Hewitt v CASELLA
[2006] WASC 254
HEWITT & ORS -v- CASELLA [2006] WASC 254
| Link to Appeal : |
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| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 254 | |
| Case No: | CIV:1438/2006 | 18 SEPTEMBER 2006 | |
| Coram: | MASTER NEWNES | 10/11/06 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for plaintiffs | ||
| B | |||
| PDF Version |
| Parties: | ANTHONY JOHN HEWITT LANA JOYCE HEWITT RONALD PETER TOLEDO KAREN TOLEDO TERENCE STEPHEN DUCKWORTH AND ROCHELLE LOUISE DUCKWORTH AS TRUSTEES OF THE TR & G SUPERANNUATION FUND PETER GARDINER DARYL THOMPSON GRAHAM DEWAR COLLEEN VAN DIJKEN JERVIS ATKINSON PAIGE ATKINSON DOMINIC CASELLA LISA FRAYNE JARMAN CHRISTINE MARY WORTHINGTON |
Catchwords: | Practice and procedure Application for summary judgment Contract for sale of lot in proposed subdivision Defendant entitled to terminate contract if unwilling to comply with conditions of subdivision approval Condition of approval that defendant make arrangements with electricity authority for supply of power Whether terms of supply of electricity authority constituted condition of subdivision approval Whether defendant entitled to terminate contract Turns on own facts |
Legislation: | Town Planning and Development Act 1928 (WA), s 24(5) |
Case References: | Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 Fitzgerald v Masters (1956) 95 CLR 420 Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 Home Building Society Ltd v Pourzand [2005] WASCA 242 Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144 Watson v Phipps (1985) 60 ALJR 1 Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25 Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177 Lewkowski v Bergalin Pty Ltd, unreported; FCt SCt of WA; Library No 7675; 26 May 1989 Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109 The State of Western Australia v Rothmans of Pall Mall (Australia) Ltd [2001] WASCA 25 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- LANA JOYCE HEWITT
First Plaintiffs
RONALD PETER TOLEDO
KAREN TOLEDO
Second Plaintiffs
TERENCE STEPHEN DUCKWORTH AND ROCHELLE LOUISE DUCKWORTH AS TRUSTEES OF THE TR & G SUPERANNUATION FUND
Third Plaintiffs
PETER GARDINER
DARYL THOMPSON
Fourth Plaintiffs
GRAHAM DEWAR
COLLEEN VAN DIJKEN
Fifth Plaintiffs
JERVIS ATKINSON
PAIGE ATKINSON
Sixth Plaintiffs
AND
- DOMINIC CASELLA
Defendant
- First Plaintiff
CHRISTINE MARY WORTHINGTON
Second Plaintiff
AND
DOMINIC CASELLA
Defendant
Catchwords:
Practice and procedure - Application for summary judgment - Contract for sale of lot in proposed subdivision - Defendant entitled to terminate contract if unwilling to comply with conditions of subdivision approval - Condition of approval that defendant make arrangements with electricity authority for supply of power - Whether terms of supply of electricity authority constituted condition of subdivision approval - Whether defendant entitled to terminate contract - Turns on own facts
Legislation:
Town Planning and Development Act 1928 (WA), s 24(5)
Result:
Judgment for plaintiffs
(Page 3)
Category: B
Representation:
CIV 1438 of 2006
Counsel:
First Plaintiffs : Mr A R Beech SC
Second Plaintiffs : Mr A R Beech SC
Third Plaintiffs : Mr A R Beech SC
Fourth Plaintiffs : Mr A R Beech SC
Fifth Plaintiffs : Mr A R Beech SC
Sixth Plaintiffs : Mr A R Beech SC
Defendant : Mr P G McGowan
Solicitors:
First Plaintiffs : Lavan Legal
Second Plaintiffs : Lavan Legal
Third Plaintiffs : Lavan Legal
Fourth Plaintiffs : Lavan Legal
Fifth Plaintiffs : Lavan Legal
Sixth Plaintiffs : Lavan Legal
Defendant : Mendelawitz Morton
CIV 1458 of 2006
Counsel:
First Plaintiff : Mr A R Beech SC
Second Plaintiff : Mr A R Beech SC
Defendant : Mr P G McGowan
Solicitors:
First Plaintiff : Lavan Legal
Second Plaintiff : Lavan Legal
Defendant : Mendelawitz Morton
(Page 4)
Case(s) referred to in judgment(s):
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Fitzgerald v Masters (1956) 95 CLR 420
Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310
Home Building Society Ltd v Pourzand [2005] WASCA 242
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2006] FCAFC 144
Watson v Phipps (1985) 60 ALJR 1
Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25
Case(s) also cited:
Esanda Finance Corporation Ltd v Spence Financial Group Pty Ltd [2006] WASC 177
Lewkowski v Bergalin Pty Ltd, unreported; FCt SCt of WA; Library No 7675; 26 May 1989
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
The State of Western Australia v Rothmans of Pall Mall (Australia) Ltd [2001] WASCA 25
(Page 5)
1 MASTER NEWNES: The various plaintiffs in each of the actions have applied for summary judgment against the defendant for a declaration that a notice of termination served on them by the defendant is ineffective to terminate their contract with the defendant and that the contract remains in force and effect. The facts in each case are, in all relevant respects, identical.
