Hynes Holdings Pty Ltd v Noomar Investments Pty Ltd
[2003] QSC 31
•21 February 2003
SUPREME COURT OF QUEENSLAND
CITATION:
Hynes Holdings Pty Ltd v Noomar Investments Pty Ltd & Ors [2003] QSC 031
PARTIES:
HYNES HOLDINGS PTY LTD
ACN 073 438 838
(Applicant)
v
NOOMAR INVESTMENTS PTY LTD
ACN 010 169 623
(First Respondent)FLOWERMILL PTY LTD
ACN 010 195 749
(Second Respondent)SATINAY PARK PTY LTD
ACN 010 234 474
(Third Respondent)FILE NO/S:
S 867 of 2003
DIVISION:
Trial
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
21 February 2003
DELIVERED AT:
Brisbane
HEARING DATE:
11 February 2003
JUDGE:
Atkinson J
ORDER:
Application dismissed with costs
CATCHWORDS:
CONTRACT – VENDOR AND PURCHASER – SALE OF LAND – right to terminate if affected by proposal of competent authority for resiting of a railway abutting the land – Planning layout prepared by Main Roads Department for possible Queensland Transport requirement for rail but no approved proposal to resume land – Whether particular land affected by a “proposal of a competent authority” for the resiting of a railway “abutting the land” – R.E.I.Q. Standard Commercial Conditions Commercial Land and Buildings (2nd Edition) Clause 21.1(c).
CONTRACT – VENDOR AND PURCHASER – SALE OF LAND – right to terminate if vendor fails to disclose that “notice has been issued by a competent authority” whereby the interest of the vendor in the property “may be rendered liable to forfeiture to the Crown” at the time of completion of the contract – Whether possible taking or acquisition of the land under the Acquisition of Land Act 1967 falls within the meaning of the phrase “may be rendered liable to forfeiture to the Crown” - R.E.I.Q. Standard Commercial Conditions Commercial Land and Buildings (2nd Edition) Clause 7.3(e).
Acquisition of Land Act 1967
Criminal Proceeds Confiscation Act 2002
Drugs Misuse Act 1986
Fisheries Act 1994
Penalties and Sentences Act 1992
Police Powers and Responsibilities Act 2000
Uniform Civil Procedure Rules, Rule 11
Ex parte Christensen [1984] 1 Qd.R 382
Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147
Legione v Hateley (1983) 152 CLR 406
Whim Creek Consolidated NL v Colgan and Another (1991) FCR 469COUNSEL:
P G Bickford for the applicant
R J Douglas SC for the respondent
SOLICITORS:
Robinson and Robinson for the applicant
Hyland Lawyers for the respondent
The applicant applied pursuant to rule 11 of the Uniform Civil Procedure Rules for the following orders:-
(1)A declaration that, on the proper construction of the contract dated 12 December 2002 between the applicant as purchaser and the respondents as vendors, in respect of land situated at 237-239 Bradman Avenue, Maroochydore, and described as Lot 5 on RP 897366 in the County of Canning, Parish of Mooloolah, Title Reference 50166688 (“the land”), and in particular, Clause 21.1(c) of the said contract, the applicant as purchaser is entitled to terminate the said contract;
(2)In the alternative, a declaration that the land is adversely affected by a proposal of a competent authority for the re-alignment, widening, resiting or altering of the present level or direction of any road or railway abutting the land;
(3)A declaration that on the proper construction of the contract dated 12 December 2002 between the applicant as purchaser and the respondents as vendors, in respect of … the land, and in particular, Clauses 7.3(e) and 7.4 of the said contract, “the Applicant as purchaser is entitled to terminate the said contract”.
This procedure is apt to consider urgently a question of law on agreed facts which should be determined prior to the settlement of the contract. The date of settlement has been extended by mutual agreement to 25 February 2003. The relevant chronology of events which was not the subject of dispute between the parties is conveniently set out in the outline of submissions of the applicant.
On 12 December 2002, a contract for the sale and purchase of the land situated at 237-239 Bradman Avenue, Maroochydore was entered into by the applicant as purchaser and the respondents as vendors. The land is a commercial property on which a modern attractive office building has been built. The purchase price under the contract was $1,000,000. The contract contained a number of standard and special terms to which I will refer in more detail in the course of these reasons.
