Nash v Nash
[2021] VSC 266
•17 May 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S ECI 2020 03213
| DONALD NASH & ORS (according to the attached schedule) | Plaintiffs |
| v | |
| DAVID JAMES NASH & ORS (according to the attached schedule) | Defendants |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 March 2021 |
DATE OF RULING: | 17 May 2021 |
CASE MAY BE CITED AS: | Nash & Ors v Nash & Ors |
MEDIUM NEUTRAL CITATION: | [2021] VSC 266 |
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PRACTICE AND PROCEDURE – Application for payment of funds out of Court – Sale of development land – What is the proper construction of ‘sold jointly’ in the sale of development land agreement and deed of settlement – Whether the development land was ‘sold jointly’ – KDR Victoria Pty Ltd v JC Decaux Pty Ltd [2020] VSC 390.
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APPEARANCES: | Counsel | Solicitors |
| For the First Plaintiff | Mr D. G. Collins QC with Mr I. H. Percy | Anthony Raso & Associates |
| For the Defendants | Mr A. P. Dickenson | Succession Legal |
TABLE OF CONTENTS
Background......................................................................................................................................... 1
Deed of Settlement............................................................................................................................ 3
Sale of the Development Land Agreement................................................................................... 5
Contracts of sale................................................................................................................................. 6
Evidence............................................................................................................................................... 8
First plaintiff’s submissions............................................................................................................ 9
Fifth defendant’s submissions...................................................................................................... 13
Applicable principles...................................................................................................................... 16
Analysis.............................................................................................................................................. 18
What is the proper construction of ‘sold jointly’ in cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed?...................................................................................................................................... 18
Was the Development Land ‘sold jointly’ for the purposes of cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed, the Estate Land contract of sale and the Superannuation Land contract of sale?............................................................................................................................................... 23
Conclusion......................................................................................................................................... 30
HER HONOUR:
The million dollar question to be determined here is how the term ’sold jointly‘ should be construed in two instruments executed by the parties, being a deed of settlement and a sale of development land agreement. The construction of that term affects how net proceeds of the sale of land will be apportioned. If the first plaintiff succeeds in establishing the land has not been ’sold jointly‘ then his proportion of net sale proceeds will increase by $1.24 million. The fifth defendant is the active contradictor in this application and says that the land was ’sold jointly‘ and that the first plaintiff seeks a windfall.
There are two questions for determination at this stage of the proceeding:
(a) What is the proper construction of ‘sold jointly’ in cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed?
(b) Was the Development Land ‘sold jointly’ for the purposes of cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed, the Estate Land contract of sale and the Superannuation Land contract of sale?
Background
On 22 June 2006, Mr James Samson Nash (‘James’) died. James is survived by his wife, Joyce, his brother Donald (first plaintiff) and James’ three sons, David (first defendant), John (second defendant) and Trevor (second plaintiff).
James, by his last Will made on 10 February 2006, (a) appointed his brother Donald as executor and the trustee of his estate and provided that if Donald was unable to act, David, John, and Trevor were to be the executors and trustees of the estate; and (b) gave the whole of his estate to his executor on trust to be known as the James Samson Nash Trust fund (‘the Trust’).
The Will provided that the Trust would be governed by provisions including that: the ‘beneficiaries’ would include Joyce, David, John, Trevor and Donald and the trustee should divide the net income and capital of the Trust Fund between such of the beneficiaries they think fit.
Donald later renounced probate.
On 6 March 2007, probate of James’ Will was granted to David, John, and Trevor as joint trustees (‘the Estate Trustees’).
Disputes arose concerning distribution of the deceased estate. As discussed further below, a deed of settlement was executed. However, now there is a dispute about how that deed should be construed. More particularly, this proceeding concerns a dispute about how the sale proceeds of three parcels of land will be distributed (collectively, ‘the Development Land’). The Development Land is comprised of the land at 705-775 Princes Highway (volume 9002 folio 660) and 76-156 Canterbury Road, Lara (volume 9000 folio 992) (together, ‘the Estate Land’) and the land at 785–805 Canterbury Road, East Lara (volume 9925 folio 167) (‘the Superannuation Land’).[1] The Development Land is depicted in figure 1 below save for the quadrangle abutting Princes Highway.[2]
[1]The properties’ street numbers are not consistent in the Deed and Sale Agreement. The correct street numbers along with the volume and folio details are specified in the contracts of sale.
