Mirvac (WA) Pty Ltd v Yeo
[2011] WASC 162
•24 JUNE 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: MIRVAC (WA) PTY LTD -v- YEO [2011] WASC 162
CORAM: KENNETH MARTIN J
HEARD: 10 MAY 2011
DELIVERED : 24 JUNE 2011
FILE NO/S: CIV 1329 of 2011
BETWEEN: MIRVAC (WA) PTY LTD
Plaintiff
AND
SIOK KEAK YEO
First DefendantWOOI MUN CHEAH
Second Defendant
FILE NO/S :CIV 1330 of 2011
BETWEEN :MIRVAC (WA) PTY LTD
Plaintiff
AND
LESLEY MARGARET WILLIAMS
Defendant
FILE NO/S :CIV 1331 of 2011
BETWEEN :MIRVAC (WA) PTY LTD
Plaintiff
AND
JOAN ROSS GEBBIE
First DefendantRONALD WILTON GEBBIE
Second Defendant
FILE NO/S :CIV 2778 of 2010
BETWEEN :HARMAN NOMINEES PTY LTD
Plaintiff
AND
LEIGHTON SHORES PTY LTD
First DefendantMULTIPLEX LEIGHTON SHORES PTY LTD
Second DefendantROCKINGHAM PARK PTY LTD
Third Defendant
FILE NO/S :CIV 1497 of 2011
BETWEEN :LEIGHTON SHORES PTY LTD
Plaintiff
AND
ERIC CHIEN LOONG HOO
Defendant
Catchwords:
Preliminary issue - Statutory construction - Strata titles sale - Vendor and purchaser - Notice of avoidance under statute - Registered strata plan - Contractual provision allowing longer period than statutory minimum - Contractual provision allows vendor to unilaterally extend date for registration of strata plan - Application of section to contract - Contractual construction of registration date in context - Suggested severance of provisions in contract
Legislation:
Strata Titles Act 1985 (WA)
Result:
Preliminary issue answered in affirmative
Category: A
Representation:
CIV 1329 of 2011
Counsel:
Plaintiff: Mr C L Zelestis QC & Ms T Di Cicco
First Defendant : Mr D H Solomon
Second Defendant : Mr D H Solomon
Solicitors:
Plaintiff: Freehills
First Defendant : Solomon Brothers
Second Defendant : Solomon Brothers
CIV 1330 of 2011
Counsel:
Plaintiff: Mr C L Zelestis QC & Ms T Di Cicco
Defendant: Mr D H Solomon
Solicitors:
Plaintiff: Freehills
Defendant: Solomon Brothers
CIV 1331 of 2011
Counsel:
Plaintiff: Mr C L Zelestis QC & Ms T Di Cicco
First Defendant : Mr D H Solomon
Second Defendant : Mr D H Solomon
Solicitors:
Plaintiff: Freehills
First Defendant : Solomon Brothers
Second Defendant : Solomon Brothers
CIV 2778 of 2010
Counsel:
Plaintiff: Mr N Hutley SC
First Defendant : Mr C L Zelestis QC & Mr A Logan
Second Defendant : Mr C L Zelestis QC & Mr A Logan
Third Defendant : Mr C L Zelestis QC & Mr A Logan
Solicitors:
Plaintiff: Paul Fletcher & Co
First Defendant : Minter Ellison
Second Defendant : Minter Ellison
Third Defendant : Minter Ellison
CIV 1497 of 2011
Counsel:
Plaintiff: Mr C L Zelestis QC & Mr A Logan
Defendant: Mr D H Solomon
Solicitors:
Plaintiff: Minter Ellison
Defendant: Solomon Brothers
Case(s) referred to in judgment(s):
Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Clifford and Bayley v Solid Investments Australia Pty Ltd [2009] VSC 223
Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160
McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579
Process Minerals International Pty Ltd v Consolidated Minerals Pty Ltd [2010] WASC 266
Re Karounos; Ex parte Official Trustee in Bankruptcy (1989) 25 FCR 177
Solid Investments Australia Pty Ltd v Clifford and Bayley [2010] VSCA 59
Walker v Clough Property Claremont Pty Ltd [2009] WASC 367
Walker v Clough Property Claremont Pty Ltd [2010] WASCA 232
KENNETH MARTIN J:
Overview
The court is determining a common preliminary issue in five related vendor/purchaser actions. The preliminary issue is:
Whether the plaintiff and the defendants agreed in writing a period after the date of the contract … within which the strata plan pursuant to which the lot the subject of that contract was to be created was registered within the meaning of s 70(4) of the Strata Titles Act 1985.
It is convenient at the outset to mention s 70(4) of the Strata Titles Act 1985 (WA) (the STA) because it is a central underlying focus in the preliminary issue. There would appear to be no earlier decided case authority towards s 70(4). In mentioning s 70(4) at this point, I will omit any reference to that subsection's dual application to a survey‑strata plan, which is irrelevant.
Section 70(4) provides:
(4)If the strata … plan is not registered -
(a)within such period after the date of the contract as is agreed in writing by the purchaser and the vendor; or
(b)in the absence of any such agreement, within 6 months after that date,
the purchaser may avoid the sale at any time before the plan is registered.
Each of the purchasers (together, 'the Purchasers') in five actions before this Court has given a notice of avoidance, invoking s 70(4). The notice in each case was given at a time prior to any registered strata plan existing for the strata lot that each purchaser had contracted to acquire under contracts of sale and purchase. The Purchasers' notices were given on the basis of an attempted exercise of a statutory right under s 70(4). In each case, a time period specified under s 70(4)(b) (i.e. six months) had passed, subsequent to the date of the contract with each vendor (together, 'the Vendors'), but prior to the issue of a registered strata plan.
The underlying premise of each Purchaser notice of avoidance is that, as a matter of law, no greater period than six months was ever 'agreed' upon - as between the Vendors and the Purchasers - as is countenanced by s 70(4)(a). The Purchasers' contention as to the effective absence of any agreed period under s 70(4)(a) is, of course, heavily disputed by the Vendors.
In each contract of sale, in each action, there is a definition of 'Registration Date' found in the Special Conditions. As defined, 'Registration Date' 'means the date which is forty eight (48) months after the Contract Date, or as that date may be extended under [a subsequent numbered clause to which I will refer, within the Special Conditions in each contract of sale]'.
The preliminary issue requires consideration to be directed at, potentially, three essential fields of controversy. First is the statutory construction of s 70(4)(a) of the STA, particularly towards ascertaining the correct meaning, in context, of the word 'period'. The focus of enquiry on the first issue concerns whether a period, for the purpose of the section, must exhibit a precise and identifiable end date.
Second, after ascertainment of the correct meaning of the statutory provision, there arises need for an assessment to be made as to s 70(4)(a)'s application (or otherwise) to the contracts of sale. All contractual arrangements uniformly address circumstances in which the nominated date for registration of the strata plan, 48 months after the contract of sale was entered, may be extended at the initiative of the Vendors. Ascertaining whether or not the arrangements between the parties successfully engaged the opportunity to agree (in writing) upon a period - within a framework allowed by s 70(4)(a) - is at the heart of the dispute. This is because the Vendors uniformly contend that whatever view may be reached in this Court as to the true meaning of s 70(4)(a) and towards the word 'period' used therein, each of the vendor's contractual arrangements validly engage s 70(4)(a).
In the application phase, issues of contractual interpretation arise in respect of the term 'Registration Date', as well as further provisions, including terms which purport to constrain circumstances in which the purchaser may exercise the statutory right to avoid under s 70(4) STA and further, by which an extension of time for the Vendors to register a strata plan beyond 48 months can be obtained, solely on the Vendors' initiative.
