Jones & Anor v Walker Corporation (Qld) Pty Ltd

[1996] QSC 224

IN THE SUPREME COURT

OF QUEENSLAND

No 8351 of 1996

Brisbane

Before the Hon. Justice Williams

[Jones & Anor v. Walker Corporation (Qld) Pty Ltd]

BETWEEN:

BRIAN PHILIP JONES

and

MAXINE JONES
  Plaintiffs
AND:
  WALKER CORPORATION (QLD) PTY LTD
  ACN 003 251 803
  Defendant

REASONS FOR JUDGMENT - WILLIAMS J

Judgment delivered 29/11/1996

CATCHWORDS:     SPECIFIC PERFORMANCE - sale of lot on buildings units plan - application for summary judgment - plan referred to in contract abandoned - construction in accordance with new plan - whether purchasers entitled to units similarly placed on new plan - held triable issue raised - summary judgment refused.

Counsel:Harrison QC for applicants

Dutney QC and Radcliffe for respondent

Solicitors:Barry & Nilsson T/A for Chan Lawyers for applicants

Gilshenan & Luton T/A for Robinson & Robinson for respondent

Hearing Date:   19 November 1996

IN THE SUPREME COURT

OF QUEENSLAND

No 8351 of 1996

Brisbane

[Jones & Anor v. Walker Corporation (Qld) Pty Ltd]

BETWEEN:

BRIAN PHILIP JONES

and

MAXINE JONES
  Plaintiffs

AND:

WALKER CORPORATION (QLD) PTY LTD
  ACN 003 251 803
  Defendant

REASONS FOR JUDGMENT - WILLIAMS J

Judgment delivered 29/11/1996

By separate contracts each dated 20 March 1995 each of the plaintiffs agreed to purchase from the defendant a unit in a proposed building units plan for a building to be constructed by the defendant.  Each plaintiff now seeks by way of summary judgment a declaration that each agreement ought to be specifically performed and carried into effect.  The defendant vendor resists that application.
           For convenience I will state particulars of the male plaintiff's contract; for material purposes the contract to which the female plaintiff was a party is in identical terms.
           The contract documents bear the heading on the first page "The Bermudan South Tower Standard Agreement for Sale".  The vendor is named as Lazermaze (Australia) Pty Ltd; that is the former name of the defendant company.  The property sold is described as follows:

"Lot No. 201 as outlined on the plan appearing in the Fifth Schedule hereto and to be known as Unit No 201 Level 2 Floor 2.  Courtyard and garden area (if any) as shown in the plan of courtyard garden areas and storage areas appearing in the Fifth Schedule hereto.  The said plan is incorporated in this Contract for identification purposes only."

Thereafter there is a reference to a car space as being included in the property sold:  "The car space as outlined on the Plan appearing in part of the Fifth Schedule hereto.  The said plan is incorporated in this Contract for identification purposes only."
           The purchase price of $186,900 is then stated.  The contract document also provides that the final date for registration of "relevant building unit strata title plan" is to be 1 December 1997.
           The next document forming part of the contract is that headed Memorandum of Agreement.  Relevantly it provides:

"The Vendor intends, subject to the terms hereof, to construct on the said land, buildings in accordance with plans and specifications prepared by the Vendor's Architects (as amended) to be called "The Bermudan South Tower" and containing therein the said home unit above described by its proposed unit number, proposed lot number and floor level (referred to as "the lot"), and hereafter referred to "the lot"."

There is then reference to the Building Units and Group Titles Act 1980-1988 and a statement of intent to have issued a Certificate of Indefeasible Title "for each lot in the Building Units Plan". Then follows a statement that the "Unit Entitlement of the Lots to be endorsed on the Building Units Plans will be those specified in the Tenth Schedule hereto."
           Another clause expressly provided:-

"The Purchaser shall not be entitled to make any objection, requisition or claim for compensation by reason of:-

(i)any minor variations as regards the property sold between the Plans in the Fifth Schedule hereto and the Building Units Plan as registered by the Registrar of Titles;

(ii)any alterations in the number, size, location or unit entitlement of any lot or lots in the  Building Units Plan (other than the property sold) or in or to the Common Property provided that the unit entitlement of property sold and the aggregate unit entitlement all the lots shall not thereby be substantially varied;

(iii)any alterations in the number, size, location or allocation of the car parking spaces referred to on the Plans in the Fifth Schedule hereto;

(iv)any minor alterations required to the design of the said development or the property sold between the Plans and the Schedules hereto and the final plans and specifications lodged by the Vendor and/or approved by the relevant Governmental, semi-Governmental and Local Authorities;

(v)any alteration or variation in the Preliminary Plans and/or the approved Plans or in the Schedule of Finishes as may become necessary during the course of construction by reason of matters beyond the control of the vendor ...