The facts
2 The claims arise out of contracts made between the respective plaintiffs and the defendant on various dates in 2005. Each of the plaintiffs agreed to purchase a proposed lot on then undivided land in Boddington owned by the defendant, on the basis that the defendant would cause the land to be subdivided in accordance with a proposed plan of subdivision. The contracts were in all relevant respects in the same terms and incorporated the 2002 General Conditions for the Sale of Land published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (the "General Conditions").
3 The General Conditions provided, so far as relevant:
"13 Subdivision
13.1 When Clause applies
This clause applies only if the Land is not a Lot at the Contract Date.
13.2 Contract conditional
The Contract is conditional on the following.
(a) An application for the subdivision of the Lot from the Original Land being lodged with the Planning Commission within 3 months after the Contract Date.
(b) The Planning Commission granting approval for the subdivision of the Lot from the Original Land within 6 months after the Contract Date, or any longer period as specified in:
(1) the Contract; or
- (2) a subsequent agreement in writing between the Parties.
- 13.3 Further condition for subdivision
(a) The Contract is also conditional on the following.
(1) The Planning Commission endorsing approval on a Subdivision Plan within 6 months after approval for subdivision by the Planning Commission.
(2) The Subdivision Plan being in Order for Dealing within 3 months after the date of endorsement of approval by the Planning Commission in accordance with subclause (1).
(b) Each period specified in subclause (a) will, if applicable, be extended as specified in:
(1) the Contract; or
(2) a subsequent agreement in writing between the Parties.
(a) The Seller must, if the Seller has not already done so, lodge an application with the Planning Commission for the subdivision of the Subdivision Lot, from the Original Land, within 15 Business Days after the Contract Date.
(b) Following the lodgment of the application in accordance with subclause (a), the Seller must use best endeavours to:
(1) obtain the approval of the Planning Commission, to the subdivision of the Subdivision Lot from the Original Land; and
- (2) subject to the approval of the Planning Commission to the subdivision, arrange for preparation of a Subdivision Plan including the Subdivision Lot, and for the Subdivision Plan to be:
(A) lodged at DOLA; and
(B) endorsed as in Order for Dealing,
as soon as practicable.
- 13.5 Unacceptable condition imposed by Planning Commission
If the Planning Commission grants approval for the subdivision of the Lot from the Original Land subject to a condition with which either the Seller or the Buyer, acting reasonably:
(a) is unwilling to comply with; or
(b) considers it to be prejudicial,
the Party who:
(c) would be bound to comply with the condition; or
(d) is prejudiced by the condition,
may within 10 Business Days of being notified of the condition elect by Notice to the other Party to withdraw from and terminate the Contract."
(Page 8)
- "Condition(s)
The WAPC is prepared to endorse a deposited plan in accordance with the plan submitted once the condition(s) set out have been fulfilled.
The condition(s) of this approval are to be fulfilled to the satisfaction of the WAPC.