On 9 January 2003, the purchaser’s solicitor sent an application for information concerning Main Roads land requirements for road purposes to the Main Roads Department. On 14 January 2003, the purchaser’s solicitor received a response from the Main Roads Department stating that “current proposals indicate possible requirements from the subject land”. An attached plan showed a shaded triangular slice of land having a length of 23.6 metres and breadth at its widest point of 8.6 metres as “possible Queensland Transport requirement for rail”. It was said, however, that there was no approved proposal to resume any part of the property at that time. On the same date, a copy of the Main Roads search results was forwarded to the solicitors for the respondent vendors. Later in the day, there was a telephone conversation between Mr Fawkes of Robinson and Robinson, the solicitors for the applicant purchaser, and Mr Hyland of Hyland Lawyers for the respondent vendors in which Mr Fawkes advised that the Main Roads search had disclosed a proposal affecting the property the subject of the contract and that
Mr Fawkes was obtaining instructions from his client in relation to the search results.
On 22 January 2003, the solicitors for the respondent vendors sent a letter to the applicant’s solicitors enclosing a copy of a letter which the vendors had received from the Queensland Government dated 14 August 2001 with attached executive summary of a study prepared for Queensland Transport as to possible requirements for rail called the Caboolture Maroochydore Corridor Study (‘CAMCOS”). The letter to the vendors from the Queensland government had informed them that:
“All or part of the property or properties that you own/manage, identified from Council Rates records, remains directly affected by the approved corridor.
Whilst it is likely that the corridor may not be needed for public transport for a few years, it is important that the corridor be protected from incompatible development. However, land acquisition is proposed to match the timing for construction within the corridor and available funds. Hardship claims for land acquisition will continue to be considered, subject to available funding.”
On 20 January 2003, the applicant’s solicitor, by letter to the respondents’ solicitor, asserted that the purchaser was entitled to terminate the contract pursuant to clause 21.1(c) of the contract for the sale of the land. It is common ground that the shaded area on the Main Roads plan transects the part of the land on which the office building is situated.
The contract for the sale of the land included standard clauses 7 and 21, which, so far as are relevant to this application, provide:
“7 VENDOR’S STATEMENT
7.1The Purchaser is not entitled to deliver to the Vendor requisitions or enquiries on or to the Vendor’s title to the Property.
7.2The Vendor states that, except as disclosed in this Contract, each of the following statements is accurate at the time the Vendor executes this Contract:
(a)the Vendor has free and unqualified capacity and power to contract and to complete this Contract;
(b)the Vendor is not under any legal disability which affects the Vendor’s capacity to contract and to complete this Contract; and
(c)if the Vendor is a trustee, the Vendor has free and unqualified power of sale under the instrument creating the trust, and that instrument does not require the consent or authority of any person to the entering into of this Contract or the completion of this Contract.
7.3The Vendor states that, except as disclosed in this Contract, each of the following statements will be accurate at the Date for Completion:
(a)there is no current litigation by any person claiming an estate or interest in the Property;
(b)there is no unsatisfied judgment, order or writ of execution which affects the Property;
(c)no order has been made under Part 11 of the Property Law Act 1974 which would operate as a charge on the Land;
(d)there is no order of a Court or other competent authority affecting the ability of the Vendor to complete this Contract;
(e)no notice has been issued by a competent authority or proceedings instituted in a Court pursuant to any statute whereby the interest of the Vendor in the Property may be rendered liable to forfeiture to the Crown;
(f)if the Land is Crown leasehold title, the Crown leasehold title is not rendered liable to forfeiture by reason of the non-observance or non-performance of the covenants or conditions of the lease;
(g)if the Vendor is a natural person, the Vendor is not a bankrupt nor has the Vendor signed any authority under section 188 of the Bankruptcy Act 1966;
(h)if the Vendor is a corporation within the meaning of the Corporations Law or any similar legislation applicable in the Vendor’s place of incorporation;
(i)the Vendor is not in liquidation;
(ii)no action has been taken by or against the Vendor which could lead to the winding up of the Vendor;
(iii)the Vendor is not under official management;
(iv)an administrator, controller or managing controller has not been appointed to the Vendor or in respect of the whole or any part of the Property; and
(v)a compromise or arrangement has not been proposed between the Vendor and its members or creditors nor agreed to by the members or creditors nor sanctioned by a Court; and
(i)the Vendor is the registered owner or the lessee of the Land (according to the title expressed or implied in this Contract).
