Mitchell v Schofield

Case [2007] WASC 303

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   MITCHELL -v- SCHOFIELD [2007] WASC 303

CORAM:   SIMMONDS J

HEARD:   20 & 21 AUGUST 2007

DELIVERED          :   12 DECEMBER 2007

FILE NO/S:   CIV 1283 of 2007

BETWEEN:   ROBERT ARTHUR MITCHELL

RUTH MARIE MITCHELL
First Plaintiffs

DICK WILLIAM BLOM
ANNIE IRENE BLOM
Second Plaintiffs

AND

VERNON SCHOFIELD
CHRISTINE SCHOFIELD
Defendants

Catchwords:

Contracts - Sale of land - Condition 13.3(a)(1) of Joint Form of General Conditions for the Sale of Land 2002 Revision - Date from which period there referred to ran where WAPC conditional approval given before contracts concluded and contracts subsequently varied

Contracts - Sale of land - How contract on standard form then in use might be accepted - When such contract was concluded - Whether the term in Condition 26 of Joint Form of General Conditions of Sale of Land 2002 Revision 'Contract Date' was relevant to Condition 13.3(a)(1)

Contracts - Sale of land - Whether Condition 13.3(1)(1) of Joint Form of General Conditions of Sale of Land 2002 Revision was self-executing - How contract required to be terminated for non-satisfaction of Condition 13.3(a)(1) - Whether repayment of deposit was required for that purpose - Whether 'Notice' within Condition 21 of Joint Form of General Conditions of Sale of Land 2002 Revision was required for that purpose

Contracts - General contractual principles - Construction of variation of contract by reference to language and structure of the document and the context to the document

Contracts - General contractual principles - Construction of contract where literal reading would produce absurdity

Contracts - General contractual principles - Rectification of variation of contract - Whether there was evidence to discharge the burden of proof required for rectification

Contracts - General contractual principles - Whether there was waiver of requirement for effective termination of contract - Whether party was estopped from relying on failure of other party to meet such requirement

Legislation:

Nil

Result:

Action by plaintiffs successful

Category:    B

Representation:

Counsel:

First Plaintiffs               :     Mr T O Coyle

Second Plaintiffs           :     Mr T O Coyle

Defendants:     Mr M G Pendlebury

Solicitors:

First Plaintiffs               :     Lavan Legal

Second Plaintiffs           :     Lavan Legal

Defendants:     Marks & Sands

Case(s) referred to in judgment(s):

African Minerals Ltd v Pan Palladium Ltd [2003] NSWSC 268

Bacchus Marsh Concentrated Milk Co Ltd (in liq) v Joseph Nathan & Co Ltd (1919) 26 CLR 410

Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 62

Bishopsgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd [1981] 1 NSWLR 429

Budget Stationery Supplies Pty Ltd v National Australia Bank Ltd (Unreported, NSWSC Eq No 4303 of 1993, 25 September 1996)

Capper v Thorpe (Unreported, WASC, Library No 960220, 24 April 2006)

Crouch v Joseph (Unreported, WASC (Anderson J), Library No 9004, 22 August 1991)

Dockside Holdings Pty Ltd v Rakio Pty Ltd [2001] SASC 78

Foran v Wight (1989) 168 CLR 385

Heppingstone v Stewart (1910) 12 CLR 126

Immer (No 145) Pty Ltd v…

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AGLC
Mitchell v Schofield [2007] WASC 303
Case
[2007] WASC 303
Decision Date

CaseChat Overview and Summary

In the case of Mitchell v Schofield, the plaintiffs, Mitchell, sought to recover the deposit they had paid to the defendants, Schofield, for the purchase of land. The dispute arose out of a sale contract that had been subsequently varied, and the terms of the variation were central to the court's decision. The defendants had given conditional approval for the subdivision of the land prior to the conclusion of the contracts, and the contracts were varied after they were signed. The primary issues that the court had to decide involved the interpretation of the varied contracts, specifically how the period referred to in Condition 13.3(a)(1) of the Joint Form of General Conditions for the Sale of Land 2002 Revision was to be determined. Additionally, the court needed to ascertain whether Condition 13.3(a)(1) was self-executing and how the contract should be terminated for non-satisfaction of this condition. The court also had to determine whether the repayment of the deposit was required for termination and if a 'Notice' as referred to in Condition 21 was necessary for that purpose.

