M M Maxwell Properties Pty Ltd v Porter
[2004] QDC 184
•21 June 2004
DISTRICT COURT OF QUEENSLAND
CITATION:
M M Maxwell Properties Pty Ltd v Porter & Anor [2004] QDC 184
PARTIES:
M M MAXWELL PROPERTIES PTY LTD
Plaintiff
v
ANGELIQUE CHARMAYNE PORTER
First Defendant
and
MICHAEL WILLIAM PORTER
Second Defendant
FILE NO/S:
D521/02
DIVISION:
PROCEEDING:
Claim
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
21 June 2004
DELIVERED AT:
Brisbane
HEARING DATE:
3 March 2004
JUDGE:
Rackemann DCJ
ORDER:
That the first defendant pay to the plaintiff the amount of $48,533.00 including $8,533.00 interest to this day and further that the first and second defendants pay the plaintiff the amount of $12,033.00 including $2,133.00 interest to this day. The question of costs will be reserved for argument.
CATCHWORDS:
REAL PROPERTY – Where contract entered into for sale of proposed allotments – whether contracts void by reason of s8(2) Land Sales Act – whether s7A Land Sales Act applicable - whether deposit paid in respect of contract which was conditional on execution and settlement of contract found to be void, recoverable
CONTRACT - Breach – whether defendants’ failed to prove damage for breach of confidentiality clause
Legislation cited:
Ss7A and 8(2) Land Sales Act 1994
COUNSEL:
Mr PA Freeburn SC for the plaintiff
Mr PJ Dunning for the defendantsSOLICITORS:
Tucker & Cowen Solicitors for the plaintiff
Primrose Couper Cronin Rudkin for the defendants
The facts
These proceedings concern the uncompleted sale of a potential development site by the defendants to the plaintiff, a property developer.
The relevant landholding comprised Lot 3 on RP805478 (“Lot 3”) and Lot 20 on RP894218 (“Lot 20”). The total purchase price was $4.22 million.
The parties entered into three written contracts of sale, each dated 18 August 1998.
One of the contracts was for the sale of Lot 3, comprising 3.035 hectares, for the sum of $250,000 (“the Lot 3 contract”) and was expressed to be subject to a number of special conditions including the simultaneous execution of two other contracts (the proposed Lot 201 contract and the proposed Lot 202 contract) and the simultaneous settlement of one of them (“the proposed Lot 202 contract”). The Lot 3 contract required a $10,000 deposit payable when the buyer executed the contract.
The remaining two contracts related to two halves of Lot 20, referred to as proposed Lots 201 and 202.
The proposed Lot 202 contract described the property, the subject of that contract, as “Lot 202 on Plan of Proposed Subdivision of Lot 20 on RP894218” containing an area of 26.54 hectares. The purchase price was $1.97 million with a $40,000 deposit payable upon the buyer signing the contract. That contract was subject to a number of special conditions, including the simultaneous execution of the other two contracts and the simultaneous settlement of the Lot 3 contract.
The proposed Lot 201 contract described the property, the subject of that contract, as “Lot 201 on Plan of Proposed Subdivision of Lot 20 on RP894218”, containing an area of 26.54 hectares. The purchase price was $2 million. No deposit was required. That contract also contained a number of special conditions including the simultaneous execution of the other two contracts and the prior settlement of both the Lot 3 contract and the proposed Lot 202 contract.
The proposed Lot 202 contract was subject to a condition (special condition 15) which required the buyer to prepare a plan of reconfiguration in registrable form to create proposed Lots 201 and 202, lodge a development application for local authority approval of the subdivision, lodge the plan with the Lands Title Office for registration, diligently pursue those matters and keep the seller fully informed of the progress on a fortnightly basis. In the event that the plan was not registered by 1 February 1999 either party was at liberty to determine the contract by written notice (special condition 16).
Both the Lot 3 contract and the proposed Lot 202 contract were also conditional upon the buyer receiving a decision notice from the assessment manager that “the development application” had been approved on conditions satisfactory to the buyer acting reasonably (special condition 9(c)). The expression “development application” was defined by reference to the expression “development approval” which was also defined in the contracts (special condition 9(b)). Those definitions were as follows:
“Development Application means an application for a development approval for reconfiguring a lot in relation to the subdivision of the parcel in making a material change of use of land;
Development Approval means a development approval in the form of a development permit for the reconfiguration of Lots 3, 202 and 201 to provide for a minimum of 8 lots per hectare.”