Third, in the event the Vendors fail on the second issue, there would arise a final phase in this preliminary issue. If the arrangements are assessed not to engage the opportunity afforded by s 70(4)(a) to reach agreement upon a period, the issue then arises whether the Vendors' exposure to purchaser avoidance under s 70(4), might still be alleviated nevertheless by a technique of severance of the offending components, either under s 70A(1) of the STA, or by contractual severance provisions within each contract of sale (or by using both, in combination). Terms in each contract protect against a 'conflict' arising, as between a provision in the contracts of sale with the STA, by the amending or deleting of any offending contractual provision to the extent necessary, to eliminate conflict, and thereby, to deliver conformity and not conflict with the STA.
However, the Vendors' primary case is that recourse to severance measures is unnecessary.
Before more specifically addressing the three essential aspects of the preliminary issue, it is necessary to mention some background matters, including a recent decision at first instance, then on appeal in the Victorian Supreme Court, argued by all sides (depending upon the perspective of the Vendors or the Purchasers) to carry force, or at least significant insights in these proceedings.
Agreed facts: The Mirvac Actions and Contracts
I refer in aggregate to the three Mirvac (WA) Pty Ltd (Mirvac) matters, being CIV 1329, 1330 and 1331 of 2011, as the 'Mirvac Actions' and to the relevant contracts of sale in each case as the 'Mirvac Contracts'. In each action, Mirvac brings the proceedings as plaintiff. As the vendor in each case, Mirvac seeks to specifically enforce the contracts of sale entered with each purchaser, so as to compel a settlement on each sale. The terms of the Mirvac Contracts are essentially identical. The preliminary issue is chiefly concerned with the Special Conditions in the Mirvac Contracts, clauses which are identical.
By statements of agreed facts filed in each of the Mirvac Actions, the respective contracts of sale for strata titled units in a strata lot unit development known as 'Beachside Leighton' at North Fremantle, are agreed, as to their identification. The contracts have been provided uncontroversially to the court.
In each of the Mirvac Actions it is an agreed fact that 'neither party contends that there is any document other than the Contract which constitutes an agreement in writing of a period within which the strata plan by which [the relevant apartment] to be created was to be registered'.
Agreed facts: The Leighton Actions and Contracts
In action CIV 2778 of 2010, the plaintiff is the purchaser, Harman Nominees Pty Ltd, under a contract of sale for strata titled units in respect of apartments to be constructed at a development known as 'The Leighton, Indian Ocean'. There was an issue in this action (which has been deferred) over the identity of a relevant vendor or vendors. Arising from the contention over the true vendor are three defendants, the first defendant being Leighton Shores Pty Ltd.
Different contracts of sale in respect of Apartments AGO7 and AGO8 are the subject matter of the Harman action. The relevant contracts of sale are identified and agreed.
In the Harman action, there is a statement of agreed facts, which provides:
1.On 7 May 2008 the plaintiff and one or more of the defendants entered into the contract for the purchase by the plaintiff of Apartment AG7 in the building to be constructed known as 'The Leighton' a copy of which contract is included in the trial bundle behind tab 3 ('the Lot 7 Contract').
2.On 7 May 2008 the plaintiff and one or more of the defendants entered into the contract for the purchase by the plaintiff of Apartment AG8 in the building to be constructed known as 'The Leighton' a copy of which contract is included in the trial bundle behind Tab 4 ('the Lot 8 Contract').
3.By delivery to the defendants of the notices, copies of which are included in the trial bundle behind tabs 1 and 2, the plaintiff has sought to be rescind both the Lot 7 Contract and the Lot 8 Contract.
4.There is no document, other than the Lot 7 Contract and the Lot 8 Contract, which either party contends constituted an agreement in writing of a period within which the strata plan, by which Apartments AG7 and AG8 were to be created, was to be registered.
5.The period of 48 months after the contract date, referred to in the definition of Registration Date in cl 2.1 of the Lot 7 Contract and Lot 8 Contract, has not yet elapsed.
In a fifth action, CIV 1497 of 2011, Leighton Shores Pty Ltd is plaintiff seeking, as vendor, specific performance against Mr Eric Chien Loong Hoo as purchaser. Facts have not between agreed in CIV 1497 of 2011. But, I was uncontroversially advised on 10 May 2011 by solicitors for Leighton Shores, that:
The following facts are not in dispute and are the only facts in this action which are relevant to the s 70(4) issue:
1.The contract the subject matter of this action included a document titled 'annexure A (Special Conditions of Sale)' a copy of which can be found attached to Mr Hoo's affidavit (of 6 May 2011) and also attached to the second affidavit of Mr Steens (of 6 May 2011); and
2.There is no other document other than the special conditions which either party contends constituted an agreement (if at all) in writing of a period within which the strata plan was to be registered.
Absence of an agreed statement of facts in the Hoo action arises by reason of a (deferred) dispute concerning what other documents (if any) constitute the contract of sale, in the context of a wider (also deferred) dispute about vendor compliance with s 69 of the STA.
I refer to the two Leighton Shores actions as the 'Leighton Actions' and the respective contracts of sale, as the 'Leighton Contracts'. For relevant purposes the Leighton Contracts are similarly constructed to the Mirvac Contracts, although not identical.
Places that a s 70(4)(a) STA agreement may be reached
It is opportune to observe that s 70(4)(a) of the STA is seen to refer to a 'period' after the date of the contract, 'agreed in writing' as between the purchaser and the vendor.
In structure, the Western Australian provision presents as somewhat different to s 9AE of the Sale of Land Act 1962 (Vic) (which I will set out in full, in due course), in that the Victorian provision employs the distinct terminology 'or, if the contract specifies another period'. So the permissible Victorian location for an agreement under s 9AE(2) is only in the contract of sale. The Victorian provision is therefore narrower, in only countenancing an agreement as to a specified 'period' in the contract of sale instrument itself. On the other hand, the local s 70(4)(a) of the STA is wider, as regards allowable mechanisms potentially open to a vendor and purchaser to reach agreement as to a 'period' for the purposes of s 70(4)(a) - as long as the agreed period is 'in writing'. The breadth allowed by the Western Australian provision also opens up the potential for more than one such agreement as to the 'period' being effected, subsequent to the contract of sale.
Notwithstanding a theoretically wider scope in the Western Australian provision on these points, the facts that manifest in all actions here render the chosen implementation position, in effect, as akin to that allowed in Victoria. The parties here only raise the contracts of sale as being the frameworks within which a relevant agreement in writing for the purpose of satisfying s 70(4)(a) of the STA is possibly located. The Vendors say that these agreements do contain an agreed period. The Purchasers say the attempt to engage s 70(4)(a) STA in the contracts of sale was unsuccessful.
A potential for the agreement upon a s 70(4)(a) period to be found elsewhere than in the contract of sale itself may bear upon how agreement over the period between the purchaser and the vendor could work in operative effect. This question would have relevance towards understanding how what is agreed as an initial period of years fixed upon for the purpose of s 70(4)(a) could later come to be extended - by a further agreement(s) between the purchaser and vendor - which are reached subsequent to the contract of sale.
The Vendors submit that in Western Australia, there is no reason why an agreement as to an initially agreed period cannot be the subject of a further agreement that extends the initially agreed period. Such is the consequence of the large measure of contractual freedom bestowed by the Legislature upon the vendor and the purchaser, so it is put.
First issue: Statutory construction of s 70 of the STA
Section 70 of the STA is found within Part V of the STA. The division carries a heading 'Protection of purchasers'. For the significance towards interpretation of a divisional heading, see s 32(1) of the Interpretation Act 1984 (WA).
Part V in the STA encompasses ss 68 ‑ 70B. It covers diverse situations concerning pre‑sales of strata lots to purchasers, a scenario sometimes referred to as an 'off the plans' sale. Subsections 70(1), (2) and (5) address deposits or other monies payable by a purchaser to a vendor, prior to a strata plan for the proposed scheme being registered under Part II of the STA.
