Mitchell v Spring
[1995] QCA 144
•21/04/1995
| IN THE COURT OF APPEAL | [1995] QCA 144 |
| SUPREME COURT OF QUEENSLAND |
(a) the action be dismissed; (b) the appellants (plaintiffs) pay to the respondents (defendants) the amount of the deposit ($9,000) together with interest at the rate of 12 per cent per annum from 8 July 1994 to the date of repayment of the deposit; (c) the moneys paid into the Southport District Court on account of Plaint No. 254 of 1994 together with accretions be applied towards payment of the above sum; (d) to the action including any reserved costs.
Appeal No. 201 of 1994.
Brisbane
[Mitchell v. Spring]
BETWEEN:
GARY MITCHELL and CHRISTINE
FRANCIS MITCHELL
(Plaintiffs) Appellants
AND:
MICHAEL JOHN SPRING and
JULIE ANN SPRING
(Defendants) Respondents
__________________________________________________________________
_
Pincus J.A.
McPherson J.A.
White J.
__________________________________________________________________
_
Judgment delivered 21/04/1995
Separate reasons for judgment of each member of the Court, concurring as to the
orders to be made.
__________________________________________________________________
__
THE ORDERS ARE:
1. Appeal dismissed with costs.
2. In addition to the orders made by the primary judge, it is ordered that:
the appellants pay the respondents' costs of and incidental ____
CATCHWORDS: | CONTRACT OF SALE - standard REIQ form of contract approved by QLS - breach of condition - notice of termination - non-disclosure of absence of building approval for certain structures - what constitutes approval for the purpose of s. 30A(1) of the Building Act 1975. |
| Ss. 30A, 66A Building Act 1975. | |
| Counsel: | Mr J Kimmins for the appellants. Mr D J S Jackson Q.C. for the respondents. |
| Solicitors: | Jan McCaughan for the appellants. RWT Mann & Partners for the respondents. |
| Hearing date: | 8 March 1995. |
IN THE COURT OF APPEAL
"21.1 Should it be established that at the date of this Contract: ...
(b)
all permissions consents and approvals required from the relevant local authority or other body having jurisdiction for the construction of the improvements on the Land have not been obtained or having been obtained, have not been complied with in all respects;
and any such facts are not disclosed in the special conditions or
elsewhere herein the Purchaser may by notice in writing to the... contract...".
SUPREME COURT OF QUEENSLAND
Appeal No. 201 of 1994.
Brisbane
| Before | Pincus J.A. McPherson J.A. White J. |
[Mitchell v. Spring]
BETWEEN:
GARY MITCHELL and CHRISTINE
FRANCIS MITCHELL
(Plaintiffs) Appellants
AND:
MICHAEL JOHN SPRING and
JULIE ANN SPRING
(Defendants) Respondents
REASONS FOR JUDGMENT - PINCUS J.A.
Judgment delivered 21/04/1995
This is an appeal from the District Court in a case concerning a contract for sale
of a house in the Albert Shire. The contract, dated 14 June 1994, provides for the sale
of the house for $170,000. It is on a standard form described as having been adopted
by the Real Estate Institute of Queensland Limited and approved by the Queensland
Law Society Incorporated; one of the printed clauses reads in part as follows:
In reliance on that provision, on 7 July 1994, the solicitors for the purchasers (now
respondents) purported by a letter of that date to terminate the contract and it is the
validity of that purported termination which is in issue. The matter came before the
District Court, owing to the good sense of the parties and their advisers, on an
application made in a summary way, there being no dispute about the primary facts.
The ground of termination relied on in the letter of 7 July 1994 was that certain
structures, a garden shed, carport, roofed patio and pergola had, before the contract
was made, been erected on the land on which the house stands, that the Albert Shire
Council had not granted building approval for them, and that this fact had not been
disclosed in the contract. It is admitted that the garden shed, carport, roofed patio and
pergola were built, but the vendors say that all approvals required from the relevant local
authority had been obtained.
Section 30A(1) of the Building Act 1975 provides as follows:
"A person shall not carry out or cause to be carried out building work in respect of which the Standard Building Law requires the approval of the local government unless such approval has first been obtained."