(vi)any alterations or variations in the Preliminary Plans and/or approved Plans accordingly."

The Agreement went on to state that the purchaser acknowledged that any of those alterations would not materially alter or materially prejudice the purchaser's position.
           The next relevant provision is in the following terms:

"The Purchaser agrees that on registration of the Building Units Plan (including any subsequent Plan of Resubdivision) the Vendor as sole owner and/or as the duly constituted Attorney and Proxy of the Purchaser may:

(i)Ratify and/or amend the By-Laws of The Bermudan South Tower Body Corporate and The Bermudan Primary Body Corporate in accordance with the amendment set out in the Statement Pursuant to Section 49 of the Building Units and Group Titles Act 1980-1988 (as amended) and Section 21 of the Land Sales Act 1984-1985 (as amended) which appears in the First Schedule and any variations thereof as it may in its absolute discretion deem desirable."

There was an express obligation on the vendor to "procure the preparation of the Building Units Plan of which the property sold forms part and the balance of the said land (if any) generally in accordance with the requirements of Section 9 of the Act and shall with all reasonable expedition take all reasonable steps necessary to procure the registration of such plan by the Registrar of Titles."  There followed a warranty from the vendor that there would be "no amendments to the Fourth Schedule By-Laws of the Body Corporate without the prior written approval of the Purchaser".
           Settlement was to "take place within 21 days of written advice to the Purchaser ... of registration of the relevant Building Units Plan".  I also refer to, without quoting, cl. 11 of that Agreement dealing with car parking and the purchaser's rights with respect thereto.
           Clause 21 of the Agreement provided that the "name of the Building Units Plan should be "The Bermudan South Tower"."  But if any relevant authority objected to the use of that name then the purchaser agreed to a change of name for the Plan.
The next relevant document in the contract was the Statement complying with Section 49 of the Building Units and Group Titles Act. It provided details of Lot entitlement, details of Management/Caretakers agreement, an estimate of Body Corporate contribution for the first 12 months period, and identified the By-Laws which would be in force in respect of the proposed Plan.
           The contract documents also included in the Fifth Schedule plans of each floor, in particular the second floor plan, and plans of the car parking area.
           Finally reference should be made to the Twelfth Schedule, which contained the proposed by-laws for The Bermudan South Tower.
           It appears from the material that the plan referred to in the contracts of 20 March 1995 was that approved by the relevant local authority on or about 16 December 1994.  As at 20 March 1995 work on the construction of that proposed building had not commenced; indeed the material indicates that by that date the directors of the vendor had become concerned that the success of the project was in jeopardy because only a few units had been sold off the plan.  Sales had not improved by June 1995 and about that time the directors of the vendor company decided to abandon the Bermudan project.  Consequent upon negotiations with hotel operators between July and October 1995 the defendant company decided to restructure the development so that it would be a resort hotel known as "Sovereign Hotel" with 153 strata title hotel apartments.  It became necessary to obtain fresh local authority approval for the project, and that included obtaining a Town Planning Consent Permit.  Such approval was obtained on or about 16 August 1996.  The development therein was described as a Resort Hotel.  One of the conditions of that approval was that all car parking spaces must remain common property.
           Subsequently construction has commenced of the resort hotel project.
           One important difference between the two projects is that the Sovereign Hotel, unlike the Bermudan, does not allow for permanent residency in any of the strata title units; indeed permanent residency would be contrary to local authority requirements.
           The defendant is in the process of selling units in the project under construction.  Standard form contract documents are being used, and a set is to be found as exhibit C to the affidavit of SJ MacRae.
           It seems tolerably clear from all the material that there are units of the same external dimensions on the same floor of the current project as the plaintiffs contracted to buy in the abandoned project; that much appears to be conceded by the defendant.  Primarily because of that, Mr Harrison QC, for each of the plaintiffs, submits that the subject matter of each contract of sale is identifiable in the project under construction and in consequence there is no reason why a declaration should not be made that each contract ought to be specifically performed and carried into effect.
           It should be recorded that the two units in the project under construction, which have the same external dimensions on the same floor as the units the subject matter of the contracts of sale to which the plaintiffs are a party, are each the subject of a contract of sale to some other person.