As I observed, in a different context in Walker v Clough Property Claremont Pty Ltd [2009] WASC 367 [15], s 70 in Part V of the STA is of particular protective importance for purchasers of proposed strata lots. I refer also to Martin CJ's observations in Walker v Clough Property Claremont Pty Ltd [2010] WASCA 232 [263], as regards the STA as a whole. In Walker at [21], I listed some key principles applicable in an exercise of statutory construction. It is not necessary for me to repeat those important interpretive principles here, save to say that the text of a section, broad statutory context and the ascertainment of a legislative purpose, are all key considerations, presently relevant.
It is now convenient to set out s 70 (in full), s 70A and s 70B of the STA. These provisions all fall within Part V. Section 68 STA contains some definitions. Relevantly, it provides a definition of 'Contract' as (unless a contrary intention appears) meaning 'a contract, agreement or document that legally binds the purchaser whether conditionally or unconditionally'.
70. Holding of deposit and other contract moneys when a lot is pre‑sold
(1)No person shall sell a lot in a proposed scheme before the strata/survey‑strata plan is registered under Part II unless the contract of sale provides that any deposit and all other moneys payable by the purchaser prior to the registration of the strata/survey‑strata plan are to be paid to a solicitor, real estate agent or settlement agent, who shall be named or specified in the contract, to be held by that solicitor, real estate agent or settlement agent on trust for the purchaser until the strata/survey‑strata plan is registered.
(2)Any deposit and other moneys payable and paid by the purchaser prior to the registration of the strata/survey‑strata plan under any such contract as is referred to in subsection (1) shall be paid by the purchaser to the solicitor, real estate agent or settlement agent named or specified in the contract of sale.
(3)In the event of a contravention of subsection (1) or subsection (2), the purchaser may at any time before the strata/survey‑strata plan is registered avoid the sale.
(4)If the strata/survey‑strata plan is not registered -
(a)within such period after the date of the contract as is agreed in writing by the purchaser and the vendor; or
(b)in the absence of any such agreement, within 6 months after that date,
the purchaser may avoid the sale at any time before the plan is registered.
(5)Where a purchaser avoids a sale under this section, all moneys, including the deposit, shall be recoverable by him from the solicitor, real estate agent or settlement agent or other person to whom they were paid, but the purchaser shall be liable to pay an occupation rent for any period during which he was in occupation of the lot or entitled to receive the rents and profits of the lot.
[(6), (7)deleted]
(8)In this section -
date of the contract means the day on which the contract of sale referred to in subsection (1) was signed or, if the parties signed it on different days, the last of those days;
real estate agent means a person licensed as a real estate agent under the Real Estate and Business Agents Act 1978;
settlement agent means a person licensed as a settlement agent under the Settlement Agents Act 1981.
70A.Contracting out prohibited
(1)A contract or arrangement is of no effect to the extent that it purports to exclude or restrict the operation of this Part or the rights and remedies conferred on a purchaser by this Part.
(2)A purported waiver of a right, remedy or benefit conferred on a purchaser by this Part is of no effect.
70B.Saving
Except as provided by sections 69D, 70(3) and (4) and 70A, this Part does not apply so as to render any contract illegal or void or to empower any party to avoid the contract.
Both s 70(3) and s 70(4) deal with purchasers' right of avoidance of 'the sale'. The provisions do not provide for automatic termination of the obligations of future performance of the parties under their contract of sale. Rather, the subsections only operate when a purchaser invokes the provision and thereby avoids the contract. The purchaser may choose not to. It is appropriate then to see s 70(4) in context as a conferral of a statutory right of avoidance upon a purchaser, in 'off the plans' purchase and sale contract scenarios. There is however a discernible and important constraint imposed by the legislation. Avoidance by a purchaser's election under s 70(4) STA is permissible only within a confined period. After six months (or any greater agreed time after the contract of sale has run), the opportunity for the purchaser to avoid subsists only in a period before a strata plan is registered.
No factual controversy arises here about whether each purchaser's attempted avoidance of their contract of sale under s 70(4) was given after registration of the strata plan. Only subsequent to Purchasers' notices of avoidance being given here, were the registered strata plans issued for units in each strata development the subject of a relevant contract of sale.
Subsections 70(3) and (4) are seen not to make express reference to the purchaser's 'deposit' or to monies paid to a vendor, prior to the registration of the strata plan. Compare in that respect s 70(1) and (2), which do. It will be noted however, that s 70(5) in referring to avoidance of a sale under either s 70(3) or (4) expressly provides for recoverability from the vendor by the purchaser of all monies, including the deposit, upon an avoidance taking effect.
The words used in s 70 carry a clear message from the Legislature, in my view. The provision seeks to protect monies payable by a purchaser, in the period prior to registration of a strata plan. In a context of arrangements involving 'off the plans' sales of units not yet constructed, and possibly not to be completed for some considerable period, a clear intent in the Legislature to lay down a workable regime of protection for purchaser's funds placed in a vendor's hands - prior to creation of a purchased lot - is understandable.
In s 70A of the STA, there is observed to be provided an entrenched protection against contractual attempts to exclude or restrict a purchaser's rights or remedies, conferred under Part V of the STA. This protection is followed by s 70A(2), another observed constraint against a 'waiver' by a purchaser of a right, remedy or benefit conferred under Part V. Once again, this section demonstrates the Legislature's tangible concern that its statutory protections intended for such a category of purchasers not be given up, fettered or whittled away. Contracts of adhesion, under which vendors' legal advisers draft voluminous and elaborate terms and conditions, then present them for signature to a purchaser on a 'take it or leave it basis', could represent a situation where such statutory protections could be threatened or jeopardised by 'clever drafting'.
By s 70B the purchaser's protected right of statutory avoidance under s 70(3) and s 70(4) to avoid a sale (or contract) is recognised even further. Section 70B generally protects against contracts being unduly assessed to be illegal or void, if measured against provisions within Part V. Again, the importance of the purchaser's rights of avoidance under s 70(3) and s 70(4), with need for that right to be protected from being lost or bargained away, emerges as being demonstrable in this provision.
Legislative history
When the STA was originally enacted in Western Australia on 6 May 1985, s 70(4) at that time afforded to a purchaser the right to avoid a contract, where the strata plan was not registered within six months of the sale. No opportunity was initially provided by the Legislature to allow the parties to agree upon a longer period.
Section 70(4) was then adjusted by s 4 of the Strata Titles Amendment Act 1986 (WA) to provide:
If the strata plan is not registered -
(a)within 6 months after any such sale; or
(b)within such period after any such sale exceeding 6 months but not exceeding 18 months that may be agreed in writing by the purchaser and the vendor,
the purchaser may after the expiration of the period applicable under paragraph (a) or (b) as the case may require, but before the plan is registered, avoid the sale.
The subsection was adjusted again by s 95 and s 96 of the Strata Titles Amendment Act No 58 of 1995 to accommodate survey‑strata plans.
Section 70(4) was re‑enacted to its current form during 1996 by the Strata Titles Amendment Act 1996 (WA). Subsections 70(6) and (7) were repealed in December 1995 by s 64(c) of the Strata Titles Amendment Act 1995 (WA), No 58 of 1995.
By the most recent amendments, a definition for 'date of the contract' was included within s 70(8). This amendment, in operative effect, tightened a reference point used for ascertaining the commencing date in a calculation of a six month, 18 month, or for a lesser 'period', by moving away from the former commencing date criteria of 'the sale', to invoke tighter criteria, namely the 'date of the contract'.
That last amendment delivered scope for greater precision in any calculation of an agreed period for the purposes of s 70(4)(a).
