Morland and Morland v Federation Home Designs (Aust) Pty Ltd

[1993] QCA 398

IN THE COURT OF APPEAL

[1993] QCA 398

SUPREME COURT OF QUEENSLAND

Brisbane

Before The Chief Justice Mr Justice Davies Mr Justice Cullinane

[Morland & anor. v. Federation Home Designs & anor.

Federation Home Designs v. Morland & anor.]

Appeal No. 120 of 1993

BETWEEN:

ANDREW WILLIAM MORLAND and

GEOFFREY STEWART MORLAND

(Plaintiffs) Appellants

AND:

FEDERATION HOME DESIGNS (AUST) PTY LTD

(First Defendant) Respondent

AND:

WASHINGTON REAL ESTATE PTY LTD

(Second Defendant)

Appeal No. 122 of 1993

BETWEEN:

FEDERATION HOME DESIGNS (AUST) PTY LTD

(Plaintiff) Respondent

AND:

ANDREW WILLIAM MORLAND and

GEOFFREY STEWART MORLAND

(Defendants) Appellants

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 18/10/1993

These are appeals from declaratory judgments given in two competing summonses pursuant to O. 18A of the Rules of the Supreme Court. The appellants were the vendors and the respondent the purchaser under a contract of sale of real property dated 21 July 1992. The appellants claimed to be entitled to forfeit the deposit under the contract of $12,000 for failure of the respondent to complete on the completion date whilst the respondent claimed to be entitled to retain that deposit because it had accepted the appellants' repudiatory conduct in requiring completion when a condition of the contract as to subdivisional approval had not been fulfilled.

The question in issue below and before this Court is whether a decision of the Logan City Council of 15 December 1992 constituted subdivisional approval required by cl. 6 of the contract. It is common ground that if it did the appellants are entitled to succeed and to the deposit; and that if it did not the appeal fails and the respondent should have the deposit. That question involves the construction of the contract and of the terms of some other documents, including that containing the decision. It also involves consideration of some other evidence which, on one view, is unsatisfactory. Nevertheless, the parties joined in asking the learned judge who heard the two summonses to make a final determination between them and they join in asking this Court to do that also.

The contract was made subject to subdivisional approval by cl. 6. However, it is necessary to construe that provision in its context, particularly, according to the appellants, in the context of cll. 4 and 5. We therefore set out those clauses in full:

"4. The Logan City Council at its meeting of the 3rd of March, 1992 resolved to approve the rezoning of the land from Rural to Residential A subject to certain conditions which are set out in the Council's letter to Roy Sommerville Surveys Pty Ltd dated the 3rd of March, 1992. A true copy of that letter is annexed hereto and marked with the letter "A". The Purchaser acknowledges that the Vendor is in the process of renegotiating with Council condition 19 to lower the minimum area from 450 m2 to 400 m2. This Contract is subject to the gazettal of that rezoning.

5. The Vendor has obtained from the Logan City Council at its meeting of the 3rd of March, 1992 its consent to cluster housing development on the subject land subject to certain conditions set out in the Council's letter to Roy Sommerville Surveys Pty Ltd and dated the 3rd of March, 1992. A true copy of that letter is annexed hereto and marked with the letter "B". The Purchaser agrees to accept the conditions imposed by Council for the cluster housing development.

6. This Contract is subject to and conditional upon the Vendor obtaining from the Logan City Council subdivisional approval for the subdividing of the said land into not less than forty-one (41) allotments which is required for the proposed cluster housing development. The Vendor has prepared a subdivisional plan drawing nos. 831-10 which has been accepted by the Purchaser. The Vendor agrees to submit that plan to Council for its approval without undue delay and in any event before the gazettal of the rezoning. The Vendor agrees to be responsible for all costs associated with the application."

The application for subdivisional approval pursuant to cl. 6 was made in written form by a document dated 18 August 1992, which referred specifically to 41 allotments and which was accompanied by plan of subdivision no. 831-12 which differed only in minor respects from plan no. 831-10 referred to in cl. 6. Both showed 41 allotments.