The court examined the language and structure of the contract, as well as the context in which it was made, to avoid any absurdity and to reflect the true intention of the parties. The court noted that the term 'Contract Date' in Condition 26 was not relevant to Condition 13.3(a)(1). It concluded that the Variations, when read in the context of their content and circumstances, should be interpreted as providing a reference point from which the extended periods commence. This reference point was the 'Date' under the heading 'Particulars of Contract' in the relevant Variation. The court held that this was the point in time that the parties intended to use for the varied contract. The plaintiffs' argument that the 'Date' could not be the relevant reference point, as it would subject the sellers to obligations in respect of a subdivision plan approved by the WAPC before the contracts were concluded, was rejected by the court. The court found that the variations should be read in a way that gave effect to the parties' intentions as objectively gathered. The court also considered the general principles of contract law, including the avoidance of absurdity, and the need to rectify the variation if there was sufficient evidence to discharge the burden of proof. The court found that there was no waiver of the requirement for effective termination of the contract and that the defendants were not estopped from relying on the failure to meet the condition.

The court's final orders were that the plaintiffs' action was successful, and they were entitled to the return of their deposit. The court determined that the defendants had failed to satisfy the condition regarding the approval of the subdivision plan within the specified period. As a result, the contract was properly terminated, and the plaintiffs were entitled to the repayment of their deposit.

Orders

Orders of the court

Action by plaintiffs successful

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The court should construe the contract in question so as to avoid the absurdity and to properly reflect the intention of the parties gathered objectively: Westpac Banking Corporation v Tanzone Pty Ltd [2000] NSWCA 25 especially [37] (Priestley and Fitzgerald JJA and Foster AJA); Dockside Holdings Pty Ltd v Rakio Pty Ltd [2001] SASC 78 [39] – [40] (Williams J), [1] (Olsson J) and [2] (Duggan J). Gathering that objective intention involves the court assessing the meaning which the document would convey to a reasonable person having all of the background knowledge which would reasonably have been available to the parties in the situation they were in at the time of contracting: African Minerals Ltd v Pan Palladium Ltd [2003] NSWSC 268 [44] (Einstein J) and authority there cited. As stated in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 [22] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ) such an exercise:requires consideration, not only of the text of the documents, but also the surrounding circumstances known to [the parties], and the purpose and object of the transaction (footnote omitted). Particular phrases used in a contract are to be considered in this light: McCann v Switzerland Insurance Australia Ltd (2000) 203 CLR 579. Further, in approaching its task, the court should not without the authority of a statute 'attribute a different meaning to the words of a contract to the words … simply because the courts regard the meaning as otherwise working a hardship on one of the parties': McCann [74] (Kirby J). On the defendants' primary contentions when the content of the Variations and their circumstances are properly considered the Variations should be read as providing a reference point from which the extended periods commence, being the entry for 'Date' under the heading 'Particulars of Contract' in the relevant Variation. Whether or not that reference point is the one that would have applied absent the Variation in question, it is what, considering the matter objectively, the parties intended to use for the Contract as varied. The plaintiffs submit that the 'Date' could not be the relevant reference point as that would have the effect of subjecting the sellers to obligations in respect of a subdivision plan approved by the WAPC, presumably of the sort described by cl 13.4(b)(2), for a period even before the Contracts were concluded. 2002 General Conditions cl 13.4(b)(2) reads as follows:Following the lodgment of the application [with the WAPC for the subdivision of the Subdivision Lot from the Original Land] in accordance with subclause (a), the Seller must use best endeavours to:(2)subject to the approval of the Planning Commission to the subdivision, arrange for preparation of a Subdivision Plan including the Subdivision Lot, and for the Subdivision Plan to be (A)lodged at DOLA; and(B)endorsed as in Order for Dealing,as soon as practicable. Below, I will consider the dates at which the Contracts were concluded. For now I can indicate that, if the Variations could be taken to have in effect set the date of WAPC approval, for the purposes of all of the provisions of cl 13 at least and not only for the purposes of cl 13.3(a)(1), as the 'Date' in each case, the effect contended for by the plaintiffs would in my view arguably follow.