           I set out above some details of the male plaintiff's contract.  Really the contractual provisions to which I briefly adverted have, in my opinion, to be read in full in order to appreciate the subject matter of the contract.  A building unit title is far more complex than title to land in the strict sense.  A building units title embraces the Building Units plan and the registered by-laws and the like.  Because the subject matter of the title is but part of a structure with respect to which other persons also have title, the subject matter can only be defined by reference to the rights inter se of the holders of all the titles in the structure, the rights of the body corporate, and the terms of the registered building units plan and by-laws.
           I have already adverted to the standard form of contract documents being used by the defendant with respect to the project under construction.  What one has to do, in my view, is compare the matters I have highlighted from the contract entered into by each of the plaintiffs with the corresponding provisions (if any) applicable to the units in the project under construction.
           Prima facie one finds a number of differences.  The title description is different; there are different lots on a different plan.  A unit in the Bermudan project could be used as a permanent residence, whereas a unit in the Sovereign project cannot.  No car parking spaces can be included with the sale of a unit in the Sovereign project; such a space is part of the subject matter sold pursuant to each contract entered into by the plaintiffs.  The By-laws of the Sovereign project refer extensively to the hotel nature of the project, and the limited rights which a unit holder has to occupy the units personally; there is a hotel operator, a hotel manager, a long term lease and other features which may well be regarded as differentiating the rights attaching to a unit in the Sovereign project from those attaching to a unit in the Bermudan project.
           There are some differences with respect to unit entitlements, and the levy contributions attached to each unit.  They may not be large but, in my view, it is at least of some significance that such differences exist.
           Looked at in isolation the fact that the internal layout of the units is different may not be of significance; for example, there are no individual laundries in the units in the Sovereign project as there were in the Bermudan.
           It is the contention of the defendant that, whilst there are some similarities between the two projects, there are nevertheless such differences as make the allegedly corresponding units in the Sovereign project different in substance from those in the Bermudan project.  The argument for the defendant is essentially that one cannot honour a contract to supply peas by delivering beans.
           The argument for the defendant for present purposes accepts that the defendant may well have wrongfully repudiated the contracts with the plaintiffs of 20 March 1995 and that in consequence the defendant would be liable in damages.  This application is not concerned with such issues.
           Since the decision in Flight v. Booth (1834) 1 Bing (N.C.) 370 it has been recognised that a purchaser may rescind a contract where there is a material discrepancy between the subject matter of the sale and that which is ultimately offered by the vendor on settlement. It follows that the vendor could enforce specific performance, notwithstanding some differences, unless there was such a substantial difference as would mean that the subject matter of the contract was not being fulfilled. There are also instances in the reports of cases where, notwithstanding significant differences, the purchaser is willing and desirous of taking that which the vendor can offer, and in those circumstances the purchaser has been held entitled to a decree of specific performance (cf. Imamovic v. Kalamalka Constructions Pty Ltd (1975) 49 ALJR 244 and Imamovic v. Exton (1975) 49 ALJR 246). But even in such cases it must be clear that it is the contract entered into between the parties which is being specifically performed; the court will not decree that a contract to supply beans shall be specifically performed by the supply of peas. That is in many instances what is meant by the proposition that a decree of specific performance will not be made when the party in question is no longer in a position to perform its contractual obligations (cf. Ferguson v. Wilson (1866) L.R. 2 Ch. App. 77 and Duncombe v. New York Properties Pty Ltd (1986) 1 Qd. R. 16).
           Mr Harrison QC submitted that the court should at this stage make a declaration that the contracts in question ought to be specifically enforced and that the issue whether or not that declaration could be satisfied by transferring lots in the Sovereign project should be determined at some later stage.  He relied in support on the reasoning in Hasham v. Zenab (1960) A.C. 316. Whilst the Judicial Committee in that case recognised the two parts of an order for specific performance, there is nothing, in my view, in the judgment which suggests that the declaratory part of the order should be made even though it appears that the relevant subject matter will not be in existence when the time for performance is reached.
           It follows, in my view, that even before a declaration can be made it is necessary for the plaintiffs to establish a substantial identity between lots 101 and 201 on the Bermudan plan with the lots having the same external dimensions on the same floors of the current project (which would appear to be lots 8 and 16 in the Sovereign South Tower); there is at least a triable issue in that regard.  The court cannot make such factual findings on a summary judgment application; it may well be that after a trial such a degree of identity is established as would justify the court in making the decree.
           It follows that the application the summary judgment for specific performance should be dismissed.