7.4If a statement contained in either clause 7.2 or clause 7.3 is not accurate then the Purchaser may terminate this Contract by notice in writing to the Vendor.
7.5If this Contract is terminated pursuant to clause 7.4, the Deposit and other moneys paid under this Contract shall be refunded to the Purchaser by the Vendor or the Stakeholder as the case may be and the Vendor shall be liable by way of damages as compensation for the loss suffered by the Purchaser in such sum as at the time this Contract was made was reasonably foreseeable as the loss liable to result, and which does in fact result from a termination of this Contract due to a statement contained in either clause 7.2 or clause 7.3 not being accurate.
21 PROPERTY ADVERSELY AFFECTED
21.1 If it is established that at the date of this Contract:
(a)the use of the Property as described in Item H was not lawful under any town planning scheme;
(b)the access to the Land is other than by way of an adjoining road dedicated for public use as a road or by way of a registered easement to a road dedicated for public use;
(c)the Land was affected by a proposal of any competent authority for the re-alignment, widening, resiting or altering of the then level or direction of any road or railway abutting the Land;
(d)any electricity, telephone, water supply, sewerage or drainage service to the Land which passes through other land is not protected by a registered easement or by statutory authority;
(e)there is current in respect of the whole or part of the Land, a notice to treat or notice of intention to resume issued by a competent authority;
(f)the Property is dedicated as a protected area of any class mentioned in section 14 of the Nature Conservation Act 1992 or is affected by a conservation agreement or conservation plan pursuant to that Act;
(g)there exists any claim for an interest in the Property by any Australian Aboriginal people pursuant to the Aboriginal Land Act 1991, the Native Title Act 1993 (Cth) or the Native Title (Queensland) Act 1993; or
(h)the Property is affected by the Queensland Heritage Act 1992 or is included in the World Heritage List;
and any such facts are not disclosed in this Contract the Purchaser may by notice in writing to the Vendor given on or before the Date for Completion terminate this Contract.
21.2The Vendor authorises the Purchaser or the Purchaser’s solicitor to inspect all records relating to the Property held by the Local Government or other body maintaining any such records and will if requested by the Purchaser sign an appropriate authority to the Local Government or other body for the purposes of this clause 21.”
In addition, special clause 35 enabled the purchaser to conduct “due diligence enquiries” and, if not satisfied, could terminate the contract at its absolute discretion on or before 5 pm, 20 December 2002. The purchaser had not invoked the right to terminate by that date.
The first question to be decided is whether the applicant is entitled to the relief sought in the first and second declarations. That requires a determination of whether cl 21.1(c) has been breached. That clause provides that if it is established that as at 12 December 2002, the land was affected by a proposal of any competent authority for the re-alignment, widening, resiting or altering of the then level or direction of any road or railway abutting the land, and such fact is not disclosed in the contract, the purchaser may, by notice in writing to the vendor given on or before the date for completion, terminate the contract.
On the hearing of this application, the purchaser has produced evidence that as at 12 December 2002, the land was affected by what was said to be “current proposals for possible future use” by the Main Roads Department. This is capable of satisfying the requirement that there be a proposal of a competent authority.[1] The proposal is for resiting the direction of a railway. The purchaser can not show, however, that the railway which is to be resited, abuts the land. The present railway is nowhere near the land. It does not border on or adjoin the land. Accordingly, cl 21(1)(c) cannot apply to this factual situation and the purchaser cannot rely on this clause to terminate the contract for the sale of land.
[1]See Ex parte Christensen [1984] 1 Qd.R 382 at 387.
It remains to determine whether the applicant is entitled to the third declaration that it seeks. This requires a determination of whether cl 7.3(e) has been breached. Clause 7 deals with representations which the contract deems to have been made by the vendor in the context that the purchaser has no entitlement to deliver requisitions or enquiries as to title. Clause 7.2 sets out representations deemed to be made by the vendor as being correct as at the time of execution of the contract of sale.
Clause 7.3 sets out a number of statements which the vendor says will be accurate at the date for completion, unless otherwise disclosed in the contract. This may enable the vendor to remedy problems before completion. It enables a purchaser to avoid a contract where any of the enumerated circumstances existed at the time of signing the contract but which were not disclosed by the vendor and cannot be remedied by the vendor before settlement or where one of the enumerated matters arose after signing the contract but before completion and cannot be remedied prior to settlement.
