Narrogin Holdings Pty Ltd v Wortley Developments Pty Ltd

[2017] WADC 54

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   NARROGIN HOLDINGS PTY LTD -v- WORTLEY DEVELOPMENTS PTY LTD [2017] WADC 54

CORAM:   DEPUTY REGISTRAR HEWITT

HEARD:   12 APRIL 2017

DELIVERED          :   27 APRIL 2017

FILE NO/S:   CIV 4833 of 2016

BETWEEN:   NARROGIN HOLDINGS PTY LTD

Plaintiff

AND

WORTLEY DEVELOPMENTS PTY LTD
First Defendant

DAVID BRIAN WORTLEY
Second Defendant

Catchwords:

Practice and procedure - Applications for summary judgment by both plaintiff and defendant - Turn on their own facts

Legislation:

Nil

Result:

Both applications dismissed

Representation:

Counsel:

Plaintiff:     Mr M Ahern

First Defendant             :     Mr T Carmady

Second Defendant         :     Mr T Carmady

Solicitors:

Plaintiff:     Aherns Lawyers

First Defendant             :     Williams & Hughes

Second Defendant         :     Williams & Hughes

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

Louinder v Leis (1982) 149 CLR 509

Shakibaee v Chan [2001] WASC 60

1. DEPUTY REGISTRAR HEWITT:  In this action the plaintiff sues for damages said to arise through the breach by the defendant of contracts entered between it and the first named defendant dated respectively 12 November 2015 and 18 February 2016 under the terms of which the plaintiff agreed to purchase, and the defendants agreed to sell, various parcels of land situated in Narrogin in the state of Western Australia.  It is said by the plaintiff that the defendant breached those contracts by reselling the land the subject of the contracts to third parties and in doing so repudiated the contract, entitling the plaintiff to a remedy against the first defendant.  As against the second defendant the claim relates to misrepresentations said to have been made by the second defendant the gist of which are that it was represented to the office bearers of the plaintiff that if they performed or continue to perform certain work on behalf of the first defendant, the second defendant, as a director of the first defendant, would procure the first defendant to enter the contracts, and honour the contracts to which I have earlier referred.

2. There are two applications which require my attention; the first of them being an application for summary judgment by the plaintiff; and the other being an application for summary judgment by the defendant. 

3. The contractual arrangements which were entered between the plaintiff and the first defendant are expressed to have been partly written and partly oral.  In so far as the first of the contracts is said to have been written, it is an offer for the sale of land by offer and acceptance in a standard REIWA form in which 13 strata units said to be located at the rear of lot number 1 Federal Street, Narrogin were sold to the plaintiff for the sum of $10.  It is pleaded that the oral portion of the contract comprised an agreement that the plaintiff would pay the stamp duty on the transfer of the strata lots (although I do not understand the purpose of that term since the onus to pay stamp duty would fall on the purchaser) and the plaintiff would take responsibility of all outstanding rates and charges due on the lots the subject of the sale.  It is not clear from the pleading or the evidence whether that agreement was struck before, during or after the execution of the written contract.

4. The second agreement was likewise partly written and partly oral and in so far as it was written it was comprised in, again, a standard contract for the sale of land and dated 18 February 2016.  That contract was subject to a special condition as follows:

   This offer is subject to the successful settlement of the 13 rear strata blocks (7 – 19) prior to the settlement of this property. 

5. In so far as the contract is said to have been oral, it is said that it was agreed that the plaintiff would pay the first defendant the purchase price of $30,000 and would pay stamp duty on the amount of $90,000 being the dutiable value of the relevant lot.  Both the written contracts are exhibited to the affidavit of A R Ofield sworn 3 February 2017. 

6. It is common ground that notwithstanding the execution of the documents, the first defendant sold the relevant properties to a third party.  That settlement took place on 28 November 2016.  In so far as the plaintiff's claim is levelled against the first defendant it is on the basis that the sale by the first defendant of the relevant properties to a third party was a repudiation of the contracts which was accepted by the plaintiff and gave rise to an entitlement to sue for damages.  That raises one of the contentions between the parties, namely whether or not the first defendant validly terminated the contract between it and the plaintiff prior to selling to a third party.  The plaintiff relied on the contractual provisions said to be contained in the contracts in the following terms:

   Neither party may terminate the contract as a result of the other party's default …  unless:

   1.the non-default party gives a default notice to the default party; and

   2.the default party fails to remedy the default within the time required.