Victorian legislation and the Solid Investments decisions
Bongiorno J in Clifford and Bayley v Solid Investments Australia Pty Ltd [2009] VSC 223 was concerned with what may be described as very broadly analogous vendor/purchaser strata title legislation. Section 9AE of the Sale of Land Act 1962 (Vic) was in terms:
(1)If the vendor under a prescribed contract of sale of a lot fails to comply with section 9AA or 9AB the purchaser may rescind the contract of sale at any time before the registration of the plan of subdivision.
(2)If the plan of subdivision is not registered within 18 months after the date of the prescribed contract of sale of a lot on that plan of subdivision, or, if the contract specifies another period, before the end of that specified period, the purchaser may, at any time after the expiration of that period but before the plan is so registered, rescind the contract.
(my emphasis)
The decision was taken on appeal, see Solid Investments Australia Pty Ltd v Clifford and Bayley [2010] VSCA 59, Mandie JA, with whom Harper JA and Emerton AJA agreed. At [13] Mandie JA set out s 9AE.
At first instance, Bongiorno J at [12] ‑ [14] traced the statutory history of s 9AE from introduction via the Sale of Land (Allotments) Act 1985 through to subsequent amendment in 1989 and 1991 under the Subdivision (Miscellaneous Amendments) Act No 48 of 1991. The 1991 amendment introduced the notion of 'another period that is specified' (i.e. other than the specified 18 month period). As to that permissive amendment, Bongiorno J observed [14]:
Although this amendment permitted a variation to the stated period by consent of the parties expressed in the contract, it did not reduce the certainty which the section in its original form gave a purchaser. At the time he entered such a contract the purchaser still knew, with certainty, the date upon which he would be entitled to exercise his right to rescind if the plan of subdivision had not been registered.
Whilst there are thematic (strata lot acquisition) similarities, there are also some significant differences as between s 9AE of the Victorian Sale of Land Act 1962 and s 70(4)(a) STA. I have already mentioned one important difference. There is more scope in s 70(4)(a) STA for vendors and purchasers to agree upon a period(s) in writing (i.e. beyond their merely making one agreement as to a chosen period within their contract of sale, as the Victorian legislation requires). In Western Australia there is the scope for more than one vendor/purchaser agreement upon an agreed period to be reached subsequent to the contract of sale.
Another key distinction as between the two State provisions can be seen by the use in Victoria of the words 'specifies or specified', as regards 'period'. In contrast, s 70(4)(a) STA refers only to 'such period'. Locally, the adjective 'specified' is seen not to be used as regards the noun 'period', within s 70(4)(a). Nor is the word 'specifies' used as a verb, as regards contract (of sale) and the following phrase, 'another period'.
Based upon an absence of 'specify' or 'specified' in s 70(4)(a), the Vendors in this action press for a more liberal approach than that adopted in Victoria, as regards the degree of required specificity in the designation of any agreed period. The ambit starting position is that s70(4)(a) STA should be read so widely as to include any period, even if that period were to be capable of being subsequently extended (albeit, it may not). The Vendors say that 'period' under s 70(4)(a) could properly include any interval of time that is determined by reference to particular events or criteria (and even a period unilaterally determined by one person, such as by the vendor alone). On the Vendors' case, s 70(4)(a) STA imposes no limit on the duration of a period that may be agreed by the parties. Hence, 48 months theoretically could have been even longer (say 10 years, or greater). However, the indigestible commerciality of such a long period before settlement would no doubt present as problematic for most purchasers.
On the other hand, the Purchasers emphasise the unique presence in s 70(4)(a) of the phrase, 'as is agreed in writing'. The phrase, it is put, lessens the significance of the absence of words like 'specifies or specified', as regards the agreed period under the STA on the basis that such words are essentially rendered unnecessary. The Purchasers argue that where the agreed period must be in writing, the specification will be inherent in the writing.
The Vendors point to observations by Mandie JA on the appeal in Solid Investments, for his Honour's identification (at [27]) of the 'real question' in that appeal. This was identified as whether the Victorian contractual provision could be assessed to 'specify', 'another period', under s 9AE(2). This renders it clear, say the Vendors, that the decision turned upon the conceptual narrowness of the Victorian provision - unlike the broader scope for subsequent agreements as to period in the Western Australian law. Mandie JA at [31] said:
In the present case, I cannot identify any reason of policy for extending the meaning of 'specifies another period' so as to encompass the specification of a period by reference to an ascertainable event, let alone so as to permit the creation of machinery for the identification of the period at some time in the future, such machinery to be activated by the vendor on the basis of a set of wide contractually provided circumstances. On the contrary, the section on its face and in its context must be taken to have intended to establish an identifiable period at the time the contract is entered into and I would endorse the reasoning of the trial judge as to why that is so.
(my emphasis)
The Vendors, contrasting the Victorian legislation, press the local significance of an absence of the words 'specifies or specified' as regards an agreed period under s 70(4)(a), in Western Australia. That difference coupled with a tighter requirement in Victoria that any agreed period could only be specified 'at the time the contract is entered into', say the Vendors, renders the Western Australian provision distinguishable and of greater flexibility in the agreement upon a period or periods, and then, correlatively by extension for the specification of the period itself.
Caution, I agree, must be exhibited, before drawing too much from the Solid Investments decisions in Victoria, particularly in circumstances where there are such obvious structural differences between the legislation. Moreover, it is apparent that the contractual provisions assessed in the Solid Investments decision are rather different to those presently at issue.
In Solid Investments, a special condition in the contract of sale defined the concept, 'Plan Registration Date'. Clause 4.4 provided for potential extension of the 'Plan Registration Date' in designated circumstances, but with a proviso stipulating that, 'Plan Registration Date may be extended by such a period as the Vendor may reasonably determine from time to time'.
Under the Victorian contracts, Plan Registration Date was defined as being a fixed period of 30 months after the day of sale. In those contracts, Plan Registration Date was not defined to also embrace any extended date that came to be fixed by the operative effect of the potential extension provision that was cl 4.4.
Extension clause 4.4 under scrutiny in the Solid Investments litigation was assessed at first instance (and then on appeal) not to satisfy the requirements of s 9AE(2). The (earlier) 30 month fixed period did. In Solid Investments, the forensic focus of that litigation was upon the validity of the vendor's unilaterally made extension(s) in period(s) after the fixed 30 month period had run out without the strata plan being registered.
On the present preliminary issue, the forensic focus is temporally earlier. Unlike the focus in Solid Investments, attention here must be directed at the initially fixed (48 month) period in which purchaser avoidance has been attempted. Unlike in Solid Investments the focus is directed at assessing whether the bare capacity conferred by a term in the contract to potentially extend further the 48 month period, on the Vendors' sole initiative, in effect, delivers an invalidating outcome with a result of there being no agreement reached upon any period.
That result would render the matters within a mere six month statutory window for the Vendors to effect their strata plan registrations by the residual operative effect of s 70(4)(b) (but which six month period has now run).
With those issues identified, it is now convenient to examine more closely certain provisions within the Mirvac and Leighton Contracts.
The Mirvac Contracts and the Leighton Contracts
Within Special Conditions in each contract of sale, a term 'Registration Date' is defined (identically) (see cl 1.1 of the Mirvac Contracts and cl 2.1 of the Leighton Contracts), as:
In this Contract:
…
Registration Date means the date which is 48 months after the Contract Date, or as that date may be extended under [cl 4(b) Mirvac Contracts and cl 7 Leighton Contracts].
This definition for 'Registration Date' may be observed to carry within it a deliberately placed comma which is followed by a use of the link word 'or', after the definition first refers to a date 48 months after the 'Contract Date'. The term 'Contract Date' is not defined in the Special Conditions. But that term's contextual meaning as being the date at which the parties' agreement was consummated is clearly ascertainable.
