JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : KILLARNEY INVESTMENTS PTY LTD -v- MACEDONIAN COMMUNITY OF WA (INC) [2005] WADC 259 CORAM : YEATS DCJ HEARD : 13 DECEMBER 2005 DELIVERED : 23 DECEMBER 2005 FILE NO/S : CIV 2604 of 2003 BETWEEN : KILLARNEY INVESTMENTS PTY LTD (ACN 070 769 416) Plaintiff
AND
MACEDONIAN COMMUNITY OF WA (INC)
Defendant
Catchwords: Contract - Conveyancing - Late settlement of contract for sale of land - Claim for penalty interest - Whether Offer and Acceptance inconsistent with Joint Form of General Conditions for the Sale of Land - Waiver
Legislation: Nil
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Result:
Plaintiff's claim dismissed Representation:
Counsel:
Plaintiff : Mr K E Yin
Defendant : Mr P G McGowan
Solicitors:
Plaintiff : Murcia Pestell Hillard
Defendant : Vincent Partners
Case(s) referred to in judgment(s):
Commonwealth v Verwayen (1990) 170 CLR 394
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153
Case(s) also cited:
Nil
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1 YEATS DCJ: The plaintiff claims payment of penalty interest in the sum of $47,049.18 from the defendant for late settlement of a contract for the sale of land between the plaintiff (herein after referred to as the purchaser) and the defendant (herein after referred to as the vendor). The parties have tendered a statement of agreed facts and a book of agreed documents thereby enabling the trial to be completed in one day. From those facts and documents and from the pleadings, the issues between the parties have clearly emerged:
Issue 1 - Is cl 16 of the general conditions for the sale of land (the "General Conditions") varied by or inconsistent with cl v of the Offer and Acceptance stipulating the settlement date as "1 May 2003 or earlier by mutual agreement"? If the answer to issue one is "no" then the purchaser's case fails. If the answer to issue one is "yes" then there are three further issues that need to be resolved: Issue 2 – Was the purchaser ready, willing and able to settle on 1 May 2003? Issue 3 – Did the purchaser by letters to the vendor dated 15 April 2003 and 30 April 2003 waive the benefit of condition 5 of the Offer and Acceptance? Issue 4 – Has the purchaser established that the reason for the failure to settle on 1 May 2003 was attributable to the vendor?
Background 2 On 13 January 2003 the vendor and purchaser agreed to the sale of two lots being subdivisions of the vendor' holding of Lot 140 in Albert Street, Balcatta. The Offer and Acceptance is exhibit 1.3. The purchase price was $870,000 with a deposit of $50,000 paid. Settlement date was "1 May 2003 or earlier by mutual agreement". Condition 3 of the Offer and Acceptance was in the usual form that the "Joint Form General Conditions for the Sale of Land shall be incorporated herein and shall apply to this sale so far as they are not varied by or inconsistent with the express terms hereof". It was a further condition of the Offer and Acceptance in condition 5 that the contract was "subject to Stirling Council's approval for both the subject parcel of land to be used for retirement housing development". It appears that the word "parcel" should be in the plural as the sale contemplated two separate lots referred to in appendix A to exhibit 1.3 setting out a proposed subdivision of Lot 140 and the sale of what is referred to as the upper lot and the lower lot on appendix A.
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3 The purchaser applied on 21 January 2003 to the City of Stirling for approval to commence the retirement housing development (exhibit 1.4). On 17 February 2003 the City of Stirling planner responded positively to the purchaser's proposal but set 10 conditions for the development (exhibit 1.5) and on 20 March 2003 the purchaser was notified that Council had resolved to adopt the committee's recommendations subject to satisfactory resolution of the outstanding design issues and relevant planning conditions. One of the planning conditions was the need for a 20 metre wide access-way between Albert Street and the balance of Lot 140 being a right of way to the northern portion of the upper lot. On 1 March 2003 the purchaser wrote to the vendor seeking the vendor's agreement to dedicate a 20 metre wide access-way. The vendor did not agree to provide that access-way.
