Highmist v Tricare

[1997] QSC 238

IN THE SUPREME COURT
OF QUEENSLAND

O.S. 9387 of 1997
Brisbane
Before Mr Justice Dowsett
[Highmist v Tricare]

IN THE MATTER of Order 64 rules 1A   and 1B of the Rules of the Supreme Court

- and -

IN THE MATTER of a certain contract

between Highmist Pty Ltd and Tricare

Australia Ltd

CATCHWORDS:     Contract - construction and interpretation of the term “completion date”.

COUNSEL:               Mr P.J. Lyons Q.C. for the applicant

Mr W Sofranoff Q.C. and Mr J.D. McKenna for the respondent

SOLICITORS:          Praeger & Associates for the appellant

Bowdens for the respondent

HEARING DATE:    30 October 1997

REASONS FOR JUDGMENT - DOWSETT J.

Delivered the 24th day of December 1997

The applicant is the purchaser from the respondent of certain vacant land being part of Lot 1 on R.P. 890439 in the county of Ward, parish of Gilston pursuant to a contract dated 27 April 1996. The land is identified on an annexed plan. It is common ground that as the contract was for the sale of part only of a subdivided allotment, it was necessary to obtain exemption from the provisions of the Land Sales Act 1984. Such exemption was obtained. For present purposes, as I understand it, only two provisions of the contract are relevant. One is cl. 47 which provides as follows:-

“47      SUBDIVISION REGISTRATION

47.1     This contract is subject to:

(a)approval by the Local Authority and registration in the appropriate office of a plan of subdivision substantially in the form attached; and

(b)the issue of an indefeasible title under the Land Title Act 1994 for the Land required to register the transfer to the Purchaser,

on or before the Completion Date.

47.2If the condition referred to in clause 47.1 has not been satisfied by the Completion Date the Purchaser may terminate this contract by notice in writing given to the Vendor. In such event all deposit and other moneys received by the Vendor or the Stakeholder on account of the purchase price (other than the First Deposit Instalment and the Second Deposit Instalment) shall be refunded to the Purchaser without deduction.

47.3The Vendor will diligently pursue the Local Authority and relevant government offices in relation to the subdivisional plans and applications lodged by it under this clause.

47.4The plan of subdivision shall be taken to be substantially in the form attached notwithstanding that the boundaries differ, provided that:

(a)the boundaries do not vary from those on the attached plan by a distance of more than 20 metres at any point; and

(b)the area of the Land to be purchased does not reduce by more than 3%.

47.5Notwithstanding clause 47.4, the purchaser may at its sole discretion elect to complete this contract, if the boundaries do vary from those on the attached plan by a distance of more than 20 metres at any point, or the area of the Land to be purchased does reduce by more than 3%.

47.6If the condition is satisfied the Vendor shall give notice in writing of such satisfaction to the Purchaser promptly and in any event not later than 2 business days after the date of satisfaction.”

The second relevant provision is clause 49 which provides as follows:-

“49      COMPLETION

49.1The date for completion under this contract is the date falling 18 calendar months after the date of this contract or at the option of the Purchaser, the date being 5 days after registration of the plan of subdivision in accordance with clause 47.

49.2Despite clause 49.1, the Purchaser may at its sole discretion elect to complete this contract prior to the date falling 18 calendar months after the date of this contract, but after the date of satisfaction of the condition contained in clause 47.1. Should the Purchaser wish to complete this contract during that time, the Purchaser shall give the Vendor 5 business days prior notice in writing, which notice shall specify the date upon which the Purchaser requires completion to be effected."

Clause 47.1 provides that the contract is subject to registration of the plan of subdivision and issue of a separate title on or before the Completion Date. The Completion Date, according to cl. 49.1, is the date falling 18 months after the date of the contract or at the option of the purchaser, a date 5 days after registration of the plan of subdivision in accordance with cl. 47. The period of 18 months has expired, but the subdivisional approval contemplated by cl. 47 has not yet been obtained. The respondent/vendor asserts that the contract is now terminable by either party for non-fulfilment of that condition. The applicant/purchaser submits that the effect of cl. 47 is to permit the purchaser to terminate the contract for non-fulfilment of the condition, and it not having done so, the contract remains on foot.