The date for completion of the Lot 3 contract and the proposed lot 202 contract was to be 60 days after the grant of the development permit or, in the event of an appeal to the Planning and Environment Court being lodged and determined, 60 days from the date of the court order (special condition 12).
Each of the contracts were subject to a special condition whereby the parties acknowledged that the buyer was buying the property for the purposes of subdivision into housing allotments and, accordingly, it was agreed that certain conditions of the standard conditions of sale would be deleted from the contracts.
Reflecting the different ownership of Lot 3 and Lot 20, the Lot 3 contract was entered into between the plaintiff as buyer and the first and second defendants as sellers, whereas the proposed Lot 201 contract and the proposed Lot 202 contract was entered into between the plaintiff and the first defendant only.
In effect, the contracts were so structured that the buyer, before proceeding to settlement on any of the contracts, could confirm the development potential of the whole of the site by obtaining a satisfactory development approval for future redevelopment for housing purposes at a suburban density. The contracts then contemplated that the seller would acquire the site in a staged way, with Lot 3 and proposed Lot 202 acquired prior to Lot 201.
Each of the contracts had a confidentiality clause.
Notwithstanding the confidentiality clause, the transaction was disclosed, by the plaintiff (by John Fish), to a journalist with the Gold Coast Bulletin. The transaction was reported in the real estate section of the newspaper on the weekend of 31 October – 1 November 1998.
Pursuant to the terms of the contracts, the plaintiff had until 15 November 1998 to lodge the development application for the material change of use and reconfiguration for the redevelopment of the site. Under cover of a letter dated 11 November 1998 a development application was lodged, however it was only for a material change of use and not for a reconfiguration (subdivision).
The failure to make an application for reconfiguration was explained by the plaintiff’s consultants in a letter to the defendants dated 4 February 1999 wherein it was said that:
“A sensible subdivision layout cannot be made without reasonably accurate contours. The property is so heavily vegetated that accurate contour survey cannot be prepared without extensive clearing taking place beforehand. Council will not grant tree clearing permits unless the land to be cleared has either a rezoning or subdivision approval and floral/fauna assessments carried out.
The latter, as you are aware, had been prepared and we are in the process of obtaining rezoning approval.”
The reference to a “rezoning approval” is a reference to a process which was available under the repealed Local Government (Planning and Environment) Act. The application for a material change of use was intended to achieve a result similar to rezoning under the superseded legislation.
No further correspondence was entered into at the time in relation to the decision to defer any application for reconfiguration.
The application to reconfigure Lot 20 into proposed Lots 201 and 202 was made under cover of a letter of 13 January 1999. That application was approved by Council on 30 April 1999 and subject to a decision notice dated 4 May 1999.
At the same meeting, the Council also approved, subject to conditions, the application for a development permit for the material change of use. That decision was communicated in a decision notice dated 5 May 1999.
The plaintiff was not satisfied with the conditions attaching to the material change of use approval and lodged an appeal with the Planning and Environment Court. An appeal was also instituted to the Planning and Environment Court by an objector to the granting of the approval.
Attempts to resolve the litigation were protracted but resulted in orders being made by the Planning and Environment Court on 6 June 2001 approving the material change of use on conditions which were satisfactory to the parties to that litigation. Informed of that approval, the solicitors for the defendants wrote asserting that the date for completion, pursuant to the contracts for Lot 3 and Lot 202 was Monday 6 August 2001.
In a facsimile transmission dated 19 July 2001 the plaintiff’s solicitors took the point that no approval for the reconfiguration of the land had yet been obtained. They also advised that the Council had declined to seal the plan for the reconfiguration of Lot 20 into Lots 201 and 202 because of unpaid rates. The solicitors for the defendants responded by asserting that the plaintiff had effectively waived its right to rely upon the condition concerning approval of the reconfiguration to suburban densities. As to the Council’s refusal to seal the plan for creating Lots 201 and 202, the solicitors for the defendants noted that the plaintiff’s surveyors had raised the matter with it on 6 July 2000 and called on the plaintiff to ensure that the plan was relodged for sealing and registration prior to completion. Subsequent correspondence advised that the rates had been brought up to date.
