Mirvac Queensland Pty Limited v Dunworth

[2012] HCATrans 23

[2012] HCATrans 023

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B45 of 2011

B e t w e e n -

MIRVAC QUEENSLAND PTY LIMITED ACN 060411207

Applicant

and

MARIS ANNE DUNWORTH

Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 10 FEBRUARY 2012, AT 11.18 AM

Copyright in the High Court of Australia

MR A.J. MYERS, QC:   May it please the Court, I appear with MR L.F. KELLY, SC for the applicant.  (instructed by Corrs Chambers Westgarth Lawyers)

MR W. SOFRONOFF, QC:   May it please the Court, I appear with MR R.A. INGHAM‑MYERS for the respondent.  (instructed by Hall Payne Lawyers)

FRENCH CJ:   Thank you, Mr Myers.

MR MYERS: The question of general importance raised by this application for special leave we frame this way. Should remedial provision of the statute, and in this case it is section 64 of the Property Law Act 1974 (Qld), that modifies private contractual relations be interpreted to enable a wrongdoer, namely, a party in breach of that contract, to take advantage of the statutory remedy when the remedy would not have been available if the applicant had not breached the contract?

FRENCH CJ:   Does the construction against which you contend only operate the benefit to wrongdoers?

MR MYERS:   Yes, we say it does.  In other cases, an innocent party could, if there is a breach of the contract, terminate the contract and so would not be affected by the adverse consequences of the statute.

FRENCH CJ:   But date of actual completion might differ from contractual date of completion for a variety of reasons, one of which might be the circumstances that have arisen in this case than there might, might there not, in a variety of other circumstances?  I just wonder whether tying the constructional question to the concept of wrongdoing is not putting it too narrow a base.

MR MYERS:   Well, your Honour, it is possible to imagine all sorts of situations where the statute may operate but taking a sort of sensible, practical realistic view of it, the sort of case that the Court is concerned with here is that which is likely to arise and the very facts of this case are the facts which are most likely to arise.

KIEFEL J:   Whatever the factual position of parties are, are they not answered by the purpose of approach by Justice McMurdo in the Court of Appeal to the construction of a statute at paragraph [51], namely, that the purpose of the provision is to shift the risk to vendors?

MR MYERS:   Well, with respect to what is said by Justice McMurdo, his Honour says it is an evident policy.  Certainly the effect of the statute is to change the general law position and shift the risk from the purchaser to the vendor, that is to say, the risk of damage to the property after the contract is entered into and before completion.  But the question still remains, should that shifting of risk occur where the contract is not completed on the due date by reason of a breach by the purchaser?

KIEFEL J:   But how does that become a question of construction and not a moral question?

MR MYERS:   Well, it does not become a question of construction as such.  I will come to the question of construction in a moment.  We frankly criticise the reasons of Justice McMurdo because that part of his reasoning and in paragraph [53] of his reasons is simply based upon an assertion and a more just assertion, we would say, would be that the risk only shifts during the period during which it was contemplated that the contract would be on foot if not performed.  A vendor who enters into a contract cannot be taken to have accepted the risk of damage to the property occurring after the breach by the purchaser in refusing to complete. 

With respect, your Honour, we agree with your remark, it is just a moral question.  The question really is one of construction and that depends ultimately on the words, but we also say the construction is informed by the principle which has informed the construction of statutes for a very, very long time in the courts, namely, that the statute should not be construed so as to assist a wrongdoer.  If I could ask your Honours to be good enough to go to page 22 of the appeal book where the statutory provision is set out.  The words we say are clear:

In any contract for the sale of a dwelling house where, before the date of completion or possession whichever earlier occurs –

and so on.  The statutory provision begins with the words “In any contract for the sale” and then it goes on “before the date of completion”.  If the construction which the Full Court adopted were correct, the words “date of” are absolutely otiose, it would simply be “before completion or possession”.  This is a statutory provision by its opening words and by the words that are at the centre of this question of construction, identifies the terms of the contract.

KIEFEL J:   His Honour’s construction I think has the word “possession” understood as referable to actual possession.

MR MYERS:   Of course, possession will always be actual possession, actual in the sense of the moment when physical possession is taken of the premises or something tantamount to physical possession, but it will be an agreed date.  A purchaser who is a trespasser, for example, would not be said to have taken possession in the relevant sense; the date of possession would not have arrived.  The date of possession would be a matter of agreement.

KIEFEL J: Mr Myers, do you say that the question of importance in relation to section 64 and which requires clarification generally are the words “date of completion or possession” in the context of contract for sale?

MR MYERS:   They are the words of the provision which require to be construed and if they are not plain and there is some ambiguity about them, then the approach should be informed by considering that a construction should not be adopted which would assist a wrongdoer.