It is in substance common ground in the present case that the work of building the
structures mentioned was such as to require the approval of the Albert Shire Council
under the Standard Building Law. No approval under s. 30A was obtained. Were there
nothing more in the case, then it would seem clear that an approval "required from the
relevant local authority" was not obtained, within the meaning of the relevant clause in
the contract. But the vendors rely upon an approval which they say was obtained under
s. 66A of the Act:
"(1) It is competent to a person to make and for a local government to decide on an application for approval to the carrying out of building work even though the building work to which the application relates has been commenced or completed.
(2) Subsection (1) must not be construed as affecting the operation of section 30A(1)."
Mr D J S Jackson Q.C. who appeared for the purchasers did not contest the
proposition that, if an approval was given under s. 66A, then the notice of termination
given by the purchasers was invalid. It is desirable, however, to attempt to reconcile the
two provisions: s. 30A and s. 66A. By subs. (2) of the latter, subs. (1) is not to be
construed as affecting the operation of s. 30A(1). It should be noted that s. 66A does
not in terms require that if there has, in respect of building work, been a breach of
s. 30A(1) then an application must be made under s. 66A; the making of such an
application is optional and no time limit for making it is prescribed. On the face of
things then, some difficulty can be seen in accepting the assumption which underlay the
argument advanced on each side, that an approval under s. 66A can be one which is
"required from the relevant local authority" within the meaning of the contract. It should
be noted that another possible course open to one desiring an approval of a completed
building is to apply in response to a notice under s. 52A of the Act.
Section 66A does not say what effect an approval given under that section has.
It can hardly be said that, when obtained, it must be treated as fulfilling the obligation in
s. 30A(1); if no approval has been obtained under s. 30A(1) that is a breach of the Act
and s. 66A(2), however construed, must at least mean that an approval under s. 66A
does not erase the breach of s. 30A. There is room for difference of view about the
effect (if any) a s. 66A approval has under the Act: it neither fulfils the obligation created
by s. 30A, nor requires one to deem that obligation to have been fulfilled, nor constitutes a fulfilment of any other obligation created by the Act. The possibility arises that the
drafter of s. 66A had in mind making it possible for a building in respect of which no s.
30A approval has been obtained to be the subject of a s. 66A approval, to satisfy such
a contractual condition as is in issue here.
But in view of the basis upon which the matter was argued, it is desirable to deal
with the case as if the Act provided, expressly or otherwise, that a s. 66A approval if
granted produces the result that the s. 30A approval must be treated as not having been
required or as having been obtained.
Mr J P Kimmins for the vendors relied first upon the fact that plans of the
structures, which were lodged, it appears, in February 1993, bore a Council stamp: "All
relevant Council by-laws, the Building Act Amendment Act 1975-1991 and all other
relevant government acts and regulations to be complied with" and that the application
for approval which went with the plan was given a building approval number, B93/805.
The suggestion was that one should infer that the Council practice was, at relevant
times, that the building approval number was generated and placed on the application
only when approval was given; the words stamped on the plan were said to be
consistent with the imposition of a condition of that approval. Mr Jackson QC however
pointed out that the application appears to have been assigned no number other than
B93/805, so that the facts suggest a practice of giving the application and anticipated
approval the same number. The submission is also confronted with the difficulty that a
letter from the Shire Council dated 25 July 1994, relied on in connection with a second
submission discussed below, describes a letter of 9 July 1993 as being the Council's
"standard authorisation of an existing or as constructed building or structure"; that
implies that neither the stamping of words on the plan nor the assignment of a building approval number to the relevant application was intended to constitute, in accordance
with Council's ordinary practice, a building approval.
The appellants' first submission must therefore be rejected and the remaining
question is whether the letter written by the Council to the vendors on 9 July 1993 is a s.
66A approval. The body of the letter is as follows:
"BUILDING APPLICATION NO: B93805 SITE ADDRESS: 42-44 PEACHEY ROAD, ORMEAU REAL PROPERTY DESCRIPTION: LOT 325 RP 210236 DARLINGTON
DESCRIPTION OF WORK: EXISTING GARDEN SHED, CARPORT,
ROOFED PATIO AND PERGOLA
_____________________________________________________________
_I refer to the Building Application submitted in connection with abovementioned work, which has now been assessed for compliance with the provisions of the Building Act and Queensland Standard Building By-laws 1975-1988.
As a site inspection has revealed that the building/structure has already been erected, Council is unable to grant formal Building Approval. Further, as Council did not carry out inspections of the work during construction, it is not possible to certify that the work is structurally adequate, however, from the information available and from what was visible during inspection, the building work does not appear to be contrary to the provisions of the building regulations. It is advised, however, that there is no objection to the building work remaining as constructed.