[2]Extracted from ‘Figure 2 – Aerial Plan’ in the Planning Report prepared on behalf of Charter Keck Cramer by Tract Consultants Pty Ltd dated 9 November 2018 is exhibited to affidavit of Amy Beth Fisher sworn on 30 October 2020 (‘Fisher affidavit’) as exhibit ‘ABF-4’, 11.
Figure 1 Aerial Plan of 705-755 Princes Highway, Lara
Deed of Settlement
On 30 November 2017, the Deed of Settlement (‘Deed’) was executed.[3] The recitals record the following.
[3]Deed of Settlement dated 30 November 2017 is exhibited to the affidavit of Anthony Leo Raso sworn on 13 October 2020 (‘Raso affidavit’) as exhibit ‘ALR-1’. The Deed of Settlement is also sch 1 to the Sale of Land Development Agreement.
Disputes concerning the disposition, partition and sale of land
…
V.The following land is now owned by the Estate Trustees and Donald as tenants in common in equal shares, and was previously owned by James and Donald as tenants in common in equal shares:
…
3.705-835 Princes Highway, Lara being the land described in Certificate of Title volume 9002 folio 660 (705-835 Princes Highway, Lara);
4.[705-785] Canterbury Road, Lara being the land described in Certificate of Title volume 9925 folio 167 (Canterbury Road, Lara);
…
W.The David Nash Superannuation Trustees, the Trevor Nash Superannuation Trustee and the John Nash Superannuation Trustee are each proprietors as tenants in common of one undivided one third share in the land known as 785-805 Princes Highway, Lara being the land described in Certificate of Title volume 9000 folio 922 (the Superannuation Land).
X.The Superannuation Land, Lot 1 Princess Highway, Lara, 705-835 Princes Highway, Lara and Canterbury Road, Lara have potential for future development and it is believed that if two or more of these properties are sold together it is likely that a price which is greater than the total price obtained if they are sold separately will be achieved.
Clauses 6 and 7 follow.
Agreements for the sale of land
6.Donald, the Estate Trustees, the David Nash Superannuation Trustees, the Trevor Nash Superannuation Trustee and the John Nash Superannuation Trustee agree to jointly engage Charter Keck Cramer to act as their agents for the purpose of managing the sale either jointly or separately as they see fit the following land:
(a) The Superannuation Land;
(b) 705-835 Princes Highway, Lara; and
(c) Canterbury Road, Lara,
(collectively referred to as the Development Land), (the Sale of the Development Land Agreement).
7 (a) The Sale of the Development Land Agreement shall provide that Charter Keck Cramer is engaged and authorised to do all things necessary to manage and facilitate the sale of the Development Land, including:
(i) to engage estate agents and negotiate the terms of the engagement and authority of the_ estate agents for the marketing of the Development Land either jointly or separately;
(ii) to engage solicitors to provide advice, to prepare contracts of sale and certificates as required by s.32 of the Sale of Land Act and act on the sale of the Development Land;
(iii) to give instructions to the estate agents and solicitors concerning the reserve price for the sale of land, the terms on which the land is to be sold including price and any matters necessary in relation to the sale of the land;
(iv) that in the event that the Development Land is sold jointly, Charter Keck Cramer is to determine the apportionment of the sale price between the properties as experts, and their determination shall be final and binding on the parties;
(v) that in respect of any costs and expenses incurred jointly in respect of the Development Land, Charter Keck Cramer shall apportion such costs as referable to which parts of the Development Land as experts and their determination shall be final and binding on the parties; and
(b) each of the Estate Trustees, Donald, the David Nash Superannuation Trustees, the Trevor Nash Superannuation Trustee and the John Nash Superannuation Trustee agree to do all things reasonably necessary to facilitate the sale of the Development Land as managed by Charter Keck Cramer as requested by Charter Keck Cramer, and to provide all reasonable assistance and co-operation to Charter Keck Cramer to facilitate the sale of the Development Land; and
(c) all costs and expenses in relation to the sale of the Development Land, including the fees and disbursements of Charter Keck Cramer, shall be paid out of the proceeds of the sale of the Development Land.
…
12.Donald and the Estate Trustees shall each be entitled to receive one half of the net proceeds of the sale of the land which they are owners as tenants in common in equal shares upon settlement of the sale of the land.[4]
[4]Ibid (underline added).