KIEFEL J:   The facts and circumstances of this case are rather unusual, so I think you are really driven more to the point of whether or not there is some potential ambiguity which may need to be resolved for the purpose of conveyancing generally in Queensland.  I take it that there are no authorities or no discussion in the texts on vendor and purchaser and conveyancing which suggests a problem about this?

MR MYERS:   This is a novel point.  It is a novel issue, but ‑ ‑ ‑

KIEFEL J:   But I wonder whether it is novel because of the peculiar facts or whether or not there is a real ambiguity in the section?

MR MYERS:   We say it is not because of the peculiar facts.  The facts are the common facts that one would expect to occur.  A purchaser does not complete on time and the property is damaged.  Can the purchaser take advantage of this provision or do the words, relevantly, “date of completion” in the context refer to the date specified in the contract and that brings about their result?

FRENCH CJ:   That is what it boils down to, is it not?  It is a question of construction of the words “date of completion” and that is the question which seems to be addressed in your ground 3 at page 36 of your draft notice of appeal.  I must say, I cannot find, and you may be able to point to it, something that suggests that the Court of Appeal adopted a construction in the rather pejorative terms set out in ground 2.  But are we not really just talking about ground 3?  That is, does date of completion, stripped of all the, as it were, moral disadvantages of one construction or the other, does date of completion mean date of actual completion or contractual date of completion?

MR MYERS:   That is the question of construction, but ‑ ‑ ‑

FRENCH CJ:   That is the only question, is it not?

MR MYERS:   It is the only question of construction, but, with respect, your Honour said stripped of moral considerations.  This is in a context of the general law where the general law ‑ ‑ ‑

FRENCH CJ:   I am sorry, I am reading and trying to make sense of ground 2 which suggests:

The Court of Appeal erred in interpreting section 64 of the Property Law Act 1974 (Qld) as meaning that a purchaser who was in fundamental breach –

et cetera.  Where did the Court of Appeal say that?  How does that question of construction arise?  It is really down to ground 3, is it not?

MR MYERS:   That is the consequence of the Court of Appeal’s decision.  That is what I can ‑ ‑ ‑

FRENCH CJ:   But they did not construe it by reference to fundamental breach.  They construed it by reference to date of completion. 

MR MYERS:   Undoubtedly, that was the question of construction, but the consequence of that question of construction – I am sorry, their decision concerning the question of construction was that a person who is in fundamental breach can take advantage of this statutory provision, notwithstanding the terms of the contract.  We say, with respect, that the meaning of those terms is quite plain and that meaning is reinforced by a consideration of the consequences of the other view.

FRENCH CJ: It does not matter, on your construction, whether the person seeking to take advantage of 64 is in breach of a fundamental breach of the contract or for some other reason, the date of completion is not the contractual date. The fundamental breach – it does not matter to the impact of section 64 and how it actually works, does it? There is no rule which prevents wrongdoers from taking advantage of it that allows others to do so on a different construction.

MR MYERS:   I accept that, your Honour, but one of the consequences of the construction that is adopted is that it does allow wrongdoers to take advantage of it.  It is not a construction which is limited in its effect to the consequences for wrongdoers but, in the end, we say that the words of the statute are tolerably plain.  There is no issue of fact that encumbers this question and it is an important statutory provision in the present context of Queensland.  If your Honour pleases, they are the submissions on behalf of the applicant.

FRENCH CJ:   Thank you, Mr Myers.  Yes, Mr Sofronoff.  Perhaps, Mr Sofronoff, you could focus on ground 3 in draft notice of appeal.

MR SOFRONOFF:   If the Court pleases. In our respectful submission, there are two reasons why it is that there is no doubt about the correctness of the decision of the Court of Appeal. First, the use in section 64 of the word “of” instead of the word “for” connotes that the relevant date is the date of actual completion or the date of actual possession rather than the agreed date, if any, in the contract.

Secondly, that construction accords with the self‑evident purpose of the provision because if it were the date for completion specified in the contract that was meant by that expression in subsection (1), then it would follow that if no date for completion had been specified in the contract or the date for completion had passed without completion having occurred, with no breach by any party being responsible for non‑completion, if, for example, the date had been agreed to be waived for some reason and no new date was fixed, that would leave an innocent purchaser of property without the protection of protection.  No possible policy reason could be thought of for that.

Thirdly, much is sought to be made of the fact that my client did not complete on the due date for completion set by the contract.  At the time that she declined to settle there was, of course, an argument raised by her which was tried as to whether or not she was obliged to complete by reason of what she said were representations that had been made to her in contravention of section 52.  By the time the order for specific performance was made, she was no longer in fundamental breach of contract because by that stage the order was made and there was no suggestion and no evidence that she was not then ready, willing and able to settle but for the occurrence of the flood.