When the solicitors for the plaintiff did not attend on the nominated settlement date at the nominated time, the solicitors for the defendants purported to terminate the contract and forfeit the deposit. The solicitors for the plaintiff responded by asserting that the defendants’ conduct represented a repudiation of the contract. A purchaser’s caveat was registered over Lots 3 and 20 and the plaintiff’s solicitors wrote affirming the contracts and asserting their client remained ready will and able to settle once the reconfiguration (to suburban density) was registered. It appears that shortly thereafter however, in October 2001, the solicitors for the plaintiff raised the claim that the proposed Lot 201 and proposed Lot 202 contracts were void by reason of contravention of the Land Sales Act.
The Issues
The present proceedings are for the return of the deposit monies, together with interest on the basis that the proposed Lot 201 and proposed Lot 202 contracts were void abinitio by operation of s 8(2) of the Land Sales Act 1984 and, in turn, the consideration for the deposit on Lot 3 contract wholly failed, or that the contract became impossible to perform and was frustrated.
The defendants contended that:
(a) the transaction for the sale of proposed Lots 201 and 202 did not offend s 8 or that s 8(2) did not apply by reason of s 7A;
(b) they are entitled to terminate the contracts and forfeit the deposit;
(c) they are entitled to damages in respect to the plaintiff’s failure to complete;
(d) they are, in any event, entitled to general damages for the plaintiff’s breach of the confidentiality clause.
I was informed by counsel that there was no relevant authority with respect to the Land Sale Act issues. I was however, greatly assisted by the helpful submissions of counsel for the respective parties.
Do the contracts offend the terms of section 8
Section 8 of the Land Sales Act places restrictions on the sale of a “proposed allotment”. That expression is defined, in s.6 as follows:
“Proposed Allotment’ means a single parcel of land, other than a lot within the meaning of this Act, the boundaries of which are shown, or to be shown, on a Plan of Survey that is to be registered under the Land Act 1994 or Land Title Act 1994.”
The expressions “sell”, “purchase” and “agreement” are defined in s 6. The latter is defined, in part, as follows:
“(a) a written contract of sale, or another instrument, under which a sale or purchase is entered upon; or
(b) an oral contract of sale …”
The expression “purchase” is defined to include “agree to purchase” and “sign an instrument that is intended to legally bind a signatory to purchase”.
At the relevant time[1] section 8 provided, with respect to the sale of proposed allotments, as follows:
[1] prior to the amendments effected by the Integrated Planning and other Legislation Amendment Act 2003
“8. Restriction on Selling
(1)A person may sell a proposed allotment of freehold land only if, when the purchaser enters upon the purchase of the allotment –
(a) local government unconditional approval of the subdivision application for the land is in force under the Planning Act; or
(b) local government approval of the subdivision application for the land, subject to conditions other than conditions requiring the applicant to construct works on the land, is in force under the Planning Act; or
(c) The following approvals are in force under the Planning Act –
(i) Approval of the subdivision application for the land, subject to conditions requiring the applicant to construct works on the land; and
(ii) Approval of the engineering drawings and specifications for the works mentioned in sub-paragraph (1).
Maximum Penalty – 200 Penalty Units or One Year’s Imprisonment
(1A) …
(2) An agreement made in contravention of this section is void and any person who had paid money thereunder shall be entitled to recover the amount thereof, together with the amount of interest (if any) that has accrued in respect of that amount since the money was so paid, by action as for a debt due and owing to the person by the person to whom the money was paid.”
On the face of it, the proposed Lot 201 and proposed Lot 202 contracts contravene s 8(1). In each case, the purchaser, by entering into the contract of sale, entered upon the purchase[2] of a single parcel of land the boundaries of which were shown or were to be shown on a plan of survey that was to be registered under the Land Title Act. It is common ground that, at the time the purchaser entered upon the purchase, there was no local government approval to the subdivision creating proposed Lots 201 and 202 as described in subparagraphs (a), (b), or (c) of s.8(1).
[2]See the definition of “purchase” in s.6.
To avoid that conclusion, counsel for the defendants submitted that, properly construed, there was a single agreement, expressed in two contracts, to sell the existing Lot 20.