7. A notice by the first defendant is relied upon and that notice apparently is in the following terms:

   As settlement is way overdue I am saying to you that any obligation to sell these blocks is now finished. 

8. The argument advanced by the plaintiff is that does not comply with the contractual terms and is ineffectual as a basis for termination of the contract.  Reliance is placed by the plaintiff on the decision of Louinder v Leis (1982) 149 CLR 509. The portion of the decision relied upon by the plaintiffs is that contained in pars 17 and 21 of the decision of Mr Justice Mason, those paragraphs being in the following terms:

   The principal issue in the appeal is: in what circumstance is a party to a contract for the sale of land entitled to give notice to complete making time the essence of the contract?  The appellant's prospects of success in the appeal depended very largely, if not entirely, on his obtaining leave to amend his notice of appeal.  His failure on that issue almost inevitably means that he must fail on the appeal itself.  But as the question sought to be raised is of particular importance in New South Wales, where it has been common practice to enter into contracts which do not fix a date for completion, we should deal with it.  At the outset we need to keep in mind (a) the difference between a contract which does not fix a time for completion and one which does, though not making time of the essence; and (b) the difference between breach of an obligation to complete the contract on a stipulated date or within a reasonable time, as the case may be, and a breach of some other obligation imposed by the contract, for example cl. 4 of the instant contract.  The entitlement to give notice having the effect of making time of the essence varies in these situations.

   …

   However, in relation to contracts fixing a date for completion, time not being of the essence, there was authority for the proposition that 'even when time was not originally of the essence of the contract it may be made so by a later notice, either before or after the day named in the contract, requiring completion by a particular day, if the time allowed is reasonable …'.  So said Talbot J.speaking for himself and Humphreys J. in Bernard v. Williams (30) (citing Benson v. Lamb (31); Parkin v. Thorold (32); Crawford v.Toogood (33)).  Of these three cases only Parkin v. Thorold, a decision of Lord Romilly M.R., provides support for the proposition (34).  Some support is to be found in the judgment of Malins V.c. in McMurray v. Spicer (35), where the Vice-Chancellor said: '... I entirely accede to the doctrine laid down in Parkin v.Thorold .. which is, that time not being of the essence of the contract originally, either of the parties may by subsequent notice make it so.  There was no time fixed here, and the parties were at liberty at any period to make time of the essence of the contract'.  But this approach has not been adopted in the later cases, the correct view being that stated by Fry J. that one party cannot remake the contract by unilaterally making time of the essence in the absence of delay or default by the other party.

9. Clearly on his Honour's analysis it is crucially important to determine whether or not the contract makes time of the essence.  None of the materials placed before me deal with that issue.  Each of the contracts include by reference the general conditions for the sale of land.  In the case of one contract, the 2011 version and in the other, the 2009 version.  No party has placed those general conditions before me.  There is a complete absence therefore as to:

   (a)whether or not the contract made time of the essence, and in that particular I note that nothing in the documents before me answer that question one way or the other, and

   (b)whether or not the relevant contracts did in fact contain the clause requiring notice to be given in the manner contended for by the plaintiff.

10. Those seem to be to be considerable difficulties which face the plaintiff which wishes to contend that a notice terminating the contract said to have been given by the second named defendant on 10 January 2016 did not have the effect of terminating the contract between the first defendant and the plaintiff.  The next issue to be considered is even if there were a term in the contract as is contended for by the plaintiff in this application, does that comprise the only way in which a contract of the relevant nature may be terminated.  In making that submission the defendants relied on the case of Shakibaee v Chan [2001] WASC 60 [103] – [104] where his Honour Mr Justice Owen stated:

    The second issue relates to par 10 of the statement of claim.  There is implicit in that paragraph a contention by the plaintiffs that the defendant could not terminate the Contract without first issuing a default notice under cl 16 of the General Conditions.  I do not think this is correct.  Generally speaking, a right to terminate conferred by a contract must be exercised in accordance with the procedures laid down in the contract.  However, an act which can trigger a contractual right of termination may also evince a repudiation giving rise to a right of termination and a right to claim damages under the general law: Shevill v Builders Licensing Board (1982) 149 CLR 620; Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 at 53.104.