The condition(s) must be fulfilled before submission of a copy of the deposited plan for endorsement.
The agency/authority or local government noted in brackets at the end of the condition(s) identify the body responsible for providing written advice confirming that the WAPC's requirement(s) outlined in the condition(s) have been fulfilled. The written advice of the agency/authority or local government is to be obtained by the applicant/owner. When the written advice of each identified agency/authority or local government has been obtained, it should be submitted to the WAPC with a Form 1C and appropriate fees and a copy of the deposited plan.
…
The condition(s) of this approval, with accompanying advice, are:
CONDITIONS
…
12. Suitable arrangements being made with Western Power for the provision of an electricity supply service to the lot(s) shown on the approved plan of subdivision. (Western Power)
…"
5 The approval of the WAPC was subject to a total of 14 conditions, the responsible body being the local government agency in several cases. They included, for example, "[a]rrangements being made with the local government for the upgrading of Days Road from Crossman Road to the proposed subdivisional road" and "battleaxe accessway(s) being constructed and drained at the applicant/owner's expense to the specifications of the local government". There was also a condition which
(Page 9)
- required "[s]uitable arrangements being made with Western Power for the removal and relocation of electricity supply infrastructure, including plant and equipment, located on or near the lots shown on the approved plan."
6 On 3 January 2006, Western Power notified the defendant's electricity consultant of the specific requirements of Western Power for the provision of an electricity supply service to the lots. The defendant says that the cost of meeting those requirements was such that he could not complete the development at a reasonable profit and it was entirely likely that he would make a loss. They were therefore conditions with which he was not willing to comply and which he considered to be prejudicial to him.
7 On or about 6 January 2006, the defendant, by his solicitor, sent a notice of termination of each of the contracts, relying on cl 13.5 of the General Conditions. The notice, after reciting the relevant provisions of the contract, simply stated that pursuant to condition 13.5 the defendant withdrew and gave notice of termination of the contract. It did not identify the condition on which the defendant relied.
8 It was not in issue, however, that the defendant says that one of the requirements of Western Power in its letter of 3 January 2006, that three phase power be installed, was a "condition" within the meaning of cl 13.5 that he considered to be prejudicial and with which he was not willing to comply, the cost being too great.
9 I understand that the matter has now reached an impasse. The defendant contends that the contracts have been terminated and nothing further is required of him in respect of the contracts. The plaintiffs, on the other hand, contend that cl 13.5 of the General Conditions has no application and that the contracts remain on foot.
10 The plaintiffs have therefore sought summary judgment for a declaration that the notices of termination served by the defendant were ineffective to terminate the contracts, which remain in full force and effect.
The plaintiffs' submissions
11 It was submitted on behalf of the plaintiffs that the letter from Western Power was, and is, incapable of giving rise to a right on the part of the defendant to terminate the contracts under cl 13.5. That provision applies only in respect of a condition to which the grant of approval by the WAPC is made subject. The conditions of the approval are set out in the
(Page 10)
- letter of approval of 7 September 2005. The right of termination arises only where a party (acting reasonably) is unwilling to comply with a condition or considers it to be prejudicial and that right has to be exercised within 10 business days of being notified of the condition.
12 Senior Counsel for the plaintiffs argued that the defendant's case required cl 13.5 to be read so that, wherever a condition is imposed by the WAPC which requires the making of arrangements with some other authority, if the party required to comply with the condition becomes dissatisfied with the arrangements required by the authority, it can invoke cl 13.5. The language of cl 13.5 is not susceptible of such an interpretation, which would be a rewriting of the provision.
13 It was submitted that such a construction not only ran contrary to the plain meaning of cl 13.5, but would necessarily give rise to difficult questions as to whether a "condition" had been imposed, and the point at which the "condition" had been imposed, by the authority. That, in turn, would lead to uncertainty as to the time by which a party affected by the condition may give notice under cl 13.5. In the present case, the letter from Western Power did not, in its terms, impose any condition on the provision of electricity but provided two options for the installation of supply, together with the cost of each, from which the defendant was to choose.