In support of that submission, counsel for the defendants pointed to the special conditions requiring simultaneous execution of all of the contracts and simultaneous settlement of the Lot 3 and proposed Lot 202 contracts prior to the settlement of the proposed Lot 201 contract. It was submitted that, by reason of the common and complementary special conditions, the contracts collectively operated as the sale of the whole of Lot 3 and the whole of Lot 20, although the payment of the sale of the whole of Lot 20 was to be staged. In this regard, it was submitted that it would not have been necessary for separate titles to issue for proposed Lots 201 and 202 in order for settlement to take place. The alternative, it was submitted, would have been for one registrable instrument transferring the whole of Lot 20 to be handed over either at the time of completion of the proposed Lot 202 contract or, more likely, at the time of the settlement of the proposed Lot 201 contract, with a caveat being used to protect the interest of the vendor or purchaser, as the case may be.
I am not persuaded that the contracts are not agreements to sell proposed allotments namely proposed Lot 201 and proposed Lot 202.
For present purposes, the expression “agreement” in s 8(2) directs attention to each written contract of sale under which the sale or purchase was entered upon[3].
[3]See the definition of “agreement” in s 6, particularly subparagraph (a).
As senior counsel for the plaintiff submitted, the defendants’ submission flies in the face of the ordinary meaning of the words of the proposed Lot 201 contract and the proposed Lot 202 contract, which purported to be separate agreements involving different parcels of land at different prices and on different terms.
As senior counsel for the plaintiff pointed out, the differences in the terms of the contracts extended to the completion dates and the “interdependency” of the contracts. That is, the proposed Lot 202 contract was to be settled at a significantly earlier time than proposed Lot 201 contract and, although conditional upon the simultaneous execution of the proposed Lot 201 contract, was not dependent upon the later settlement of that contract. It was possible that the proposed Lot 202 contract would proceed to settlement, even if the proposed Lot 201 contract did not, for whatever reason.
There is no sufficient basis for concluding the proposed Lot 202 contract, for example, was not an agreement, in accordance with its express terms that, “the seller and buyer agree to sell and buy the property under this contract” being, as described in the contract, “Lot 202 on Plan of Proposed Subdivision of Lot 20 on RP 894218”. That which was agreed to be bought and sold pursuant to that contract was an identified allotment, not then in existence, but shown on the proposed Plan of Subdivision which was, pursuant to the terms of the contract, to be the subject of the preparation of a plan of reconfiguration in registrable form and be lodged for local authority approval and subsequent registration. That is how the parties chose to express the bargain between them. There is no suggestion that the contracts were an artifice or a sham or otherwise did not express the true bargain between the parties.
That the contracts required simultaneous execution and that the completion of the proposed Lot 201 contract was conditional upon the earlier settlement of the other contracts does not, in my view, dictate that, on a proper characterisation, the contracts were not agreements made for the sale of proposed allotments.
In my view, each of the proposed Lot 201 contract and the proposed Lot 202 contract were agreements for the sale of a proposed allotment in breach of the terms of s.8(1) of the Land Sales Act.
Counsel for the defendants submitted that such a conclusion does not accord with the objects of the Act set out in s.2 as follows:
“2 Objects of the Act
The objects of the Act are –
(a) to facilitate property development in Queensland; and
(b) to protect the interests of consumers in relation to property development;
(c) to ensure the proposed allotments and proposed lots are clearly identified; and
(d) to achieve the objects mentioned in paragraphs (a) to (c) without imposing a procedural obligation on local governments in addition to their obligations under the Integrated Planning Act 1997”
While I appreciate that the transaction was intended to facilitate property development by the plaintiff, and that the provisions of s 8[4] may have been drawn with the protection of consumers who enter into contracts to purchase proposed allotments “off the plan” from developers or marketers more in mind than the sale of “en globo” parcels to a development company such as the plaintiff, the terms of the section are not so confined and I do not think that there is justification for putting the construct on the contracts which the defendants advance.
[4]And s 9 which requires identification of the proposed allotment by means of a disclosure plan and disclosure statement as well as a copy of the approved plan of survey.
Are the contracts saved by s 7A
The defendants’ alternative submission was that the contracts, properly construed, were a part of a “large transaction” for the purposes of s 7A, such that s 8(1) did not apply.