4 Despite the Offer and Acceptance being entered into on 13 January 2003, the vendor did not instruct a surveyor to commence the survey until around 11 April 2003 (exhibit 1.8). 5 Despite the purchaser not having his right of way and therefore not having full approval from the City of Stirling, Mr Adrian Lee, a director of the purchaser, wrote to Mr Paul Temov, the President of the vendor on 15 April 2003, indicating that all conditions had been met and that the purchaser was now willing and able to settle by 1 May 2003 (exhibit 1.10). Mr Lee wrote again to Mr Temov on 30 April 2003 confirming that the purchaser was ready, willing and able to proceed with settlement as scheduled on 1 May 2003 but acknowledging that Mr Temov had indicated that the vendor would not be able to settle, but will be able in a few weeks time (exhibit 1.15). 6 Settlement did not proceed on 1 May 2003 and it was not until 27 June 2003 that the City of Stirling endorsed a plan of subdivision of the property. On 7 July 2003, that plan was endorsed in order for dealings (exhibit 1.18) and on that same day, the City of Stirling granted developmental approval for the property for retirement housing (exhibit 1.27). That approval was for fewer units than had originally been sought by the purchaser because there was no right of way provided for the northern border of the upper lot. 7 On 18 August 2003 the vendor applied for new titles and those titles were issued on 10 September 2003 with the purchaser's solicitor advised by telephone. On 7 October 2003 the purchaser tendered a duly stamped transfer of land form for signing to the vendor's settlement agent (exhibit 1.38). Settlement finally took place on 22 October 2003.
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The trial
8 At trial the purchaser called Mr Adrian Min Yan Lee, a director of the purchaser, a property development company. Mr Lee gave evidence that he negotiated during 2003 with Mr Paul Temov, then the President of the vendor, concerning the purchase of the land. Mr Lee gave evidence of his assets and those of the purchaser around about 1 May 2003 including: 1. Mr Lee's personal Westpac bank account (exhibit 2.1), a balance of $20,487 in cash. 2. Mr Lee's personal HSBC bank account (exhibit 2.2), a balance slightly over $65,000 in cash. 3. Mr Lee and his sister's St George portfolio cash management account (exhibit 2.3), a balance of over $225,000 in cash. 4. Killarney Investments portfolio loan account (exhibit 2.4), contained a balance of $177,671 in cash in mid-April but by the end of April the account was down to $343.52. The account had a credit facility of $225,000. 5. The Adrian Lee Family Trust account (exhibit 2.5), containing about $6,000 in shares in David Jones Ltd. 6. Adrian Lee Family Trust Account (exhibit 2.6), containing about $9,750 in Caltex Australia Ltd shares. 7. Mr Lee's personal holding of 10,000 May Holman units (exhibit 2.7) valued at about $10,000. 8. Mr Lee's personal shares or units in Macquarie's' Global Infrastructure Trust (exhibit 2.8) valued at about $19,000. 9. The Adrian Lee Family Trust Holding of 10,000 shares in OM-IP (exhibit 2.9) valued at $10,000. 10. Mr Lee's personal shareholding in Colonial First State investments (exhibit 2.10) valued at $42,000 according to the purchaser. 11. Mr Lee's personal shareholding in Colonial First State (exhibit 2.11) valued at $8,600. 12. The Adrian Lee Family Trust Holding of 10,000 in OM-IP (exhibit 2.12) valued at $10,000.
