office of the Registrar of Titles of a plan of subdivision and of a transfer to the purchaser. This the parties clearly recognized by their inclusion in the contract of sale of the typed conditions. They intended that the purchaser should be responsible for having this survey carried out at its own expense - condition 1 (d). Since the contract prescribed precisely the position of the northern boundary the task of the surveyor would be merely to conform to that prescription; he would have no discretion in the matter. (at p455)

13. It is in the light of this fact that, in our view, the last sentence of condition 1(d) must be understood. Assuming, as we do, that its reference to "such proposal plan" is a reference to the intended survey plan, it follows, we think, that the further reference to that plan being "not satisfactory to both parties by the 12th (Twelfth) December 1972" can only contemplate a case in which either the surveyor has departed from the contractual prescription or no survey plan has come into existence by the due date. Because the parties have agreed upon the subject of the sale no other ground for dissatisfaction can arise consistently with that agreement. In either case a party may fail to be satisfied; however, because of the purely mechanical task which the surveyor has been given, we would regard his grounds for dissatisfaction as limited to these two cases. (at p455)

14. In fact the purchaser did fail to have any immediate survey made. Printed condition 21 deemed time to be in every respect of the essence of the contract but by 12th December 1972 no survey had been made nor had any plan of any description been provided by the purchaser other than a photostat copy of the plan attached to the original contract. (at p455)

15. If the last sentence of condition 1(d) has a self executing operation, the contract would thus have come to an end on 12th December 1972; but this is not, we think, the proper meaning to be given to that sentence. In our view it does not work an automatic cancellation of the contract. Had it provided that the contract "may be cancelled" the contract would clearly have been voidable only. The use of the imperative "shall" rather than the facultative "may" should not, we think, in the context, be treated as effective to make this contract one which becomes void of its own accord regardless of the then current intentions of the parties to it. In Gange v. Sullivan (1966) 116 CLR 418 a contract provided that in certain events "this contract shall be deemed at an end and all moneys paid by the purchaser to the vendor shall be refunded..."; in the joint judgment of Taylor, Menzies and Owen JJ., their Honours said of this provision that

"the authorities cited do show a disposition on the part of courts to treat non-fulfilment of a condition such as that here under consideration as rendering a contract voidable rather than void in order to forestall a party to a contract from gaining some advantage from his own conduct in securing, or contributing to, the non-fulfilment of a condition bringing the contract to an end." (1966) 116 CLR, at p 441 .

Their Honours had earlier referred to Suttor v. Gundowda Pty. Ltd. (1950) 81 CLR 418 , in which this Court considered a contractual term which, it had been contended, effected "an automatic avoidance of the contract on the occurrence of a specified event" (1950) 81 CLR, at p 440 . It was there held that such a term, expressed to apply in an event which might occur because of the act or omission of one of the parties, should not be construed as effecting any automatic avoidance of the contract, and this despite the fact that the event was also capable of occurring without any act or omission of a party. (at p456)

16. Although these cases concerned clauses quite different in form from condition 1(d) the principle is, we think, applicable here, if the purchaser, so to avoid the contract, were intentionally to refrain from having a survey plan prepared it should not be permitted to take advantage of its own default by then treating the contract as at an end; instead "void" is treated as "voidable" for all purposes despite the fact that this will require even an innocent party to evince an intention to avoid (Suttor v. Gundowda Pty. Ltd. (1950) 81 CLR, at pp 440-442 ). That is, we think, the proper interpretation of the present provision; non-fulfilment of the condition that the plan should be satisfactory to both parties by the given date renders the contract voidable rather than void. If failure of satisfaction arises because the purchaser has failed to have the plan duly prepared he may not, but the vendor may, then avoid the contract. The contract will be voidable at the instance of either party if, a proposal plan having been duly prepared, either party fails to be satisfied with it by the given date and that failure of satisfaction arises because the plan does not conform to the contractual prescription of its contents to which we have already adverted. In no event will the contract automatically be terminated; it will, if not avoided, continue on foot but subject always to the requirement that when a survey plan is procured it must be satisfactory to both parties in the sense that it complies with the contractual prescription. (at p457)