Section 7A provides as follows:
“7A Part not to apply to large transactions
(1)This part does not apply to the sale or purchase of a proposed allotment if the sale or purchase is part of a large transaction;
(2)In sub-section (1) – “large transaction” means the sale or purchase of 6 or more proposed allotments if –
(a) the vendor of each proposed allotment is the same person; and
(b) the purchaser of each proposed allotment is the same person; and
(c) the sale or purchase is the subject of
(i) a single agreement; or
(ii) 2 or more agreements entered into within 24 hours.”
The critical question, in this respect, is whether the transaction involved “the sale or purchase of six or more proposed allotments”.
The defendant’s submission is that, because, the terms of the proposed Lot 202 contract contemplated the purchaser obtaining a reconfiguration approval for further subdivision at a suburban density, the contracts should be seen as being for the sale and purchase of those “proposed allotments”.
The statutory provision calls for an inquiry as to what is being sold or purchased. As has already been observed, the contracts relating to the Lot 20 land were, on their face, in accordance with their plain and ordinary meaning, contracts to sell proposed Lot 201 and proposed Lot 202.
It is true that special condition 9 of the proposed Lot 202 contract[5] provided that it was conditional upon a development approval to reconfigure Lot 3, proposed Lot 201 and proposed Lot 202 for a minimum of eight lots per hectare however, as senior counsel for the plaintiff submitted, it is one thing for that contract to be subject to a special condition that a development approval be obtained but it is quite another for the contract to comprise the sale or purchase of six or more proposed allotments.
[5]The Lot 201 contract does not contain the same condition.
While the plaintiff bargained for conditions relating to a local authority approval for reconfiguration, the fate of that application, the number of allotments which would receive approval and their configuration were unknown. The contract did not require that the lots, the subject of any reconfiguration approval for suburban densities, would be constructed or that plans in registrable form would be lodged for registration with the titles office.
Proposed Lots 201 and 202, on the other hand, were the proposed allotments in respect of which, in accordance with the special conditions to the Lot 202 contract, there was an obligation, for the benefit of both parties, upon the buyer to prepare a plan of reconfiguration in registrable form, obtain local authority approval and lodge the plan for registration in the titles office. Either party was at liberty to determine the contract if the plan was not registered on or before 1 February 1999.
The parties did not, in the contracts, identify that which was to be sold and purchased by reference to allotments which might become the subject of a reconfiguration approval of the type referred to in special condition 9(b) of the proposed Lot 202 contract. Rather, the obtaining of such a development approval was the subject of special conditions which were expressed, in the introductory paragraph to the special conditions, to form part of the contract wherein the first defendant and the plaintiff were described as seller and purchaser “in respect of the property being Lot 202 on plan of proposed subdivision of Lot 20 on RP 894218”.
As senior counsel for the plaintiff pointed out, special condition 9 of the proposed Lot 202 contract was for the benefit of the purchaser and could have been waived by his client. Indeed notwithstanding that there was no reconfiguration approval to re-subdivide the land into suburban densities, the defendant called for the proposed Lot 202 contract to be settled, called upon the plaintiff to immediately re-lodge the plan to create Lots 201 and 202 for sealing and registration prior to settlement and sues, by way of counterclaim, for damages consequent upon the plaintiff’s failure or refusal to settle.
In my view, that which was the subject of the sale and purchase was each of the proposed allotments mentioned on the face of the proposed Lot 202 contract and proposed 201 contract respectively and also referred to in the introductory paragraph to the special conditions to those contracts.
In my view, the proposed Lot 201 contract and proposed Lot 202 contract were not contracts for the sale or purchase of six or more proposed allotments and so were not part of a large transaction for the purposes of s 7A such as to render s 8 inapplicable.
The consequence is that, in accordance with s 8(2), the agreements were void and the plaintiff is entitled to recover money paid under the proposed Lot 202 agreement, together with interest by action as for a debt due and owing by the first defendant.
The Lot 3 contract
The Lot 3 contract did not involve the sale of a proposed allotment and so did not offend the Land Sales Act. That contract was however, conditional upon the simultaneous execution of contracts which were void by reason of the Land Sales Act.
If it were the case that the Lot 3 contract was frustrated (ie discharged but not void ab initio) then the plaintiff’s claim for the return of the deposit moneys would, as Senior Counsel for the plaintiff conceded, fail by reason of special condition 5 which provided that [my underlining]:
“Upon obtaining a clearance of the deposit cheque the deposit holder shall pay the deposit to the seller and such deposit shall not be refundable to the buyer unless the sole reason for the non completion of this contract is the default of the seller.”
