Hill v Souerys Pty Ltd

[1989] TASSC 8

Serial No. B3/1989
List “B”

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Palmer and Taranto v England [1989] TASSC 8; B3/1989

PARTIES:  PALMER
  TARANTO
  v
  ENGLAND

FILE NO/S:  438/1980
DELIVERED ON:  28 February 1989
JUDGMENT OF:  Green CJ

Judgment Number:  B3/1989
Number of paragraphs:  22

Serial No B3/1989
File No 438/1989

PALMER AND TARANTO v ENGLAND

REASONS FOR JUDGMENT  GREEN CJ

28 February 1980

1. This is a claim for damages for breach of contract.

1. By clause 1 of an agreement in writing made on the 6 March 1974 the plaintiffs agreed to sell to Hallmark Homes Pty Ltd or its nominee the land described in the schedule to the agreement. On 22 April 1974 the company nominated the defendant as the purchaser. The schedule described the property as being "ALL THAT property situate Marys Hope Road aforesaid shown in the attached plan, excepting thereout Lots 48, and improvements thereon 41 and 42" (sic). The plan attached which was dated May 1973 and entitled "B J Palmer Subdivision—Proposal Plan—Marys Hope Road—Berriedale" showed amongst other things 70 numbered lots including lots numbered 48, 41 and 42. The agreement for sale also contained the following clauses:—

"14The Purchaser shall immediately on the Survey Diagram being approved transfer to the Vendors the said Lots excluded from the sale.

15The Purchaser shall not mortgage the said Lots excluded as aforesaid without the Vendors' consent first had and obtained.

16The purchaser shall construct the roads to service the said Lots, 41, 42 and 48 without cost to the Vendors".

1. On 25 September 1974 the whole of the land shown in the plan referred to in the schedule was transferred by the plaintiffs to the defendant for an estate in fee simple. On 28 April 1976 the defendant transferred to the plaintiffs a piece of land which comprised lot 48 together with some adjoining land. On 23 December 1983 the whole of the remainder of the land, which included lots 41 and 42, was transferred to a stranger.

1. Read literally clause 1 cannot be reconciled with clause 14. As clause 1 and the schedule excluded lots 48, 41 and 42 from the land which the plaintiffs were obliged to transfer to the defendant the effect of clause 14 was to impose upon the defendant an obligation to transfer to the plaintiffs land to which the defendant would not have had title.

1. If it is reasonably possible to do so I should adopt a construction of the contract which will give effect to both clauses rather than adopting a literal construction of clause 1 which would give no effect to clause 14. In my view reasonable effect can be given to both clauses by construing them as imposing an obligation upon the plaintiffs to transfer to the defendant the legal title to the whole of the land and an obligation upon the defendant to transfer lots 48, 41 and 42 back to the plaintiffs.

1. It is common ground that any subdivision of the subject land required the approval of the City of Glenorchy.

1. Section 477(2) of the Local Government Act 1962 provides:—

"(2)     Every contract for the legal subdivision of land which requires the approval of the corporation to the scheme of a building estate or of a plan of subdivision under this Division shall be deemed to have been made subject to the giving of that approval."

1. At the time when the contract was entered into the subject land had not been subdivided and no subdivision plan had been approved. It thus follows that the contract must be construed as being subject to the term imported by s477(2).

1. The plaintiffs allege in paragraph 5 of the statement of claim that:—

"It was a term to be implied from the said agreement that the Defendant would seek the approval of the subdivision as shown in the plan annexed to the said agreement within a reasonable time so as to enable the Defendant to transfer to the Plaintiffs the said lots 41, 42 and 48."

The principles applicable to the determination of whether a term ought to be implied into a contract are well settled. As Gibbs CJ said in Hospital Products Ltd v United States Surgical Corporation & Ors (1984) 156 CLR 41 at pp65–66:—

"The principles governing the implication of terms in contracts have recently been stated by the Judicial Committee in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20, at pp26–27, and by this Court in Secured Income Real Estate (Australia) Ltd v St. Martins Investments Pty Ltd (1979) 144 CLR 596, at pp 605–606, and Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, at pp345–347, 403–404. It was said by the majority of the Judicial Committee in the first of those cases, and accepted in this Court in the others, that for a term to be implied the following conditions (which may overlap) must be satisfied (1977) 52 ALJR, at p 26:

'(1)          it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.'"

1. I reject the defendant's submission that "there is now no room left for any implied term under the original contract. The conduct of the parties over a long period was  totally inconsistent with any continuing obligation to obtain approval to the original subdivision" (my emphasis). The pleadings contain no plea or allegation such as waiver or estoppel or that the contract was varied which if sustained might have had the effect of rendering the subsequent conduct of the parties relevant to the determination of their contractual rights and thus the only circumstances to which I am entitled to have regard when considering whether a term ought to be implied into the contract are those which obtained or were in the reasonable contemplation of the parties at the time when the contract was entered into.

1. Applying the principles to which I have referred I think it is quite clear that a term that the defendant would do all that was reasonably necessary to obtain whatever approval was required to enable him to transfer lots 48, 41 and 42 to the plaintiffs must be implied. Without such approval it would have been impossible for the defendant to have fully performed his obligations under the contract and as the defendant was the legal owner of lots 48, 41 and 42 he was the only person who was entitled to apply for that approval.