    This issue has been addressed specifically in the context of cl 16 of the General Conditions.  In Rigg v Lee Loy Seng [1987] WAR 333,Brinsden J said, at 354:

    'It is well settled that where a contract includes a clause such as cl 16(1) but is repudiated by the promisor, the promisee need not give a 14 day notice.'

11. That proposition immediately raises the question as to whether or not there was a repudiation of the contract by the plaintiff.  The conduct relied upon by the first defendant is the delay in settlement.  It is obvious from the very nature of the contract, assuming that it included the oral terms, that the largest consideration flowing to the first defendant would be to be relieved of the burden of taxes and rates and so forth which it was required to pay as proprietor of the relevant strata titles.  The contract provided for settlement within 30 days and the delay was considerable, amounting to almost a year in one instance.  Clearly, whilst it remained the registered proprietor of the relevant land, the first defendant would become liable to pay ongoing levies of rates and taxes relating to the land.  I think it arguable that in those circumstances a failure to settle not only within the 30 days required by the contract but for many, many months, would deprive the defendant of a substantial portion of the benefit which it sought to obtain via the sale.  I express no concluded view on this matter but think it at least arguable that the delay could comprise a repudiation capable of acceptance by the first defendant and as such not requiring strict compliance with the contractual terms relied upon by the plaintiff (although not in evidence in this application). 

12. Arguments were advanced by the defendant that the contracts relied upon by the plaintiff did not comply with the statute of frauds and as a consequence it had a good defence to the various claims which were levelled against it.  On my understanding of the requirements of the statute of frauds all that is required is a sufficient memorandum signed by the party to be charged evidencing the existence of the contract contended for.  Whether or not the signed contracts satisfy that requirement and whether or not in construing the contracts between the parties the oral agreements should be included or excluded is, to my mind, a triable issue which needs to be ventilated.

13. I now move to consider the claim which is made by the plaintiff against the second defendant.  That claim is based on misleading and deceptive conduct said to have been undertaken by the second defendant in breach of the relevant provisions of the Competition and Consumer Act 2010 (Cth) and the equivalent provisions of the Fair Trading Act 2010 (WA). In regard to that part of the claim a primary obstacle encountered by the plaintiff is its pleading. The broad background to the claim arises from what is described as a development agreement and that was said to have been an agreement between the second defendant on behalf of the first defendant, with one of the directors of the plaintiff which appears to have been a personal agreement between that director and the second defendant, under the terms of which the second defendant was to provide certain services. The agreement was said to have been entered on or around 2008. The representation relied upon in the statement of claim relates to an allegation relating to the completion of the development agreement according to its tenor, it being said that it was agreed that the first defendant would transfer the ownership of the strata lot being created to an entity established by Messrs Fields and Fraser for a substantially reduced price. It is said that in reliance in that representation, Fraser and Field entered into the development agreement on behalf of the plaintiff as a pre-incorporation contract. The problem is immediately apparent. The development contract is defined to be a contract entered between the second defendant and Fraser in or around 2008. The representations were made many years later, probably in 2015, if made as alleged. It is then said that Messrs Fraser and Field entered into the development agreement on behalf of the plaintiff as a pre-incorporation contract. The pleading obviously does not make sense. It was possibly intended to mean that Messrs Field and Fraser undertook the work or other work of a general kind which had been the subject of a development agreement between the first defendant and Fraser, but it is impossible to say. Furthermore it is argued by the defendant, as seems to be the case, that there were defects in the manner in which the plaintiff seeks to invoke the relevant law in so far as it relates to representations as to future matters. For those reasons I consider that the summary judgment application against the second defendant should likewise fail. I now turn to the application brought by the defendant seeking to have a summary judgment against the plaintiff or alternatively the statement of claim struck out on the grounds it discloses no reasonable cause of action.

14. The first point to note is the application is brought out of time and no explanation is offered for that failure.  Secondly, my analysis of the material which is recorded in the manner in which I have dealt with the plaintiff's application for summary judgment there are issues between these parties which are not suitable to be dealt with at a summary level.  To the extent that the plaintiff's pleading in so far as it levels a claim against the second defendant is deficient, I do not think that a basis for the striking out of the entire statement of claim and the deficiencies which I have identified are in my opinion matters which could be cured relatively easily and do not require the intervention of this court.