Senior counsel for the plaintiff however, contended that his client was entitled to recover the moneys by reason of there being a total failure of consideration.
Special condition 1, which went to the formation of the contract, required the simultaneous execution of contracts for the sale and purchase of proposed Lots 201 and 202 and should, be construed as requiring the simultaneous execution of valid contracts for the sale and purchase of those proposed allotments. The invalidity of the proposed Lot 201 contract and the proposed Lot 202 contract had the result that, at the time of execution of the Lot 3 contract, there was no valid contract for the sale or purchase of either of those proposed allotments pursuant to special condition 1 and no prospect of simultaneous settlement pursuant to special condition 2. In those circumstances the plaintiff is entitled to recover the moneys paid under the ineffectual Lot 3 contract.
The breach of confidentiality
Each contract was subject to a special condition which provided as follows:
“This contract and all matters and things connected with and related to this contract and its performance are confidential and no party shall disclose them to any other person except his, her or its legal and financial advisers and bankers (and then only if the recipient agrees prior to receipt to keep the information disclosed confidential) unless a prior written consent or waiver of the other parties (any guarantor excepted) is first had and obtained.”
Notwithstanding those provisions, a story appeared in the real estate section of the Gold Coast Bulletin for the weekend of 31 October – 1 November 1998 under the headline “Jefferson snares land for 1,000 homes”. The story was about the acquisition of two landholdings. One was a landholding to be acquired from the defendants under the three contracts entered into on 18 August 1998. The other was an adjoining landholding in different ownership. The article contained a map showing the location of the two landholdings. In relation to the defendants’ landholding, the article reported:
“The 56 hectare Coomera parcel bought by Jefferson is known as Days Farm and has been acquired from Michael and Angeline Porter in a $4.25 million deal with a staged settlement.
The land is zoned future urban and Jefferson will apply to the City Council to develop it as an estate with between 500 and 600 homes.”
The evidence of the journalist, Mr Racini, which I accept, is that the source of the report was what he had been told by John Fish, an executive of the plaintiff at the time.
In those circumstances, there was a breach of the confidentiality clause.
The effect of that breach was the subject of evidence by each of the defendants. The first defendant said that she was “shocked” and “horrified” to see the story, notwithstanding the agreement which had been entered into. The fact that people then knew that they had come into, or were about to come into, a significant amount of money led her to be concerned that someone might try to abduct her grandchildren who were resident on the farm or her high school aged daughter. She perceived that there were some difficulties, on a personal level, with others in the local community who thought the defendants had kept something from them with respect to the agreement to sell. She also gave evidence of experiencing, for the first time, squatters coming onto the property and some items being destroyed or taken, which she attributed to an assumption that the property was vacant, given the story that it had been sold for development purposes.
Similarly, the second defendant gave evidence of feeling shocked and let down as a result of the publication and feeling “uncomfortable” that their dealings had become general knowledge. He also spoke of the stealing of a cattle grid and the losing of up to ten cattle.
Counsel for the defendants contended that his clients were entitled to an award of general damages, in the range of $5,000 to $10,000 for “inconvenience, mental stress, vexation or the like”.
There are however, difficulties with even such an apparently modest claim.
Firstly, the confidentiality clauses, insofar as they relate to the bulk of the landholding being proposed Lots 201 and 202 are contained in contracts which, by reason of the Land Sales Act, are void. While, in some circumstances, only a severable part of a contract might be illegal, leaving other parts to be enforced, I do not consider that is the case here. The confidentiality clause was a special condition of a contract for the sale of a property. What s 8(2) renders void is the agreement, meaning, in this case, the written contract of sale under which the sale or purchase was entered upon.[6] In my view, the confidentiality clauses in the proposed Lot 202 contract and the proposed Lot 202 contract fell with those contracts.
[6]See subparagraph (a) to the definition of “agreement”.
Secondly, and in any event, the contracts otherwise contemplated steps being taken which would have led to publication of the proposal to develop the defendant’s farm as a housing estate. In that regard, the Lot 3 contract and the proposed Lot 203 contract provided for the making of a development application by no later than 15 November 1998. An application, at least for the material change of use component, was made under cover of a letter dated 11 November 1998. That application was one in respect of which public notification was required pursuant to the provisions of the Integrated Planning Act 1998. As a consequence, notices were required to be posted on the land, served on adjoining landowners and notified in the newspaper. The application itself, together with any supporting material was required to be made available for public scrutiny at the Council offices.