1. I am not satisfied that a term ought to be implied that the defendant was obliged to seek approval for the whole subdivision shown on the plan referred to in the schedule: the contract would have been effective without it and it is clear that an implied term should be given no greater scope than is necessary to give efficacy to the contract .

1. I reject the submission made by the defendant that as para 5 of the statement of claim alleged an implied term relating to the obtaining of approval of the whole subdivision the plaintiffs are precluded from relying upon an implied term relating only to lots 41, 42 and 48. In my view the substance of the allegation is indicated by the words "so as to enable the defendant to transfer to the plaintiffs the said lots 41, 42 and 48" and in any event a party is, generally speaking, entitled to rely in the alternative upon an allegation which is comprehended by but is narrower in scope than a more general allegation.

1. It follows from the conclusion I have reached as to the term which ought to be implied that I also accept the plaintiffs' submission that clause 14 of the agreement should be construed as referring to acceptance of whatever plan was required to enable lots 48, 41 and 42 to be lawfully transferred to the plaintiffs. I heard evidence from the defendant and from Mr M Clarke who in 1974 was the Town Planner for the City of Glenorchy and who is now the officer in charge of Planning and Development as to the steps the defendant took towards the subdivision of the land. However, it is not necessary to make detailed findings about the defendant's attempts to subdivide the land. For present purposes it is sufficient to outline the history of the project in broad terms.

1. I find that in July 1974 the defendant submitted a proposal plan for the subdivision of the land in four stages. Lots 41, 42 and 48 would have been included in stage 4. It was noted in the proposal that "it is part of the agreement for sale that Dr Palmer will retain lots 48, 41 and 42 and that these lots will be divided off and returned to him as soon as practicable". On 12 August 1974 stages 1 and 2 of the proposal were approved in principle subject to some conditions. On 29 March 1976 a detailed proposal plan of stage 1 was lodged by the defendant and approved subject to conditions on 21 June 1976. However that plan was never submitted for sealing. A new proposal which divided the whole land into two lots was approved on 9 April 1979 subject to some conditions but it appears that the fee payable for the approval of the survey diagram was never paid and that that proposal was never pursued. Sometime Prior to 24 February 1983 the defendant abandoned all attempts to subdivide the land and invited the mortgagees to sell the land.

1. Although it is clear that upon the defendant transferring to the plaintiffs the additional land contiguous to lot 48 the land could not have been subdivided exactly as set out in the plan referred to in the schedule to the contract it has not been shown that that transfer presented any impediment to the subdivision and transfer of lots 41 and 42.

1. Although upon the evidence before me it appears that the subdivision of the land did not proceed because the defendant made deliberate decisions not to pursue to finality the applications for approval which had to be made, it is not necessary for me to make conclusive findings about why approval of the whole subdivision was never obtained. The critical finding which I do make is that I am satisfied that the defendant did not take all necessary steps to obtain whatever approval was required to enable him to fulfil his contractual obligation to transfer lots 41 and 42 to the plaintiffs. It has not been alleged or shown on the evidence that even had the defendant taken all reasonable steps to obtain the necessary approval there existed some overriding legal or other impediment which would have prevented him from transferring lots 41 and 42 to the plaintiffs. I hold that the defendant was in breach of the implied term.

1. Prima facie the measure of the plaintiffs' damages is the value of lots 41 and 42 at the time for performance of the contract: Wroth v Tyler [1974] 1 Ch 30 at 57, Hoffman v Cali [1985] 1 Qd R 253. Nothing put to me persuades me that the circumstances of this case are such as to justify a departure from that prima facie rule.

1. In this case as there was no definite time fixed by the contract the date for performance must be taken to be the date when with the exercise of reasonable diligence the defendant would have been able to lawfully transfer lots 41 and 42. There is no evidence which directly establishes when that date would have been. However some indication is provided by the fact that the defendant was able to obtain approval of the plans for stage 1 of his proposal by 21 June 1976. Stage 1 did not include lots 41 and 42, but the time it took to obtain approval for stage 1 provides some indication of the time it might have taken had approval for a subdivision which did include lots 41 and 42 been sought. Doing the best I can on the meagre evidence before me I assess the plaintiff's damages by reference to the value of lots 41 and 42 as at mid 1976 which on the uncontested evidence before me amounted to $23,000.00.

1. It has not been alleged that the plaintiffs accepted the transfer of the additional land which adjoined lot 48 as being in full or part performance of or in discharge of the defendant's obligation to transfer lots 41 and 42 to the plaintiffs, nor has it been alleged that the contract was varied so that the defendant's transfer of that additional land would have had that effect. No contractual or equitable relief or remedy arising out of the transfer of that additional land has been sought by the defendant. It follows that I must regard the transfer of that additional land as being irrelevant to the determination of the defendant's liability under the contract and that there would be no legal basis upon which I would be justified in deducting the value of that land from the damages payable by the defendant.

1. It is agreed that in the light of circumstances which for present purposes it is not necessary to canvass the second plaintiff is entitled to judgment for the whole amount.

1. There will be judgment for the second plaintiff for $23.000.00.