So even the pejorative reason for ascribing a particular construction to the section does not hold water even in this case.  The breach, if it had been a breach in failing to settle on wrong grounds, had been waived by the vendor by its insistence that the contract be affirmed and specifically performed, at least waived as a ground for terminating the contract.  It could rely upon that breach that it passed to sue for damages.  By the stage that the order was made for specific performance or, more relevantly, by the date of rescission, there is no suggestion that she was then in fundamental breach of contact in the sense that there was a continuing breach.  That had passed, there was an order, she was expected to comply with the order on pain of committing a contempt, and there is no suggestion in the evidence that she was not going to comply with it. 

So when one comes to some extreme novel circumstance where it might be said that a person might take advantage of the section who does not deserve its protection, that does not even arise, in our submission, in this case.  But on the other side of the balance, one can see that if the construction which the appellant advocates were adopted, then a lot of strange things would happen.  That is why, in our respectful submission, the Chief Justice of Queensland was right in his reasoning at page 26, paragraphs [32] to [36] in which he set out five reasons why the construction contended for by the applicant here was wrong and it is, in our respectful submission, also why Justice McMurdo was correct in paragraph [52] at page 29 when he rejected that construction as well.

KIEFEL J:   Mr Sofronoff, do I take it your researchers have not revealed any previous judicial consideration or consideration by text writers which suggests that there has been any confusion or questions raised as to the construction of this section?

MR SOFRONOFF:   No, we have not found anything like that.  Those are our submissions, your Honour.

FRENCH CJ:   Thank you, Mr Sofronoff.  Yes, Mr Myers.

MR MYERS:   Thank you, your Honour.  I have one thing to say really, it is this.  Your Honours may not appreciate from what has been said and, indeed, the summary perhaps that has been provided to your Honours, at least that which was on the Bar table, my client was prevented from terminating the contract because the respondent obtained an injunction restraining termination of the contract.  Then at the hearing from which the appeal was taken to the Full Court there was an order that the respondent complete the contract.  

Now, what my learned friend said was that in those circumstances there was no breach by his client of the terms of the contract, and that is incorrect, and the same sort of mistake is made, with respect, in paragraph [40] of the reasons of the learned Chief Justice.  If I could ask your Honours to be good enough to go to page 27:

The submission that this construction rewards a wrong‑doing purchaser is unfounded.  The appellant had at an anterior stage suffered the consequence of her breach of contract:  she was subjected to court orders adverse to her, including an order for specific performance, the respondent having decided to enforce rather than terminate the contract.

Now, that is not, with respect, the effect of an order for specific performance.  The order for specific performance does not vary the

contract.  It simply directs the party in breach to perform the contract.  There is no suffering of consequences for breach of the contract.  One is simply, as a defaulting party, ordered to perform the contract.  The subsequent damaging of the property was obviously entirely without her fault.  Any benefits she gained from the exercise of her right of rescission was not consequent on any wrongdoing on her part, the consequences of which had earlier been spent.  With respect, that is incorrect.  It was a direct consequence.  It was not the only reason.  If she had performed the contract by the due date, then the issue would not have arisen, the contract would have been performed.  The consequences of her wrongdoing were plainly not spent.

FRENCH CJ:   This was in answer to a proposition that the construction rewarded a wrongdoing in the particular case?

MR MYERS:   Yes.  It is undoubtedly the particular case, but it is the case that will most often arise.  There are all sorts of other possible cases, but to construe the statute in a way that rewards wrongdoing in a case that will most often arise is something the Court should eschew especially where, as we say, the terms are plain or not attended with a great deal of ambiguity.  If your Honours please.

FRENCH CJ:   Thank you, Mr Myers.

This application concerns the construction of section 64 of the Property Law Act 1974 (Q) which confers upon a purchaser of a dwelling house under a contract of sale the option to rescind the contract if, before the date of completion or possession, whichever is earlier, the dwelling house is so destroyed as to be unfit for occupation as a dwelling house.

In this case the purchaser of an apartment did not complete on the date required under the contract of sale. An order for specific performance was made fixing the completion date as 8 February 2011. The apartment was rendered uninhabitable by floodwaters on 13 January 2011. The purchaser gave notice of rescission of the contract under section 64. The applicant sought an extension of the date for completion fixed under the specific performance order.

The Court of Appeal held that section 64 applied and that the date of completion to which it referred was the date of actual completion of the contract. In our opinion, the construction adopted by the Court of Appeal is not attended by sufficient doubt to warrant the grant of special leave. Special leave will be refused with costs.

The Court will now adjourn to reconstitute.

AT 11.40 AM THE MATTER WAS CONCLUDED