14 Moreover, it was not the case that construing the clause to bear its plain meaning gave rise to any necessary commercial difficulty. Any commercial difficulties in the present case were of the defendant's own making. If the defendant was concerned at the open-ended nature of the condition in respect of the provision of electricity, he could have sought a reconsideration by the WAPC under s 24(5) of the Town Planning and Development Act 1928 (WA) or exercised the right of termination under cl 13.5. There was also no evidence that proper enquiries by the defendant could not have ascertained, within 10 days of receiving notice of the conditions, what the requirements of, among others, Western Power were.
15 It followed that there was no arguable defence to the claim for a declaration.
The defendant's submissions
16 It was submitted by counsel for the defendant that cl 13.5(b) was inserted for the benefit of both parties and it was designed to enable either party to terminate the contract if any condition of subdivision approval
(Page 11)
- was unacceptable. In order for a party, acting reasonably, to make that decision, the true, effective content of the condition had to be ascertained.
17 Where, as here, the content of a condition imposed on an approval by the WAPC was dependent upon the determination of the requirements of some other body, then, on its proper construction, cl 13.5 referred to any condition imposed by the requirements of that other body. The true content of the WAPC condition could not be ascertained until the requirements of the other body, in this case Western Power, were known. It was only then that a party - in this instance, the defendant - could determine whether (acting reasonably) they were unwilling to comply with any condition imposed by those requirements or considered them to be prejudicial. It was only at that point that the true content of the WAPC condition was "fleshed out".
18 If it were otherwise, it would mean that, unless within 10 business days of receiving the conditional approval of the WAPC on 7 September 2005, the defendant provided notice of termination, the defendant was bound, in effect, by whatever requirements were imposed by Western Power in fulfilment of the condition attached to the WAPC approval. It would be an artificially narrow construction of cl 13.5 to limit it to the specific conditions attached to the WAPC approval.
The relevant principles
Summary judgment
19 The principles applicable to an application for summary judgment are well-known and were not in issue on this application.
20 It is clear that the power to order summary judgment must be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87. If after argument there remains real uncertainty as to the plaintiff's right to judgment without further investigation of the facts, summary judgment must be refused: Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332 at 335.
21 Summary judgment is not, however, restricted to cases which are obvious, and extensive argument may be necessary to demonstrate that the case of the defendant is so plainly untenable that it cannot possibly succeed: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. But that the Court should be careful not to risk
(Page 12)
- stifling the development of the law by summarily rejecting a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie: Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 (at 373).
The construction of the contract
22 Where an agreement has been reduced to writing the intention of the parties is ordinarily to be ascertained from the words they have used, looked at objectively. The document should be construed practically so as to give effect to its discernible commercial purpose.
23 If the words are plain and unambiguous the Court must give effect to them, although the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The Court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, per Gibbs J at 109.
24 If the language of the contract is ambiguous, or open to two constructions, or if the plain meaning of the clause renders it inconsistent with another, the Court should resolve the ambiguity, or reconcile the inconsistency, by adopting a construction which accords with 'business common sense' or the commercial purpose of the agreement which appears from its terms and the knowledge, common to the parties, which formed the background to the formation of their agreement: see Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 per Mason J at 352; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (supra); Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310; Fletcher Construction Australia Ltd v Varnsdorf Pty Ltd [1998] 3 VR 812 at 821.
25 If the words of a contract, while plain and unambiguous, lead to a result which is not only unreasonable but absurd, the Court should construe the contract, if necessary, by supplying, omitting, or correcting words to avoid the absurdity: Fitzgerald v Masters (1956) 95 CLR 420 at 426 - 427; Watson v Phipps (1985) 60 ALJR 1 at 3; Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25 at [19] and [20]. But the plain meaning must be manifestly absurd; mere unreasonableness is not enough.
(Page 13)
26 I should say that it appears to be a matter of uncertainty in Australia whether evidence of surrounding circumstances known to the contracting parties (or which ought reasonably to have been known to them) can be used in the ordinary course of the interpretation of contracts or only where the language of the contract is ambiguous or susceptible of more than one meaning. The relevant authorities were discussed in Home Building Society Ltd v Pourzand [2005] WASCA 242, in the judgment of McLure JA at [25] - [33]. Her Honour observed that the cases are not easy to reconcile and concluded that in that case it was unnecessary to attempt to reconcile them.