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13. The Adrian Lee Family Trust Holding in the Macquarie Investment Account (exhibit 2.13) valued at about $20,000. 9 Mr Lee gave evidence that on 1 May 2003 he had been preparing for settlement and had some $700,000 in cash available. He said the Adrian Lee Family Trust was set up by his accountant for him to deal in shares, and implied that he had control of those monies. Mr Lee also gave evidence that HSBC would have lent him up to 80 per cent of the valuation of the land. In support of that assertion Mr Lee tendered exhibit 8 showing that in July 2003 HSBC offered the plaintiff a fixed rate loan in excess of $744,000. Mr Lee admitted however, under cross-examination that the security for such a loan required a first mortgage over Mr Lee's residence and guarantees from both Mr Lee and from Capebay Holding Pty Ltd. Mr Lee's evidence was that on 4 December 2003, some six weeks after settlement took place, he mortgaged the upper lot (exhibit 11). But at 1 May 2003 he claimed that he was able to meet the purchase price based on his resources. 10 Mr Lee gave evidence that he spoke to Mr Temov in the period leading up to 1 May 2003. Mr Temov told him that the vendor was still on track but might be a few weeks late because the surveyor had just started doing his job. Mr Lee gave evidence that he told Mr Temov that if the vendor was late the purchaser would charge interest. Under cross-examination Mr Lee seemed to agree that when Mr Temov told him the vendor was not going to grant access to the right of way, Mr Lee told Mr Temov he was going to sue the vendor for penalty interest for late settlement. Mr Lee also gave evidence that after the date of settlement had passed at some time around 8 May 2003 he met with Mr Temov who asked him please not to charge him interest because it would look bad for Mr Temov who was standing for re-election as President of the vendor community. 11 The vendor called Rodney Alan Shevlin, the Assistant Registrar of Titles who is currently the acting manager of the Freehold Examination Group in the Titles Office. Mr Shevlin explained that exhibit 1.18 was the deposited plan of subdivision of Lots 151 to 153 inclusive, given the number 37311 by the Titles Officer, bearing the surveyor's certificate dated 27 June 2003, approved by the Western Australian Planning Commission on 3 July 2003 and, most importantly, endorsed in order for dealings on 7 July 2003. Under cl 16 of the General Conditions "in order for dealings" means the signing of a diagram or plan of subdivision … by or on behalf of an inspector … indicating that the inspector is prepared to
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sign that diagram or plan (subject to the satisfaction of certain conditions) as an approved diagram or plan. Mr Shevlin explained that once a plan of subdivision is endorsed "in order for dealings" documents that affect the lots created on the plan can be lodged at the Titles Office. Mr Shevlin's evidence was that the purchaser could have lodged a Transfer of Land with the Titles Office at any time after 7 July 2003 and the transfer would have been accepted despite the fact that duplicate Certificates of Title had not yet been issued. Mr Shevlin tendered exhibit 14 as an example of several ways a transfer of land could be prepared and lodged prior to duplicated Certificates of Title being issued. He gave evidence these were "registrable transfers" so long as the parcel of land was clearly defined; he said it does not necessarily have to have the volume and folio numbers of the lots.
Issue 1: Is cl 16 of the General Conditions varied by or inconsistent with cl (v) of the Offer and Acceptance stipulating the settlement date as "1 May 2003 or earlier by mutual agreement?" 12 The relevant portions of cl 16 of the General Conditions are:
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writing by either party to the other or the other's Representative that the diagram or plan is in order for dealing, or the date stipulated in the Contract (whichever is the later). (8) If any condition referred to in this Condition is not fulfilled within the time or respective times stipulated, the Vendor shall repay to the Purchaser the deposit and all other moneys (if any) paid by the Purchaser to the Vendor under the Contract without deduction and upon repayment the Contract will cease to have effect and neither party shall have any claim of any nature against the other." 13 Because of Condition 3 of the Offer and Acceptance (exhibit 1.3) cl 16 of the General Conditions forms part of the contract unless it is varied by or inconsistent with the express terms of the Offer and Acceptance. So much seems clear from the express terms of cl 16(1). The Land in this case was not a lot or lots on 13 January 2003 when the parties entered the contract so cl 16 does apply subject to any variation or inconsistency. 14 The purchaser submits that cl 16(7) is varied by and inconsistent with the express terms of the Offer and Acceptance in cl (v) which fixes the settlement date as "1st May 2003 or earlier by mutual agreement". The purchaser submits that the additional words "or earlier by mutual agreement" indicate the parties agreed that the date of settlement would not be later than 1st May 2003 and, therefore, cl 16(7) is inconsistent and is not part of the contract. 15 The purchaser also submitted cl 16(7) was varied by the express terms of the Offer and Acceptance but he did not explain how that could be and it appears to have no basis in the evidence. 16 "Inconsistent with" means "incompatible or incongruous" ("The New Shorter Oxford Dictionary"). The problem with the purchaser's submission on this point is that in its terms cl 16(7) takes the settlement date in the contract into account. The effect of cl 16(7) is to allow for the date stipulated in the Offer and Acceptance. If that date had been later than the settlement date following the procedures in cl 16(7) that date would have been the settlement date. In these circumstances it cannot be said that cl 16(7) is inconsistent with cl (v) of the Offer and Acceptance.