The Mirvac and Leighton Contracts both then display in their Special Conditions the following provision (cl 4(a) of the Mirvac Contracts, cl 7(a) of the Leighton Contracts), which reads:
(a)The parties agree that the Buyer may only exercise the Buyer's rights under s 70(4) of the Strata Titles Act if the Strata Plan has not been registered by the Registration Date.
There is a slight difference as between cl 4(b) and the cl 7(b) in the Mirvac and Leighton Contracts. The Mirvac Contracts at cl 4(b) use the word 'will' in the phrase, 'will be extended'. The Leighton Contracts under cl 7(b) use 'may', in the phrase, 'may be extended'. Apart from that difference over one word, cl 4(b) and cl 7(b) in the Mirvac and Leighton Contracts otherwise replicate each other. They provide:
(b)If the registration of the Strata Plan is delayed or potentially delayed as a result of one or more causes or occurrences beyond the control of the Seller which prevents the Seller registering the Strata Plan, the Registration Date will ['may' in the Leighton Contracts] be extended to the date which the Seller reasonably determines to take into account the effect, or likely effect, of the delay or potential delay.
There is a greater differentiation in the terminology between cl 4(c) of the Mirvac Contracts and cl 7(c) of the Leighton Contracts. They respectively provide:
[Mirvac Contracts:]
4(c)The Seller will, on request by the Buyer, advise the Buyer of any extension of the Registration Date.
[Leighton Contracts:]
7(c)The Seller shall advise the Buyer in writing of any extension of the Registration Date.
The Mirvac Contracts envisage a purchaser's request, in order for a purchaser (Buyer) to be told of an extension to the Registration Date that is unilaterally decided upon by the Seller. The Leighton Contracts provision 7(c) is a touch more courteous in operation towards the Buyer, who 'shall' be advised of such a unilateral extension by the vendor.
Regarding these contractual provisions, some preliminary observations going towards their contractual interpretation can now be made. In Hughes v St Barbara Mines Ltd [No 4] [2010] WASC 160 [594] and [595] and Process Minerals International Pty Ltd v Consolidated Minerals Pty Ltd [2010] WASC 266 [38], I set out at some length some relevant principles governing contractual interpretation, which I will apply, but not repeat again. Obviously, the abiding wisdom of Sir Harry Gibbs' observations in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109 ‑ 110 present considerations at the forefront of a construction exercise in commercial circumstances. I would also mention McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, Gleeson CJ at 589 [22].
First, I observe again that cl 4(a) and cl 4(b) of the Mirvac Contracts and cl 7(a) and cl 7(b) of the Leighton Contracts present as the only relevant attempt in the contracts of sale, for the purpose of reliance upon s 70(4)(a), for the Vendors and the Purchasers to agree upon a longer period in writing for registration of the strata plan by the Vendors after the date of the contract of sale, so as not to be governed by an underlying application of a six month period set under s 70(4)(b).
Second, draftspersons of each contract of sale look to have chosen an indirect drafting technique, in seeking to invoke the opportunity to agree upon a period under s 70(4)(a). Such an objective may have been accomplished in more straightforward fashion. For instance, the parties might simply have said in the contract of sale, '… for the purposes of s 70(4)(a) of the STA, the vendor and the purchaser hereby agree upon a period of 4 years as their agreed period for registration of the strata plan'. Instead, the observed drafting technique deploys more steps in the efforts towards achieving that same end result. In doing so, the drafting technique draws in the definition of 'Registration Date'.
Third, through reference to the use of the defined term Registration Date, cl 4(a) of the Mirvac Contracts and cl 7(a) in the Leighton Contracts look to be drafted upon a basis of imposing an expressed fetter upon the 'Buyer' exercising rights of avoidance under s 70(4) of the STA. However, the chosen terminology, 'Buyer may only exercise the Buyer's rights' presents as a matter of law as surplusage once the purchaser and vendor have agreed upon a period within the framework allowed under s 70(4)(a). In that scenario the statute itself inhibits a purchaser's right to avoid under s 70(4), within the agreed period.
Fourth, cl 4(a) of the Mirvac Contracts [and cl 7(a) of the Leighton Contracts] look to attempt to engage s 70(4)(a) STA on the basis first of the agreed period ending at 'Registration Date'. The drafting requires an enquirer seeking enlightenment on the issue to travel back to the definition of Registration Date in the Special Conditions in the search to ascertain that actual calendar date. Regrettably, locating the definition for Registration Date does not reveal the full picture. A period of 48 months after the Contract Date will be easily ascertained in that definition. But the enquiry is not over. It is then necessary to venture onward to within the Special Conditions to cl 4(b) in the Mirvac Contracts [or to cl 7 (more specifically cl 7(b)) in the Leighton Contracts] to locate some required further information about the implications of those provisions being factored into the mix for what is the Registration Date.
Fifth, before leaving the definition of Registration Date in the Special Conditions, I observe again upon the comma after the phrase 'Contract Date', then upon its following (connecting) word, 'or'. The overall grammatical and linguistic significance of this chosen structure obviously requires careful consideration in due course.
Sixth, I observe that the phrase 'that date' used in the Registration Date definition, 'or as that date may be extended under …', presents as referring to the date which is 48 months after contract date. It is that first selected (4 years post the contracts of sale) date which can then be extended outwards under the potential operative effect of the provision, if invoked by the Vendors.
There is no contest in this case that a nominated period of 48 months (after contract date) viewed alone, would be a sufficiently fixed, precisely chosen end date so as to satisfy s 70(4)(a). But the Registration Date definition contemplates its possible outward adjustment - going even beyond the selected 4 year date (potentially). But the word 'may', used in the phrase 'may be extended', means an extension of the end date beyond the initial 48 month date, is a potentiality, rather than a certain, future extension outcome.
Seventh, some differentiation exists over the choice of the word 'will', used in the phrase 'will be extended' by cl 4(b) of the Mirvac Contracts, in contrast to the word 'may' used in the phrase 'may be extended' in cl 7(b) of the Leighton Contracts, presents for consideration. In my view however, this distinction as between the terms 'will' and 'may' lacks any real significance, in overall context, after cl 4(b) and cl 7(b) are assimilated with the definition of Registration Date, as is required. As a matter of their assimilated interpretation therefore, as regards the Mirvac Contracts, the word 'will' in the phrase 'will be extended' in cl 4(b) operates via the use of 'may' in the definition of Registration Date, to effectively read, 'may be extended'. That aggregated result brings cl 4(b) back into functional alignment with cl 7(b) of the Leighton Contracts, once read and assimilated with the injected ingredient, 'Registration Date'.
Eighth, there presents, on the face of it, a degree of conceptual tension arising as between a definition for Registration Date (which seeks to embrace, all under the one umbrella definition, an extended date as also falling within the definition of 'Registration Date') and cl 4(b) of the Mirvac Contracts and cl 7(b) of the Leighton Contracts. Those subclauses engage the concept of a Registration Date on a basis of that Registration Date once ascertained then (possibly) being extended. If Registration Date embraces every such date, what is being extended? Clearly, cl 4(b) or cl 7(b) need to operate to deliver a new date before that consequence is drawn in under the generalised umbrella definition of Registration Date.
That same blurred concept is observable in cl 4(c) of the Mirvac Contracts (and cl 7(c) of the Leighton Contracts) by the terminology 'any extension of the Registration Date'. As a matter of the overall construction of these provisions read together, the substantive extension premise must be on a basis of stepping off from an initial Registration Date (initially 48 months from the contract of sale) - with that stepping off point then being extended under cl 4(b) or cl 7(b), if invoked. That outcome would align with the drafting seen in the Victorian contracts using the definition, Plan Registration Date in the Solid Investments decisions. (The contractual provisions are set out in the reasons for judgment of Mandie JA in the Court of Appeal at [4], by reference to the definition, Plan Registration Date, in cl 1.1 and the proviso to cl 1.4 in the clause headed 'Extension of Plan Registration Date').