The relevant representation found in cl 7.3(e) is that no notice has been issued by a competent authority or proceedings instituted in a Court pursuant to any statute whereby the interest of the vendor in the property may be rendered liable to forfeiture to the Crown. If that statement is not correct at the time of settlement, cl 7.4 gives the purchaser the right to terminate the contract by notice in writing to the vendor.
As previously set out, the letter from the Main Roads Department received on 14 January 2003 is capable of satisfying the definition of notice given by a competent authority. It is not strictly necessary that the notice be issued pursuant to a statute since that requirement appears to qualify “proceedings instituted in a Court” rather than “notice issued by a competent authority”.
The phrase “may be rendered liable to forfeiture to the Crown” is, however, inapposite to describe the factual situation in this case. It is apparent that the land may be rendered liable to be taken[2] or acquired under the Acquisition of Land Act 1967. However, liability to forfeiture has quite a different meaning and legal connotation. If the land is subject to compulsory acquisition, compensation will be paid.[3] ”. If the land is liable to forfeiture, it is liable to be confiscated and no such compensation will be paid.
[2]Acquisition of Land Act 1967 s 5, 9(3).
[3]Acquisition of Land Act 1967 ss 18-35.
The Shorter Oxford English Dictionary[4] relevantly defines forfeiture as “the fact of losing or becoming liable to lose (an estate, goods, life, an office, right, etc.) in consequence of a crime, offence, or breach of engagement”. The forfeiture is a penalty of the transgression[5]. The modern Australian meaning of the words is found in the third edition of the Macquarie Dictionary. “Forfeiture” is there defined as “that which is forfeited; a fine mulct”. It is a penalty which leads to the absolute loss of property. “Forfeit” is defined in the same dictionary as a noun as “1. a fine; a penalty… 3. something to which the right is lost by the commission of a crime or misdeed, the neglect of a duty, a breach of contract etc”, and as a verb as “to lose, or become liable to lose, in consequence of crime, fault, breach of engagement, etc.”
[4]p790.
[5]See William Shakespeare’s The Merchant of Venice, Act 4, Scene 1, where a pound of flesh is to be Antonio’s forfeit for failing to repay his debt; See also All’s Well That Ends Well, Act 4, Scene 3; Beaumont and Fletcher, The Maid’s Tragedy, Act 4, Scene 1.
The way in which the phrase “liable to forfeiture” is used in statutes confirms the dictionary meaning. There are numerous examples in Queensland including Part 4 of the Criminal Proceeds Confiscation Act 2002, s 12, s 33, s 34, s 41, and 44A of the Drugs Misuse Act 1986, s 33B of the Penalties and Sentences Act 1992, s 162 of the Fisheries Act 1994 and s 68 of the Police Powers and Responsibilities Act 2000, where property which is liable to forfeiture to the Crown is seized or confiscated without compensation. Other examples are given by the learned authors Professor W D Duncan and Mr S E Jones, in Sale of Land in Queensland.[6]
[6]4th ed, LBC Information Services, 1996 pp 187 – 189.
The meaning of liability to forfeiture in these statutes reflects its common law meaning.[7] A common law example of forfeiture is the rule that prevents a person who is criminally responsible for the death from benefiting from the will or intestacy of the deceased.[8] The draconian nature of forfeiture of property at law in other circumstances led to the development of the equitable doctrine of relief against forfeiture which may apply in appropriate cases.[9] It is apparent that “liable to forfeiture” whether by its dictionary meaning, in a statute, at common law or in equity, means liable to be confiscated or extinguished without compensation.
[7]Whim Creek Consolidated NL v Colgan and Another (1991)FCR 469 at 476..
[8]Cleaver v Mutual Reserve Fund Life Association [1892] 1QB 147.
[9]Legione v Hateley (1983) 152 CLR 406 at 418, 424, 433, 444.
If the land which is the subject to this contract is taken by the Crown, it will be resumed or acquired under the Acquisition of Land Act and compensation paid. It is not liable to forfeiture. It is not liable to be confiscated or seized as a penalty against the landowner and the landowner’s interest extinguished without compensation being paid.
In this instance, there is a proposal by which the land may be liable to be acquired or taken by the Crown for which the landowner will be compensated. There is no proposal by which the land may be liable to forfeiture and accordingly the occasion enabling termination of the contract pursuant to cl 7.4 has not arisen.
The applicant is not entitled to any of the declarations sought in its originating application. The application should therefore be dismissed with costs.
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