A copy of the plans has been retained for Council's records."
But for the letter of 25 July 1994 just referred to, one could hardly think that the
letter of 9 July 1993 should be read as a s. 66A approval. The letter of 9 July 1993 says
the Council "is unable to grant formal Building Approval", but it also says, rather
guardedly, that the work does not appear to be contrary to the building regulations and
that there is no objection to the work remaining as constructed. Mr Kimmins' argument
is that the letter of 25 July 1994 showed that the earlier letter should, whether or not the recipients appreciated it, have been read as a s. 66A approval. The body of the letter
of 25 July 1994 is as follows:
"BUILDING APPLICATION NO: B93805 - MITCHELL SITE ADDRESS: 42-44 PEACHEY ROAD, ORMEAU REAL PROPERTY DESCRIPTION: LOT 325 RP 210236 DARLINGTON
DESCRIPTION OF WORK: EXISTING GARDEN SHED, CARPORT,
ROOFED PATIO AND PERGOLA
_____________________________________________________________
_In response to your enquiry, I advise that the letter of 9 July 1993 to your clients, G & CF Mitchell, is the Council's standard authorisation of an existing or as constructed building or structure.
I also confirm that there are no requisitions concerning the abovementioned buildings and structures and no further permissions, consents or approvals are required."
It is necessary to keep in mind that the 25 July 1994 letter is too late to qualify as
or form part of an approval, as the question posed by cl. 21.1 of the contract is whether
the necessary permissions, consents and approvals had been obtained at the date of
the contract, which was 14 June 1994. But the letter of 25 July 1994 has two distinct
effects: first, it characterises the letter of 9 July 1993 and second, it provides further
information, in the second sentence; the latter must be ignored for present purposes.
The question then becomes whether, accepting that a letter in the form of that of
9 July 1993 is the "Council's standard authorisation of an existing or as constructed
building or structure", it emerges that the earlier letter must have effect as a s. 66A
approval. There is on the margin of that question the point referred to above - that it is
not clear that a s. 66A approval has any definable legal effect. But leaving that difficulty
aside, in my opinion the better view is that the Council has, by the letter of 9 July 1993,
read with the assistance of the explanation of its intended effect in the letter of 25 July
1994, refrained from giving a s. 66A approval. I base this conclusion on the statement that the Council "is unable to grant formal Building Approval", on the fact that the 1993
letter refrained from saying that the work complies with the regulations and on the use of
the word "authorisation" rather than "approval" in the second letter. There is a clear
implication that the first letter is not to be taken as a formal approval, by which, one
would think, is meant that it is not intended to be such an approval as is contemplated
by the statute.
The result is that the appeal fails. This may seem an unfortunate consequence
and one must suspect that the result is, in a broad sense, unjust; it emerges in part from
the rigidity of cl. 21.1(b) which may enable a party to escape from obligations under a
building contract on technical and indeed trivial grounds.
Mr Jackson Q.C. contended, without any dissent from Mr Kimmins, that if the
appeal were dismissed the action should be disposed of in favour of the purchasers. It
appears that the proper orders, then, are:
1. Appeal dismissed with costs.
2. In addition to the orders made by the primary judge, it is ordered that:
(a) the action be dismissed; (b) the appellants (plaintiffs) pay to the respondents (defendants) the amount of the deposit ($9,000) together with interest at the rate of
12 per cent per annum from 8 July 1994 to the date of repayment
of the deposit;
(c) the moneys paid into the Southport District Court on account of Plaint No. 254 of 1994 together with accretions be applied
towards payment of the above sum;
(d)
the appellants pay the respondents' costs of and incidental to the action including any reserved costs.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 201 of 1994
Brisbane
| Before | McPherson J.A. Pincus J.A. White J. |
[Mitchell v. Spring]
BETWEEN
GARY MITCHELL and CHRISTINE FRANCIS MITCHELL
Appellants
AND
MICHAEL JOHN SPRING and JULIE ANN SPRING
Respondents
REASONS FOR JUDGMENT - McPHERSON J.A.
Judgment delivered the 21st day of April 1995
I have read and respectfully agree with the reasons of be dismissed.