Ninth, the unilateral vendor's decision extension provisions in cl 4(b) or cl 7(b), viewed alone, look to present on their face as prima facie problematic towards meeting the requirements of s 70(4)(a) for an agreed period between the vendor and purchaser. At [21], Bongiorno J in Solid Investments, by reference to broadly analogous vendor extension provisions there considered, said:
The application of these authorities to the facts of this case compels a conclusion that the only period specified in these contracts for the purposes of s 9AE is the period of 30 months referred to in the definition of the Plan Registration Date in cl 1.1(a) of the contracts.
Were the same approach to be imported (the parties of course differing about whether it is appropriate to do so or not, bearing in mind the key differentiations I have discussed existing as between the two legislative regimes), cl 4(b) of the Mirvac Contracts and s 7(b) of the Leighton Contracts (viewed alone) present as equally problematic in terms of their not meeting a threshold requirement for specifying an agreed period under s 70(4)(a).
Tenth, the residual key question finally presents as to whether what would be an effectively uncontroversial nomination of an agreed period of 48 months (after contract date) for registration by the vendor of the strata plan has nevertheless been fatally undermined by reason of an inclusion of potential extension criteria seen to follow the comma and use of 'or' in the definition of Registration Date? That key question then carries with it issues as to the proper construction of the definition of Registration Date, when read into cl 4 and cl 7 of the Mirvac and Leighton Contracts, respectively. Before addressing this ultimate question, it is necessary to deal with some anterior issues of statutory construction, embracing the fundamental need to ascertain the legislative intent underlying s 70(4).
Statutory construction and legislative intent: s 70(4) STA
Distilling the parties' written and oral submissions, a number of sub‑issues of controversy emerge. These may be summarised as:
1.What is the statutory purpose underlying s 70(4) of the STA and, in particular, does it carry a requirement for precise certainty in ascertaining an end point in any agreed period, after which point the purchaser may elect to avoid the sale (prior to the strata plan being registered)?
2.What is the nature of the period contemplated under s 70(4)(a), bearing in mind that the ordinary dictionary meaning of the word 'period' is wide enough to capture both a fixed period or a period that is more loosely set? Obviously, the meaning of the word 'period' must take its place in overall context within s 70(4)(a), and then more generally, within the framework of s 70 and Part V of the STA, as a whole.
3.Does 'period' for the purposes of s 70(4)(a) need to be a 'specified' period, or is the absence of a deployed adjective like 'specified' used before 'period' within s 70(4)(a), of significance in determining what is the period? In particular, does the omission of a qualifying adjective, sufficiently distinguish the Western Australian provision from s 9AE of the Sale of Land Act 1962 (Vic), considered by Bongiorno J in Clifford and Bayley v Solid Investments Australia Pty Ltd [2009] VSC 223, then by the Victorian Court of Appeal in Solid Investments Australia Pty Ltd v Clifford and Bayley [2010] VSCA 59.
4.Do the Solid Investments decisions, given their consideration of analogous, albeit differently worded 'off the plans' legislation, concerning a different forensic issue (i.e. purchaser avoidance happening outside the initially specified 30 month period) and differently worded contractual provisions, nevertheless carry any persuasive force here in assisting either the vendor or the purchaser in these proceedings? In particular, does a statutory purpose identified in Solid Investments as 'purchaser certainty', in terms of the effectual exercise of a purchaser's right of avoidance if a plan of subdivision is not registered in the agreed timeframe resonate locally to provide support for the purchaser's position?
These sub‑issues, arising in a context of the overall statutory construction exercise, obviously intersect and overlap to a considerable extent.
The task as regards ascertaining statutory intent commences by reference to the text, particularly towards ascertaining a meaning for the word 'period' used within s 70(4)(a). Period is a word that is capable of carrying different meanings, depending upon context. The parties accept the variable range of the possible dictionary definitions for the word. 'Period', depending on the context of its use, could carry meanings of fixed period with a definite and identifiable calendar end date (as the Purchasers contend). But another dictionary meaning would allow a less rigid designation, conformable to the Vendors' wide interpretation of the word.
The Vendors criticise the Purchasers' insistence on a need to have an identifiable fixed end date for the s 70(4)(a) period. They say that is a 'narrow' or 'confined' interpretation, not reflective of the true legislative intent. The Vendors also characterise the Purchasers' insistence upon 'precise certainty' for an end date for an agreed period as 'question‑begging', contending that the notion of 'precise certainty' cannot be ascertained as the true legislative intent underlying s 70(4)(a). As I have already indicated, the Vendors place heavy differentiating emphasis upon the absence of any reference in s 70(4)(a) to a 'specified' period - in clear contrast (they argue) to the narrower parameters of s 9AE of the Sale of Land Act 1962 (Vic).
The Purchasers submit however that, unless an end date for an agreed period is capable of being ascertained with precision, the protections clearly intended by the Legislature, securing recovery of the Purchasers' deposit monies or other monies paid to a vendor in an 'off the plans' purchase scenario is heavily diluted in terms of the sheer impracticality for a purchaser in exercising a viable recovery remedy against the vendor for its funds. Whilst WA provision may allow in concept for multiple agreements in theory as to the period under s 70(4)(a) after the contract date, that cannot alter a basal need for an ascertainable end date to emerge in the end if a s 70(4)(a) agreement as to period is to be validly reached. In the present case, that was only attempted in the contracts of sale. The Purchasers say the attempt failed overall.
There is I think, some policy force to be found in the submissions of both sides as regards ascertaining the true meaning, in context, of the word 'period'. Because of the uncertainty, I find it helpful to revisit first principles, referring to some global observations upon the word 'period' and its meanings by Sheppard J in Re Karounos; Ex parte Official Trustee in Bankruptcy (1989) 25 FCR 177, where his Honour observed at 181, by reference there to provisions in the Bankruptcy Act:
One of the meanings of 'period' is any specified division or portion of time. That is the meaning which I think the word bears here, particularly in the light of the various periods of time which are mentioned in the section.
His Honour continued, at 182:
I do not gainsay that in some circumstances there may be the sufficient specification of a period by reference, not to a definite point of time, but to the occurrence of an ascertainable event. The question is whether that is the meaning which the provision was intended to have in s 149. Sections 149 and 150 deal with the discharge of bankrupts, s 149 providing for discharge by operation of law and s 150 providing for discharge by the court. … Pausing there, there is manifest an intention to bring bankruptcies to an end, even where there have been objections, if not three years after bankruptcy, then five years after bankruptcy, unless the court makes an order of the kind which is mentioned.
… There is thus an underlying policy to be discerned from the terms of the section that this area of the law is to be attended with a high degree of certainty. That is not an unexpected result when one considers what is involved. Bankruptcy seriously affects the status of persons who are made bankrupt. So long as they are undischarged bankrupts, they continue to suffer the disadvantages and disabilities of bankruptcy. Those general considerations provide a reason why one would not lightly adopt a construction of a section which would involve uncertainty.
In the context of the Bankruptcy Act, Sheppard J in Re Karounos was of a view that the true legislative intent there, was that the extension provisions contemplated a finite period, bearing in mind the subject matter of the provision and the potential ramifications carried as regards the status of persons made bankrupt.
The discernible underlying legislative concern to protect a purchaser's monies in the environment of a strata lot acquisition, prior to registration of a strata plan, is no less important. The provision is a beneficial legislative provision (towards protecting the outlaid monies of strata unit purchasers placed in the hands of vendors, before settlement). The protective objective should not be countenanced to be diluted. Its attainment is best satisfied, I think, by my acceptance of the Purchasers' submissions as regards the need for real and substantive certainty in the ascertainment of the end point for the agreed period, with such certainty made manifest at the time a s 70(4)(a) agreement is concluded. Allowing the agreed period to be set with an open ended end date would not, in my view, be consistent with a legislative intent of providing a viable protection for purchaser funds during the interval before the vendor's registration of a strata plan.