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17 This interpretation of cl 16(7) allowing as it does for the settlement date to be determined differently in a contract for the sale of land not a lot or lots at the time of contract, seems appropriate because of potential delays outside the control of either party in reaching a stage where there is a deposited plan endorsed in order for dealings. Once that stage is reached cl 16 fixes the time for settlement giving both parties the benefit of some certainty. The parties in this case could have excluded cl 16 but they did not do so. In hindsight in this case where the vendor already had the Planning Commission's conditional approval for the subdivision (exhibit 1.2) at the time of the contract in January 2003, the parties could have done that. But that was not done and as there is no inconsistency cl 16(7) has been incorporated into this contract.
18 I do accept the purchaser's submission that the vendor failed to comply with cl 16(3). The agreed facts and documents show that the vendor did not use its best endeavours to have the plan of subdivision lodged in the Titles Office and endorsed in order for dealings. The vendor admits that it did nothing between 13 January 2003 and 11 April 2003 when it belatedly instructed surveyors. That delay inevitably meant that it was not possible for settlement to proceed on or before 1 May 2003. However, the only remedy available to the purchaser for the vendor's breach of cl 16(3) is found in cl 16(8). As settlement did belatedly take place on 22 October 2003 that remedy has no operation. 19 For these reasons the purchaser's claim for a penalty interest for late settlement cannot succeed because cl 16(7) of the General Conditions forms part of the Offer and Acceptance. It is neither varied nor inconsistent with the express terms of the Offer and Acceptance.
Issues 2, 3 and 4 20 Because of my finding on Issue 1 these further issues do not arise for consideration. As they were fully argued before me I will give brief reasons with respect to each one. (1) Issue 2: Was the purchaser ready, willing and able to settle on 1 May 2003? Despite Mr Lee providing evidence of his personal assets, assets held jointly with his sister and the assets of the Adrian Lee Family Trust, I am satisfied that the purchase would have been financially able to proceed on 1 May 2003 based on the purchaser's portfolio loan account (exhibit 2.4) including a credit facility for $225,000 and based on the purchaser's ability to obtain finance from HBSC
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with the backing of Mr Lee. One issue that was not touched upon, however, was the purchaser's responsibility pursuant to cl 4(1) of the General Conditions to tender "a reasonable time prior to the settlement date" a duly executed and stamped Transfer of Land to the vendor. That could not have been done until the plan was endorsed in order for dealings (Mr Shevlin's) evidence) so I have some difficulty seeing how the purchaser, relying as it does on cl 4 of the General Conditions, could have been ready to settle on 1 May 2003. (2) Issue 3: Did the purchaser by letters to the vendor dated 15 April 2003 and 30 April 2003 waive the benefit of condition 5 of the Offer and Acceptance? "Waiver" means the unilateral abandonment or renunciation of a right ("The Shorter Oxford Dictionary on Historical Principles" 3rd ed p 2497). At law a party to a contract can waive a clause that is purely for its benefit (Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537). Waiver involves the deliberate, unequivocal renunciation of a right (Commonwealth v Verwayen (1990) 170 CLR 394 per Toohey J at 474 – 475). Waiver may be proved by direct words as in Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153 or by implication from the conduct of a party (Verwayen's case). In the Sandra Investments case the facts bore some similarity to the facts in this case. A contract for the sale of land was "subject to and conditional upon" the approval by the Beaudesert Shire Council of a plan of subdivision. The purchaser waived the condition by writing to the vendors in these terms (Sandra Investments case at 157). "We hereby confirm our verbal advices to Mr Brennan that the Purchaser Company has not, as yet, received subdivisional approval to the plan of subdivision from the Local Authority. However, we have waived this Condition of the Contract of Sale thus making the Contract fully unconditional." These words are clear and direct and as was found in the case clearly amount to a waiver. In this case I am satisfied that condition 5 was inserted entirely for the benefit of the purchaser and was therefore, as a matter of law, a condition the purchaser could waive. The real issue is whether it did so.
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it had instructed the surveyor in a timely way following the contract in January 2003 settlement would have been possible before or at least at the latest on 1 May 2003. If settlement of this matter had been governed by cl 4 of the General Conditions the purchaser would have been entitled to penalty interest for late settlement pursuant to cl 5(2). I am satisfied the reason for the delay was attributable to the vendor. But, penalty interest is not available under cl 16 and, for the reasons given under Issue 1, the plaintiff's claim fails.
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