For my part I would only add that, despite the persuasive submissions of Mr Kimmins, any other outcome in this case would have some surprising consequences. We are concerned ultimately with the meaning of the expression "approval" or "approvals" in the condition in cl.21.1(b) forming part of a contract for the sale of land. Valuable rights are made to depend on whether such an approval has or has not been obtained by a specified date under a contract of which time is stated to be of the essence. The purchaser may, in reliance on that clause, rescind the contract if the required approval has not been obtained in time. If it has been obtained, a purported rescission under that clause would or might constitute a repudiation of the contract, which the vendor may accept so as to terminate the contract and forfeit the deposit. That is what has happened in the present case.
One would therefore naturally expect that in using the expression "approvals" in cl.21.1 the parties intended it to refer to something that was recognisable as such; that is, which possessed the outward appearance of an approval by being signified in some way that disclosed its character. Conversely, one would not expect it to refer to something that did not appear to anyone but the local authority in question to be an approval, but which the Council in this case over a fortnight later intimated was its standard form of approval or "authorisation", if that is the same thing. In other words, the parties by their contract surely cannot be taken to have intended that an approval wholly subjective to and known to be such only by the local authority itself and not by anyone else, should satisfy cl.21.1. No one might ever discover that an approval had been given, or that it had been given either within or beyond the time limit when the powers conferred by cl.21.1 would be, or had ceased to be, exercisable. There is, in short, no reason why anyone would suspect that this particular Council has chosen to speak in a language all of its own.
The Court was not referred to authority in which a similar question has been judicially considered, and I have not succeeded in locating any decisions in point. However, there are observations in some reported cases that tend in the direction of saying that a reference to a local authority "approval" in the context of a contract like this means an approval that is outwardly recognisable as such. I refer to what was said by Sugerman J.A. in Electronic
Industries Limited v. Harrisons & Crosfield (ANZ) Limited
Berk
(1966) 13 L.G.R.A. 277, 283, and by Bruxner D.C.J. in The question in each of those cases was whether an approval subject to onerous conditions was an "approval" within the meaning of that expression in a clause in a contract for the sale of land. The approach adopted by their Honours in each of those cases provides some support for the view that what the contracting parties might be expected to have had in mind is something which, interpreted objectively, would be regarded in the ordinary way as an approval. Cf. also Quarry Industries Limited v. City of Marion [1971] S.A.S.R. 55, 59, where Wells J. discusses the meaning of, and possible distinctions between, "consent", "permission" and "approval" as used in local authority legislation in South Australia. His Honour regarded the word "approval" as having a rather more formal connotation than some of those other expressions.
Interpreted objectively, the Council's letter dated 9 July 1992 falls well short of being an "approval" of the structures to which it refers. The subsequent letter of 25 July 1994 (which was written after the right of rescission had been exercised under cl.21.1) was incapable after the event of converting the first letter into an approval of the kind contemplated by the contract. The purchasers were consequently entitled to rescind in the exercise of the power conferred on them by cl.21.1, with all the consequences which that entails.
It only remains to add that the Real Estate Institute and the Law Society would, in the interests of their clients, be well advised to reconsider the retention in standard form contracts of this kind of the provision in cl.21.1(b) in its present form. While it remains, contracts for the sale of many properties, some of great value, will be at risk of termination on the unexpected and, one suspects, often arbitrary and irrelevant ground that some structure like a pergola or car port was erected on it without the necessary local authority approval. Why legislation should concern itself with such apparently trivial matters is not for us to say; but there is no reason why responsible organisations like the Institute and the Law Society should pick it up and run with it.
I agree with the orders proposed by Pincus J.A. for disposing of this case.
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 201 of 1994
Brisbane
| Before | Pincus J.A. McPherson J.A. White J. |
[Mitchell v. Spring]
BETWEEN:
GARY MITCHELL and
CHRISTINE FRANCIS MITCHELL
(Plaintiffs) Appellants
AND:
MICHAEL JOHN SPRING and
JULIE ANN SPRING
(Defendants) Respondents
REASONS FOR JUDGMENT - WHITE J.
Judgment delivered the 21st day of April 1995
I have read the reasons of Pincus and McPherson JJ.A. and respectfully agree with them that the appeal ought to be dismissed. As Pincus J.A. has observed, this is more than likely an outcome which is "not fair" but to hold otherwise would require a quite artificial meaning to be given to the expression "approvals" in cl.21.1(b) of the Contract of Sale. I agree with the concern expressed by McPherson J.A. that the retention of such a provision in a standard form contract may continue to lead to unsatisfactory results.
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