On 15 December 1992 the Council resolved to advise the appellants that the subdivisional application was approved subject to a number of conditions. They included:

"2(h) (1) Filling shall not be permitted below a natural surface level of 7.00 metres AHD unless the applicant can demonstrate with a flood study acceptable to Council, that such filling will not decrease the storage capacity within the flood plain and that any fill placed below 7.00 metres AHD will not create a detrimental affect on velocities in the Logan River nor create an afflux in flood level. The above levels shall apply to the toe of fill batters."

It is this decision which the appellants assert constituted subdivisional approval in accordance with cl. 6.

It is common ground between the parties that a significant part of the natural surface level of the land the subject of the subdivisional application is below 7.00 metres AHD and that the area below that level is subject to flooding. It follows that unless the appellants were able to demonstrate with a flood study acceptable to the Council that filling below that level would not decrease the storage capacity within the flood plain and that any fill placed below that level would not create a detrimental effect on the velocities in the Logan River nor create an afflux in the flood level, the subdivision would probably be less than 41 allotments.

The appellants nevertheless submit that the decision is a subdivisional approval complying with cl. 6, when that clause is read with cll. 4 and 5, the approval and consent referred to in those clauses respectively and the evidence of Messrs Sommerville and Tite. The respondent, by cl. 5, had agreed to accept the conditions imposed by the Council for the cluster housing development. Those conditions expressly required compliance with all conditions of approval of the rezoning application to which cl. 4 referred. One of the conditions of that rezoning approval, which was dated 3 March 1992, was in the following terms:

"11. Compliance with the Council's Policy in relation to Rezoning, Subdivision and Buildings in Areas Liable to Flood. In accordance with Section 6.1(vii) of this policy, a flood/fill study shall be submitted and approved by the City Engineer; or alternatively, the applicant shall pay $300.00 for Council to carry out the study and to supply filling approval with the relevant criteria."

The policy document was not in evidence. We were asked nevertheless by the appellants to infer from the evidence of Mr Sommerville, a surveyor, that certain "fill limits", that is levels below which filling was not permitted, set out in a table annexed to his affidavit, had been "applied" by the Council prior to and at the date of the contract. Even if we were to do so, it would not follow that those fill limits formed part of the Policy referred to in cl. 11. Nor does the evidence of Mr Tite, an engineer upon whom the appellants also relied on this question, show what that Policy relevantly said. It cannot therefore be argued, as the appellants sought to do, that the contract contemplated a condition of subdivisional approval of the kind stated in cl. 2(h)(1).

The appellants then submitted in the alternative that the decision of 15 December 1992 was a subdivisional approval subject to conditions; and that an approval subject to conditions is an approval for the purposes of the contract unless those conditions in effect nullify the approval.

They relied for this proposition upon the statement of Jacobs J., approved on appeal by Sugarman J.A., in Electronic Industries v. Harrisons & Crosfield (1966) 13 L.G.R.A. 277 at 282. The contractual condition under consideration there provided that the contract was subject to the purchaser obtaining approval of the Council to the "continued use" of certain properties for specified purposes. Approvals obtained from the Council were subject to conditions, one of which provided that the proposed use "shall cease without compensation if requested by the Council and/or the State Planning Authority of New South Wales at any time after 13th May 1971". It was held that this was not an approval to continued use of the properties.

Sugarman J.A. said, in the passage relied on:

"Jacobs J. went on to say, and I agree, that the consent does not have to be unconditional provided that any conditions do not so alter the consent that the actual consent given cannot really be called a consent to the continued use."

The contractual condition in the present case was for "subdivisional approval for the subdividing of the said land into not less than forty-one (41) allotments which is required for the proposed cluster housing development". It was not simply subdivisional approval for proposed cluster housing development. It was subdivisional approval into not less than 41 allotments for that purpose.

The "approval" in the decision of 15 December 1992 could not be called an approval for subdivision into 41 allotments. When read with the application and the plan which accompanied it, showing AHD levels on the subject land, the decision was one to approve subdivision into not less than 41 allotments only if it could be demonstrated with a flood study acceptable to the Council that filling below 7.00 metres AHD would not decrease the storage capacity within the flood plain and that any fill placed below that level would not create a detrimental effect on the velocities in the Logan River or create an afflux in the flood level.