17. In fact, although 12th December 1972 passed without any survey plan having been prepared and, consequently, without either party being in a position to express satisfaction or otherwise concerning it, the vendor did not then treat the contract as at an end. The contract required the purchaser to pay a further deposit of $2,950 on 12th December 1972 but it failed to do so, whereupon the estate agent engaged in the transaction, acting on behalf of the vendor, on 4th January 1973 communicated by telephone with the purchaser's solicitors and on the following date received from them a cheque for the sum of $2,950 which, in accordance with condition 1(a), he deposited in his trust account and for which he issued an appropriate receipt dated 6th January. He at the same time informed the vendor's wife by telephone of the receipt of the further deposit. Then, on 23rd January 1973, the purchaser's solicitors, in a letter which referred to an earlier letter from the vendor's solicitors dated 6th December in which a copy of "the proposal plan" referred to in condition 1(d) had been requested, enclosed a photo-copy of a plan which was not a survey plan although the letter appears to treat it as answering the requirements of condition 1(d). Thereafter nothing more appears to have happened until about the end of April 1973 when surveyors engaged by the purchaser sought entry upon the vendor's land to carry out the necessary survey and were refused entry by the vendor. There then ensued, on 2nd May 1973, a telephone conversation between the managing director of the purchaser and the vendor in which the former sought to arrange a time convenient to the vendor at which the surveyors might enter the land. The result of this telephone conversation was inconclusive and the next day the purchaser's managing director called on the vendor and was told that the latter had received legal advice that the surveyors were to be refused entry to the property. Then the purchaser received from the vendor's solicitors a letter on 7th May offering to refund all moneys paid and stating that no binding contract existed between the parties and that, presumably in the alternative, the vendor was entitled to cancel the agreement pursuant to condition 1(d) and elected to do so. (at p457)

18. In these circumstances the purchaser is, in our view, entitled to specific performance of the contract of sale. The contract is an enforceable one further performance of which is now being denied by the vendor. He cannot now rely upon the default by the purchaser in procuring a surveyor's "proposal plan" before the stipulated date; he lost that opportunity when, after the purchaser's default on 12th December 1972, the vendor nevertheless continued to treat the contract as still on foot. When the purchaser belatedly sought to have a "proposal plan" prepared the vendor prevented this from being done and repudiated the contract. Time having ceased to be of the essence so far as concerned satisfaction with that plan the vendor could not then avoid the contract in reliance upon the absence of such a plan on the stipulated date. (at p458)

19. What will be required to be specifically performed will be the contract with condition 1(d) still remaining as an applicable condition although its original time limit will be inoperative; should there be undue delay on the purchaser's part in procuring a "proposal plan" the vendor may then require it to be procured within a reasonable time, failing which he may avoid the contract. Similar considerations will apply should any undue delay occur in registration of the plan, as contemplated by condition 1(b). Moreover if and when the plan does become available either party may find it to be "not satisfactory", and may on that ground avoid the contract, but only if the plan in fact fails to conform to the contractual prescription concerning the position of the northern boundary of the land to be sold. If, instead, the plan accords with what the parties have agreed upon the parties will be bound to complete the contract. (at p458)

20. We would accordingly allow this appeal and order that the contract of sale be specifically performed. (at p458)

Orders

Appeal allowed with costs.

Order of the Supreme Court of Queensland set aside and in lieu thereof order that judgment be entered for the plaintiff with costs and declare that the contract between the plaintiff and the defendant (exhibit 3 in the action), so far as it has not already been performed, ought to be specifically performed and carried into effect except so far as performance has been waived by the defendant, and order accordingly.

Liberty to apply to the Supreme Court of Queensland for any further order or direction in carrying out the decree for specific performance.