While the public notification process would not necessarily have involved disclosure of the purchase price, it is likely that the fact that the defendants had entered into an arrangement with developers for the development of their property for the purposes of suburban residential development, presumably for a significant amount of money, would shortly have become public knowledge even had it not been for the article. The consequences for the defendants would likely have been similar to those flowing from the breach of the confidentiality clause.
For those reasons, while the breach of the confidentiality condition does the plaintiff no credit, the defendants have failed to prove any substantial damage and I agree with the submission of Senior Counsel for the plaintiff that damages are nominal. I will allow $100.
Damages for the plaintiff’s failure to complete
The defendants counter-claim for damages for the plaintiff’s failure to complete must fail on the basis of the earlier conclusions as to the proposed Lot 201 contract and the proposed Lot 202 contract being void by reason of s 8(2) of the Land Sales Act and the Lot 3 contract consequently failing by reason of it having been conditional on simultaneous execution of the other contracts and simultaneous settlement of the proposed Lot 202 contract. Nevertheless, it is appropriate that I say something about the defendant’s counter-claim on a precautionary basis.
The seller’s remedies, in the event of the buyer’s default, are governed by s 9 of the standard conditions of the contracts. Relevant provisions include the following:
“9.3 If Seller Terminates:
If the seller terminates this contract under clause 9.1, it may do all or any of the following:
(1) resume possession of the property;
(2) forfeit the deposit and interest earned on its investment;
(3) sue the buyer for damages;
(4) resell the property.
9.4 resale
(1) The seller may recover from the buyer as liquidated damages:
(a) any deficiency in price on a resale; and
(b) its expenses connected with this contract, any repossession, any failed attempt to resell, and any resale; provided the resale settles within 2 years of termination of this contract;
(2) Any profit on resale belongs to the seller.
9.5 Seller’s damages
The seller may claim damages for any loss it suffers as a result of the buyer’s default, including its legal costs on a solicitor and own client basis and the cost of any work or expenditure under clause 7.6(2).”
In this case, the defendants resold the property for a greater amount and so do not make any claim under clause 9.4(1)(a). Although clause 9.4(1)(b) refers to recovery of the expenses connected with the resale, the defendants make no claim in that regard.
The claim is for:
(1) holding costs incurred as a result of the delay in settlement;
(2) legal costs incurred in the aborted transaction;
(3) the loss associated with not being put in the money, to the extent of the purchase price, from the date that settlement should have occurred.
There was debate about whether, had the proposed Lot 201 and proposed Lot 202 contracts been valid and the proposed Lot 3 contract not failed, the defendants would have been entitled to damages. That debate raised issues including as to whether, notwithstanding the provisions of clause 9.4(2), the defendants were obligated to bring into account any profit received on resale and whether there would have been a requirement to settle on the day nominated by the defendants’ solicitors notwithstanding that no development approval had then been obtained for the reconfiguration of the land at a suburban density. It is unnecessary for me however, to express even a precautionary view on those matters since they were not the subject of any contest on the facts and an appeal court would not be at any disadvantage in deciding those matters should it become necessary.
One topic upon which there was examination and cross-examination related to the legal costs connected with the contract. The defendants claim, in that regard, the sum of $31,431.81, which was particularised in paragraph 32 of the pleading, as consisting of:
(1) solicitors fees to 27 August 1998 for preparation of contracts – fees $2,400 outlays $122.80, total $2,522.80;
(2) solicitors fees from 27 August 1998 to 25 September 2001 – fees $18,229.92, GST $1,505.70, outlays $245.76, total $20,000;
(3) solicitors fees from 9 September 2001 – 16 November 2001 commercial file (prior to issue of proceedings February 2002) – fees $7,900, outlays $199.10, GST $809.91, total $8,909.01.
In support of that claim the defendants referred to various memoranda of fees, copies of which were included in the agreed bundle of documents. In each case, they included narrations giving a brief description of the work undertaken.[7] The first defendant gave evidence of the memoranda of fees having been paid. Both the first defendant and the defendants’ current solicitor were questioned in relation to the memoranda of fees, and, in particular, as to what work certain items related to. Debate then ensued as to whether the defendants would, in any event, be entitled to claim with respect to some of that work.