The essential difference between cl. 2(h)(1) and the other conditions stated in the decision of 15 December 1992 is that that clause made approval for subdivision into not less than 41 allotments a condition which the respondent was entitled to have fulfilled, subject to the happening of an uncertain future event beyond the control of the parties to the contract; whereas the others were conditions which could be fulfilled by the applicant. It was this former quality which denied that decision the character of a subdivisional approval into not less than 41 allotments. It does not follow from what we have said, of course, that no condition of the latter kind could deny the decision the character of subdivisional approval into not less than 41 allotments: see Richard West & Partners v. Dick [1969] 2 Ch. 424 at 433.

But it is unnecessary to consider that question here.

Finally the appellants contended in their written outline of argument, although they did not pursue this in their oral submissions, that the respondent was disentitled from relying on cl. 2(h)(1) because it had failed to undertake the study contemplated by that clause. We think it is plain from what we have said that the question whether the decision of 15 December 1992 constituted a subdivisional approval contemplated by cl. 6 cannot depend on whether or not the respondent undertook that study; and, in any event, it was the appellants' obligation to obtain the subdivisional approval contemplated by cl. 6.

In view of the conclusion which we have reached, it is unnecessary to consider the respondent's alternative submission that the judgment below can also be sustained on the ground that, even if filling were permitted below 7.00 metres AHD, subdivision into 41 allotments could not be achieved by reason of other conditions of the decision of 12 December 1992.

We would therefore dismiss the appeal with costs. of $12,183.47 paid into court to the credit of this action be paid out to the respondent. We did not understand the appellants to contest the making of such order and accordingly we would so order.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Brisbane

[Morland & anor. v. Federation Home Designs & anor.

Federation Home Designs v. Morland & anor.]

Appeal No. 120 of 1993

BETWEEN:

ANDREW WILLIAM MORLAND and

GEOFFREY STEWART MORLAND

(Plaintiffs) Appellants

AND:

FEDERATION HOME DESIGNS (AUST) PTY LTD

(First Defendant) Respondent

AND:

WASHINGTON REAL ESTATE PTY LTD

(Second Defendant)

Appeal No. 122 of 1993

BETWEEN:

FEDERATION HOME DESIGNS (AUST) PTY LTD

(Plaintiff) Respondent

AND:

ANDREW WILLIAM MORLAND and

GEOFFREY STEWART MORLAND

(Defendants) Appellants

____________________________________________________________
_____

THE CHIEF JUSTICE MR JUSTICE DAVIES

MR JUSTICE CULLINANE
____________________________________________________________

_____

Judgment delivered 18/10/1993

REASONS FOR JUDGMENT - THE COURT
____________________________________________________________
_____

APPEAL DISMISSED WITH COSTS. ORDER THAT THE SUM OF $12,183.47 PAID INTO COURT TO THE CREDIT OF THE ACTION BE PAID OUT TO THE RESPONDENT.

____________________________________________________________

_____

CATCHWORDS:	CONTRACT - CONSTRUCTION AND INTERPRETATION - Contract conditional upon vendor obtaining Council approval for subdivision into not less than 41 lots - Whether satisfied by Council approval for 41 lots subject to condition that filling not be permitted on significant part of land unless vendor demonstrated to Council's satisfaction no detrimental effect on flood levels - Whether contract contemplated such a conditional approval given similarity of existing rezoning approval conditions - Whether condition effectively nullified approval
Electronic Industries v. Harrisons &
Crosfield (1966) 13 L.G.R.A.  277
Richard West & Partners v. Dick [1969] 2 Ch. 424
Counsel:	P.A. Keane Q.C. with him D. Savage for the Appellants R. Mack for the Respondent
Solicitors:	Brian McMahon & Co. for the Appellants Smith & Stanton for the Respondent

Date(s) of Hearing:20 September 1993