27 In this case it is, I think, again unnecessary to attempt to reconcile them. It was not suggested by counsel for the defendant that any surrounding circumstances bore upon the meaning to be given to cl 13.5. (I note in passing that in the very recent case of Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd[2006] FCAFC 144, the Full Court of the Federal Court concluded that, in light of several recent decisions of the High Court, it was not necessary to find ambiguity before evidence of surrounding circumstances was admissible.)
Does the defendant have an arguable defence?
28 In my view, there is no arguable defence to the claim. I consider that the meaning of cl 13.5 is clear. The language is plain and unambiguous and can bear only one meaning: see Australian Broadcasting Commission v Australasian Performing Right Association Ltd (supra) at 105 - 107 per Barwick CJ, and 114 - 115 per Stephen J.
29 Clause 13.5 refers to circumstances where:
"the Planning Commission grants approval for the subdivision … subject to a condition with which either the Seller or the Buyer, acting reasonably:
(a) is unwilling to comply with; or
(b) considers it to be prejudicial …"
30 In such a case, if a party who is bound or prejudiced by the condition is unwilling to comply with it, or considers it to be prejudicial, the party may "within 10 Business Days of being notified of the condition" elect to withdraw from and terminate the contract.
31 In my view, it is plain from the terms of the contract that the "condition" referred to in cl 13.5 is that to which the WAPC approval
(Page 14)
- itself is expressed to be subject; relevantly, to suitable arrangements being made by the defendant with Western Power.
32 I do not accept the defendant's argument that such a construction is artificially narrow and would lead to an unjust and commercially impractical result. If the defendant was dissatisfied with the open-ended nature of a condition imposed by the WAPC, he had the option of terminating the contract within 10 days of being notified of the condition, or of seeking reconsideration of the condition by the WAPC.
33 On the other hand, on the defendant's construction it would be necessary, in order to determine whether, and by when, a party was entitled to terminate the contract under cl 13.5, to consider not only the terms of the WAPC approval itself, but whether, and when, any "condition" had been notified by an agency, such as Western Power, with which the applicant was required by the terms of the WAPC approval to reach any agreement or arrangement.
34 In this case it was a condition of approval by the WAPC that "suitable arrangements" be made by the defendant with Western Power for the provision of electricity services. On the defendant's case, it would be necessary then to determine whether, and precisely when, in the course of the defendant's endeavours to reach "suitable arrangements", Western Power had notified the defendant of a "condition" of its provision of electricity services.
35 The determination of whether, and if so precisely when, any condition had been notified would obviously be critical in view of the provision that termination of the contract can only occur within 10 days of the terminating party being notified of the condition.
36 Moreover, where, as here, the relevant terms of the WAPC approval contained a number of conditions, some of which referred to a requirement that the defendant reach some agreement or arrangement with an agency or local government body, those difficulties would be magnified. On the defendant's construction, when any of those bodies first notified the defendant of a "condition", within the meaning of cl 13.5, a right to terminate the contract would arise. There would therefore potentially be a number of different, unpredictable, times at which termination could occur.
37 It seems to me that the construction contended for by the defendant not only flies in the face of the plain words of the contract, but would
(Page 15)
- import into the contract unreasonable uncertainty affecting important rights and obligations of the parties.
38 In my view, it is clear that on its proper construction a "condition", as referred to in cl 13.5, is a condition of the approval granted by the WAPC and set out in its letter of approval of 7 September 2005. The fact that that may lead to practical difficulties for the defendant in his particular circumstances cannot lead to a different result.
39 It follows that the defendant was not entitled to terminate the contracts as he purported to do. The requirements contained in the letter from Western Power did not constitute a "condition" within the meaning of cl 13.5 and, in respect of the conditions attached to the approval of the WAPC, the time within which the defendant was entitled to terminate under cl 13.5 had already expired.
40 Accordingly, I consider that the plaintiffs are entitled to the declaration they seek. I will hear the parties on the precise terms of the appropriate orders and on costs.
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