[7]Although, in each case, the quantum of the professional fees was expressed in a single amount referable to all of the items described in the narration. Accordingly, it is not possible to identify what proportion of the professional costs were attributable to each specific item.
As to the work reflected in the memoranda of fees:
(a) The first two categories of fees particularised above relate to three invoices from the defendants’ former solicitors which were obtained by the defendants’ current solicitors from files held by the former solicitors relating to the subject sale.
(b) The last category of fees is represented by a single invoice from the defendants’ current solicitors “commercial file” which had been created at the time of the initial consultation and was kept separate from the subsequent “litigation file” which was created once the subject action was commenced and which contained the memoranda of fees related to the costs of this action.
(c) The earliest invoice from the former solicitor, dated 27 August 1998, contained an entry relating to the perusal of documentation including “probate, will” about which the first defendant was questioned. I am satisfied that item relates to work done by the solicitor to check that the property, the subject of the transactions, had properly passed to the first defendant by way of inheritance when her father passed away.
(d) The second memorandum of fees from the defendants’ former solicitors, dated 9 December 1998, makes reference to discussing and advising in respect of matters such as “capital gains tax liability, the purchaser’s application for development, breach of confidentiality clause”. I am satisfied that the reference to the capital gains tax liability is a reference to the liability which may arise for the defendants upon the sale of the subject property. I am satisfied that the “purchaser’s application for development” is a reference to the material change of use application and that the “breach of confidentiality” clause referred to was the breach of the clauses in the subject contracts resulting from the information passed to the journalist from the Gold Coast Bulletin by Mr Fish.
(e) The final invoice from the defendants’ former solicitors, dated 25 September 2001 contains references to certain proceedings.[8] I am satisfied that those are references to the various proceedings in the Planning and Environment Court relating to the plaintiff’s development application. That memorandum of fees also refers to prospective court action following completion of the Planning and Environment Court appeal.[9] It is probable that such entries refer to the discussion of potential court action with respect to the dispute between the parties relating to the plaintiff’s refusal to complete.
(f) The memorandum of fees from the defendants’ current solicitors include reference to obtaining counsel’s advice. Whilst the text of the advice was not disclosed by the defendants, the evidence of their solicitor, which I accept, is that those items related to obtaining advice on the removal of the caveats and the position with respect to the contracts.
[8]See, for example, references to “an update on proceedings” (9.3.2001), “seeking information on settlement of court action” (9.3.2001), “re consent order” (15.3.2001), “appeal by go cart club” (28.3.2001).
[9]See, for example, “27.9.01 – phone from M Lynn discussing viability of court action”.
The debate about whether the defendants would be entitled, in any event, to claim for the expenses related to all of the work described in the narrations, as better explained in the abovementioned evidence, involved questions of the proper interpretation and application of the provisions of clause 9 of the standard conditions of the contracts. That is, again, a matter upon which I do not need to express a view, even on a precautionary basis, since, given the documentary evidence and the findings of fact which I have made, an appeal court would not be at any disadvantage in deciding those matter should it become necessary.
There were no other controversial issues of fact concerning quantification of the counter claim.
Conclusion
The plaintiff is entitled to recover, as against the first defendant, the $40,000.00 paid by way of deposit under the proposed Lot 202 contract and, as against the first and second defendants the $10,000.00 paid under the Lot 3 contract. As to interest, s8(2) of the Land Sales Act provides that the plaintiff is entitled to recover the amount paid (under the proposed Lot 202 contract) “together with the amount of interest (if any) that has accrued in respect of that amount since the money was so paid” by action as for a debt, but there is no evidence of accretions. Interest may however be awarded under the Supreme Court Act. In the exercise of my discretion, I will only allow interest (at 8%) for the period since October 2001, when the plaintiff apparently first raised its contention with respect to the contravention of the Land Sales Act. This yields $8,533.00 on the $40,000.00 deposit and $2,133 on the $10,000.00 deposit. I will give judgment for the balance after deducting, from the letter, the nominal damages awarded on the counterclaim. Accordingly the judgment of the Court is that the first defendant pay to the plaintiff the amount of $48,533.00 including $8,533.00 interest to this day and further that the first and second defendants pay the plaintiff the amount of $12,033.00 including $2,133.00 interest to this day. The question of costs will be reserved for argument.
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