Also of force to this view, is the legislative history underlying s 70(4), which, as has been seen, began its life in 1985 with an allowable fixed period of a mere six months. This was relaxed somewhat in 1986, out to a maximum period of 18 months. In 1996 it was opened further, to allow the parties to reach agreement upon another period albeit they remain under no obligation to reach such an agreement. In that case the platform of six months applies, conditioning the timing of the purchaser's right of potential avoidance under s 70(4). The history points to a legislative intent towards certainty, rather than allowing an open ended unknown end point in the agreed period.
The drafting techniques employed in cl 4 and cl 7 in the Mirvac and Leighton Contracts, viewed at a height, display what look to be considerable efforts to convert the legislatively sanctioned scenario of vendor and purchaser mutual agreement upon a period under s 70(4)(a) into a (potential) scenario of unilateral decree (by the vendor) of an extended registration date (admittedly by reference to some specified criteria and the conditioning threshold of reasonableness upon the vendor). Nevertheless, drafting which moves the scenario of permissible bilateral agreement upon an agreed period to a different scenario, upon unilateral decree of the vendor, presents to me as repugnant to the intended protective legislative purpose towards protecting the purchaser, that is clearly manifest in s 70(4), indeed throughout all of Part V of the STA.
Nor am I diverted from this conclusion by the absence of 'specify' or 'specified' in the Western Australian legislation, as regards the noun, 'period'. The Victorian and Western Australian provisions have obviously been drafted somewhat differently. But a fair comparison, if there is to be one, is as between the phrase 'such period' in s 70(4)(a) against the phrase '(specifies) another period' used in s 9AE. On my assessment, the distinction in operative effect is not that great. There is also force in the Purchasers' submission that the Western Australian provision's invocation of criteria by reference to the selected period being 'agreed in writing', inherently carries some implied specificity, and that, as a result, the two legislative provisions are not that dissimilar in their operative effect.
There is substance also I think in submissions made by the Mirvac Purchasers, by reference to the legislative history of s 70(4) and the specificity of a defined term in s 70(8), as regards the 'date of the contract'. The scope of s 70(4) was, in its operative implementation, tightened by that amendment in relation to a calculation using a commencing date for the purposes of ascertaining the period. That being the case, it would be conceptually inconsistent from an overall legislative purpose perspective merely to tighten the commencing date by the amendment in 1996, only to countenance an uncertain end date in the period that is agreed in writing.
In the end therefore, I favour the Purchasers' position as to the need for fixed and discernible precision in the setting of an end date in any agreed period as between the vendor and the purchaser under s 70(4)(a). This approach renders the word 'period', used within its overall statutory place, in accord with the protective legislative purpose for a provision providing a purchaser with an effective and workable statutory right to potentially avoid a sale, in an ascertainable time frame, before a strata plan is registered. I reach my view of the true meaning of s 70(4)(a) irrespective of the decisions in the Solid Investments litigation in Victoria. But even allowing for some significant differences, a comparable policy sentiment towards the purchaser being protected by a delivery under these provisions of end date certainty, as regards any agreed period, is broadly discernible.
That result as to legislative intent, however, is not the end of the matter. The Vendors' residual submission remains that a nomination of an initial 48 month period in the Registration Date definition is enough for their purposes, even on my 'narrow' (I prefer, 'protective') interpretation for s 70(4)(a).
The Vendors say that whatever view is taken of the true meaning of s 70(4)(a), that the initial designation of the period of 48 months by the definition of Registration Date is a distinct, stand alone, component in the overall definition. Therefore, the Vendors contend that because the 48 month period had not elapsed, the Purchasers were not, at that time, entitled to avoid under s 70(4).
This residual position now remains as the critical deciding question in the preliminary issue. It requires the application of the (now) ascertained true meaning of s 70(4)(a) STA, as against the respective provisions of the Mirvac and Leighton Contracts.
Second issue: Application of s 70(4)(a) STA to the contractual provisions of Mirvac and Leighton Contracts
The Purchasers argue that the Registration Date definition in the Special Conditions, fails to deliver a sufficiently precise designation of an agreed period in writing under s 70(4)(a). This is particularly so as regards an absence of discernible certainty in an end date for the agreed period. The open‑ended capacity for further extension(s) at Vendors' behest, is a fatal conceptual problem, say the Purchasers.
The Purchasers contend (as Leighton Shores had initially submitted, but subsequently withdrew) that the definition of Registration Date in all contracts, sets only a minimum period. In other words, there is a fixed (48 month) minimum, but then, variable length in the overall period. The Purchasers refute the Vendors' submission that two distinct components are found embodied within the definition of Registration Date, each satisfying the requirements of s 70(4)(a). The Purchasers of course do not accept that a specification of variable duration, determined by reference to matters evaluated solely by the Vendors, as is submitted by Mirvac in the alternative, could ever be in compliance with the required setting of a period under s 70(4)(a).
The Purchasers say that the Vendors' variable duration approach deprives s 70(4) of practical protective effect, as regards a purchasers' deposit monies and wholly inconsistent with the statutory purpose underlying s 70(4) of protection by certainty. The Purchasers submit that any protections afforded by s 70(4) are rendered illusory or of a highly truncated utility once a 'period' does not have an ascertainable fixed end date.
I have accepted the Purchasers' perspective as to the statutory construction of s 70(4)(a). But that does not yet address Mirvac and Leighton's residual reliance upon the 48 month period component in the definition of Registration Date. The Vendors argue this, in any event, is a distinct element in the definition which independently satisfies s 70(4)(a), however narrow (or protective) the interpretation given to it.
In the residual arena of conflict, the Purchasers argue:
•As a matter of grammar and effect the definition of 'Registration Date' in cl 7 of the Contracts is that the 'period' provided for by the Contracts is 48 months or some further length of time … That conclusion necessarily follows from the language used in the definition of 'Registration Date' in the Contracts.
•… Clause 7(b) of the [Leighton] Contracts is not a mechanism for the parties to agree to extend the 'period'. The clause has the effect that the 'Registration Date' is greater than 48 months without further agreement by the purchaser (and unless the purchaser knows to ask under cl 7(c), without the knowledge of the purchaser). Clause 7 records an agreement that the 'Registration Date' is 48 months or a further time, not a mechanism to reach a new agreement.
•The effect and purpose of s 70(4) is that, at the time of contracting, a purchaser can ask 'on what day do I have a right to avoid the contract if the strata plan has not been registered by that day' and, by looking at the contract, know the day on which the purchaser's right accrues. On Mirvac's construction of the Contracts the answer to that question is 'I don't know'.
•Mirvac's construction does not, in any event, identify a period for the purpose of s 70(4)(a) of the Strata Titles Act.
In direct opposition to that perspective, Mirvac and Leighton say:
It is equally clear that there are two distinct elements to the agreement of the contracting parties that is embodied in cl 4 [of the Mirvac contracts]. The first element is that a period of 48 months after the contract date is agreed to be the period allowed for registration of the strata plan. That is plainly a definite and certain interval of time.
The second is that, if registration cannot occur within that period for reasons beyond the control of the vendor, the date for registration is to be extended.
Thus, the second distinct element of the agreement of the parties is dependent upon and only comes into operation when, registration of the strata plan is prevented, ie, cannot be achieved, within the 48 month period, for reasons beyond the vendors' control.
The second element has no application in these cases. In any event, there is nothing about that second element of the agreement of the parties which detracts from the clarity and certainty of the first agreement.