The interaction of cll. 47 and 49 may pose some practical problems in that although, pursuant to the former section, the contract is subject to approval and registration of the plan and the issue of a separate title,  the alternative date for completion pursuant to clause 49 is apparently to be fixed by reference only to registration of the plan in accordance with clause 47. There is a theoretical, and perhaps a practical possibility that the plan could be registered more than five days prior to issue of the new title.  Of course, it may be arguable that the phrase “registration of the plan of subdivision in accordance with clause 47" was intended to be a shorthand reference to the whole of the condition prescribed by clause 47.  That, however, is not a relevant problem for present purposes.

The respondent submits that the contract contemplates completion within 18 months in all circumstances.  The alternative date in cl.  49.1, it is submitted, was meant to apply if the condition were satisfied within the 18 month period.  In that case, the purchaser might elect to complete within 5 days of registration.  As to cl.  49.2, it is submitted that it was meant to apply if the purchaser initially chose not to complete early, pursuant to cl.  49.1, but later wished to do so within the 18 month period.  This is obviously an artificial and unconvincing argument.

Clause 49.1 must be read in the context of cl. 47, which permits the purchaser to terminate if the condition has not been satisfied by the Completion Date.  Clause 49.1 is designed to fix the Completion Date in all circumstances.  It provides two options - 18 months after the date of the contract or 5 days after registration of the plan “in accordance with clause 47".  Primarily, cl. 47 contemplates the condition in cl. 47.1 being satisfied within the 18 month period.  Should this not occur, the purchaser may terminate the contract.  In the absence of such termination, the contract will continue, in which case there must be a new Completion Date.  This is the purpose of the alternative provision in cl. 49.1. If the condition is satisfied within the 18 month period, then the purchaser may call for early completion pursuant to cl. 49.2, but that is not relevant for present purposes.

The respondent raises a number of objections to this interpretation. It points out that because of the provisions of the Land Title Act 1994, completion cannot occur until a separate title has issued. It submits that it follows from this that cl. 47 should be construed as a clause inserted for the benefit of the vendor to excuse it from liability in the event that registration has not been completed. I am not sure that it is correct to say that the vendor would be in breach if it were not legally permitted to complete its obligations under the contract, but I need not consider that matter further for present purposes. Whether or not the vendor derives a benefit under cl. 47, the point is that it is the purchaser who is given the express right to terminate the contract in the event that the condition is not satisfied by the stipulated date.

As I understand it, the question of benefit is only relevant in determining whether or not one party or the other may unilaterally waive the provisions of a particular term. The respondent’s argument is that the vendor has a right to terminate because the clause is for its benefit.  However the contract makes express provision for termination by the purchaser, but not by the vendor.  The respondent argues that it was necessary to confer an express right on the purchaser because it would not otherwise have such a right, the clause being for the benefit of the vendor. Ingenious as this argument is, I find it unconvincing. A more conventional approach is to infer that the express provision providing for termination at the election of the purchaser excludes the possibility of termination by the vendor in the same situation.  Once it is accepted that it is the purchaser alone who may elect to terminate if the condition is not satisfied by the appropriate date, it follows that it may also elect not to terminate, with the consequences to which I have referred.

It is said that this interpretation results in unacceptable consequences.  Firstly, it is said that it results in the vendor “being locked into a contract of indefinite duration”. This criticism highlights the fact that the contract seems to assume that the vendor will apply for subdivision (cl.47.3), and that the application will be considered and eventually, accepted or rejected.  If  that assumption is implicit in the contract, then a rejection will necessarily lead to the contract being impossible of performance, and therefore frustrated or, one would think, arguably at an end by virtue of some implied term.

The declarations sought in the summons are not appropriate because if made, they might  leave it open to the applicant to argue that the contract is to remain on foot indefinitely.  Any declaration should be limited to a declaration that the respondent presently has no right to terminate the contract. However I will hear further submissions on this aspect and as to costs.