Mirvac and Leighton conclude:
Thus, the parties have clearly agreed upon a period, after the date of the contract, within which the strata plan was to be registered. Registration occurred within that period. The second element of the parties' agreement was not enlivened in any of the [cases presently in question].
It follows that the parties did reach an agreement in writing upon a period, such as to displace the statutory period for the purposes of s 70(4). The presence of an additional agreement (whether effective or not), not enlivened on the facts, does not detract from that conclusion.
The Vendors, notwithstanding a 'narrow' (as they see it) interpretation of s 70(4)(a), submit that the first of the distinct components within the definition of Registration Date is specific as to an agreed period with a fixed end date, and is not undermined by an extension provision which is the second, but distinct, component (i.e. after the comma and followed by use of the word 'or') in the definition of Registration Date.
The Vendors also say that reading the definition of Registration Date in conjunction with the extension clauses (found in cl 4(b) or cl 7(b) in the Mirvac or Leighton Contracts, respectively), as must be done, supports their view.
Evaluation and conclusion as to application of s 70(4)(a) to the contractual provisions
In my view, the Vendors' submissions as regards the residual application issue must be accepted. I reach this conclusion essentially, for the following reasons.
First, nomination of '48 months' in part of the (Special Conditions) definition for Registration Date is clear to a reader, even to someone glancing only quickly at the provisions. Four years is a longish time after the contract of sale before a strata plan emerges. It stands out. It is unlikely to be overlooked by a purchaser interested about the point.
Second, it does seem on a fair grammatical reading of the contractual provisions as a whole, that there must be some acknowledged significance by a court of construction towards the draftsperson's use of the comma, after the reference to 'contract date' in the definition, then by a following deployment of the word, 'or'. As a matter of meaning, the comma followed by 'or' would carry with it in context, what I assess to be a clear, disjunctive connection between distinct components within the definition of Registration Date. The second component, in my view, if viewed alone, would not deliver the required threshold of certainty upon an end date in a period, required by s 70(4)(a). But that assessment is not the relevant forensic focus in this case (unlike in Solid Investments). This second component in the definition must be assessed, as a matter of overall contractual interpretation and grammar as a disjunctive component in a global definition of Registration Date.
Third, it must be further recognised that the second extension component might never be invoked. In the Solid Investments litigation it was the utility of the extension provision in validly setting an extended period, which was at issue. Unsuccessfully, as it turned out for the vendors there. In the present case however, the forensic focus is both earlier in time and different. Here it is the legal effect of the interrelationship as between two period fixing mechanisms found within the definition of Registration Date, which is in focus. Those two components are, as I have found, clearly and grammatically separated by their disjunctive connection. The conceptual deficiency in the second component as regards s 70(4)(a), does not, in my assessment, 'spill back' to infect or undermine the efficacy of the first designated (48 month) component end date in a disjunctively constructed definition for Registration Date.
Fourth, there is theoretical scope in Western Australia by s 70(4)(a) (unlike in Victoria) to countenance more than one agreement (in writing), upon an agreed period, subsequent to the contract of sale. A disjunctive provision of two components, both expressed to fix an agreed period, is not inconsistent with the scope of the local provision's tolerance of multiple subsequent agreements upon s 70(4)(a) agreed periods.
The Purchasers' submission that the 48 month period is a minimum period grates against the content of cl 4(b) and (c) in the Mirvac Contracts and cl 7(b) and (c) in the Leighton Contracts. As a matter of construction, these extension provisions are first premised in operative effect upon the premise that 'Registration Date' is the date at the end of a 48 month period. That is a first period end date. That period might then be sought to be extended, under cl 4(b) or cl 7(b). Interpreting 'Registration Date', injected into these extension provisions, demands a rationalised outcome. The result, as a matter of construction overall, in my view, is an outcome by which Registration Date is at the end of a 48 month period, but which date could potentially (not necessarily) be extended further at the initiative of the Vendors. Drafting the defined term Registration Date to embrace all such dates was hardly a helpful drafting technique. But reading the provisions together and attempting to ascertain their objective, sensible, commercial meaning, applying McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579, 589 [22] drives me to a conclusion that 48 months is a fixed first end registration date for an agreed period, not a minimum period.
It will be recognised, as I have earlier observed, that the draftspersons of Registration Date in both the Mirvac and Leighton Contracts have used an obscure technique in the drafting of s 70(4)(a) when a clearer, simpler approach was available. But any latent inclination towards punishing the Vendors over poor drafting must be suppressed, so as not to become a conceptually diverting consideration. In the end the question must be, what is the objective meaning of these provisions read together from a sensible commercial perspective? In my view, the Vendors' approach, recognising two discrete, stand alone components within the definition of Registration Date must prevail. The first discrete component meets the need for setting a fixed agreed term of 48 months after contract date. That is enough to satisfy the threshold requirement of s 70(4)(a). That work is not subsequently undone by a next following, disjunctive (problematic) second component in the definition, which was never sought, on the facts, to be engaged by the Vendors.
Third issue: Severance
Given the conclusion I have reached, it is not strictly necessary to pursue the further arguments that the Vendors advanced. It is therefore open to me to merely briefly summarise my views on the arguments by the parties upon this point.
I refer back to s 70A of the STA, which I earlier set out, see [30]. From there I would note that the Mirvac Contracts and the Leighton Contracts each contain similar clauses. Clause 16 of the Special Conditions in the Mirvac Contracts (see cl 3 of the Special Conditions in the Leighton Contracts which is not materially different in its terms or effect) provides:
If at any time and for so long as:
(a)the Strata Titles Act applies to this Contract;
(b)a provision of the Strata Titles Act conflicts with the provision of this Contract; and
(c)under the Strata Titles Act that provision of the Strata Titles Act prevails,
each conflicting provision of this Contract is deemed to be amended or deleted, as applicable [as the case may be, in the Leighton Contracts Special Conditions], to the extent necessary to enable this Contract to comply with the Strata Titles Act.
Were it necessary for me to consider a potential for either a viable contractual or statutory severance exercise under s 70A(1) or by reference to cl 16(b) of the Mirvac Contracts (cl 3(b) of the Leighton Contracts), the Vendors' arguments would, I think, fail. I would reach that conclusion on the basis that an assessed failure of the contractual provisions to meet the threshold requirement for setting an agreed period by s 70(4)(a) STA, simply means that no agreement arose. That result, of itself, would not present as an outcome in 'conflict' as against any provision of the STA.
All s 70(4)(a) does is afford the opportunity for a vendor and purchaser to reach agreement as to a period. If they do not, the residual statutory six month period, delivered under s 70(4)(b), will apply. Under a scenario of assumed failure by the parties' contractual efforts to effectively engage the s 70(4)(a) opportunity to agree upon a period, there is no question of s 70(4)(b) creating any conflict as between the statute with the contract of sale.
That view is unaffected by the indirect drafting approach defined in cl 4(a) of the Mirvac Contracts (cl 7(a) of the Leighton Contracts) that seeks to engage s 70(4)(a), but is also expressed as some attempt to fetter the Purchasers' right of statutory avoidance under s 70(4). As I have observed, such fetting language is in operative effect, mere surplusage once the parties do agree upon a period for the purpose of s 70(4)(a).
Were my conclusion to be that the parties had not engaged s 70(4)(a), there would still arise no conflict as between the STA and the parties' contractual provisions, by reason of the fall back work performed by s 70(4)(b) in that situation.
On that basis, there is no relevant 'conflict' presenting to be cured under a severance exercise. The position is no different under either the contractual or statutory severance provisions.
Conclusion
For those reasons, my answer to the preliminary issue posed in respect of each action is, 'Yes'. The Purchasers' arguments to the contrary are rejected.
The Purchasers should pay the Vendors' costs of the preliminary issue to be taxed, if not agreed. Subject to hearing the parties if necessary, my view is that a taxation should be undertaken without reference to scale limits.
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