Sale of the Development Land Agreement
On 19 October 2018, the Sale of the Development Land Agreement (‘Sale Agreement’) was executed.[5] The Background to it sets out:
• Pursuant to Deed of Settlement dated 30 November 2017 (“the Deed”) as annexed hereto in Schedule 1, the Registered Proprietors have agreed to jointly engage Charter [Keck Cramer Pty Ltd (‘Charter’)] to act as their agent for the purpose of managing the sale of the Development Land either jointly or separately as they see fit and to do all things necessary to manage and facilitate the sale of the Development Land.
• The Registered Proprietors have agreed that in the event the Development Land is sold jointly, Charter is to determine the apportionment of the sale price of the Development Land between the Registered Proprietors and Charter’s determination shall be final and binding on the Registered Proprietors.
• Charter has agreed to provide professional services to the Registered Proprietors as outlined in Schedule 2, to the extent it relates to the Development Land, on the terms and conditions detailed in this Agreement.
[5]Exhibit ‘ABF-1’ to the Fisher affidavit (emphasis in original).
The Sale Agreement defined the following terms as:
Contract means any agreement entered into between the Registered Proprietors and a purchaser for the sale of all, or any parcel, of the Development Land during the Term of this Agreement.
Development Land means the Estate Land and the Superannuation Land.
Estate Land means
• 705-785 Princes Highway, Lara being the parcel of Land known as Lot 2 and described in Certificate of Title Volume 9002 Folio 660 (“705-785 Princes Highway”);and
• 76 Canterbury Road. Lara being the parcel of land described in Certificate of Title Volume 9925 Folio 167 (”Canterbury Road, Lara”).
…
Settlement means the completion of a Contract and “settled” has a corresponding meaning.
…
Superannuation Land means the following:
• 785-805 Princes Highway Lara being the parcel land prescribed in Certificate of Title Volume 9000 Folio 922
Clause 11 of the Sale Agreement is relevant and follows.
11 SETTLEMENT MONEYS
a) In the event the parcels of the Development Land are settled separately, the net proceeds of the sale of each parcel of the Development Land shall be apportioned by Charter amongst the Registered Proprietors in accordance with their relevant holdings and deposited into their respective Legal Practitioners’ Trust Accounts, the details of which are to be provided to Charter; and
b) In the event that all of the Development Land is sold jointly, the net proceeds of the sale of the Development Land shall be apportioned by Charter in accordance with Clause 7(iv) of the Deed and deposited into the respective Legal Practitioners’ Trust Accounts.[6]
[6]The reference to cl 7(iv) of the Deed in cl 11(b) of the Sale Agreement is evidently intended to refer to cl 7(a)(iv) of the Deed (underline added).
Contracts of sale
On 28 June 2019, two contracts of sale were executed with the same purchaser: one for both parcels of land comprising the Estate Land (‘Estate Land contract of sale’)[7] and the other for the Superannuation Land (‘Superannuation Land contract of sale’).[8]
[7]Contract of sale of 705-775 Princes Highway and 76–156 Canterbury Road, Lara executed on 28 June 2019 is exhibited to Raso affidavit as exhibit ‘ALR-2’.
[8]Contract of sale of 785–805 Canterbury Road, Lara (‘Superannuation Land’) executed on 28 June 2019 is exhibited to Raso affidavit as exhibit ‘ALR-3’.
Special condition 14.1 in the Estate Land contract of sale defines ‘related contract’ as:
Related Contract means the contract of sale for 785-805 Princes Highway, Lara, VIC 3212, from David James Nash and Linda Florence Nash as trustee of the D & L Nash Superannuation Fund (ABN 94 473 953 922), TC Nash Holdings Pty Ltd (ACN 125 988 641) as trustee of the TC Nash Superannuation Fund (ABN 43 875 859 013 and JA Nominees Pty Ltd (ACN 126 629 016) as trustee of the JN & KSW Superannuation Fund (ABN 79 580 709 662) (as vendors) to the Purchaser (as purchaser), dated on or about the date of this Contract.
Special condition 14.1 in the Superannuation Land contract of sale mirrors the ‘related contract’ clause above, as:
Related Contract means the contract of sale for 705-775 Princes Highway, Lara, VIC 3212 and 76-156 Canterbury Road, East Lara, VIC 3212 from Donald Nash, David James Nash, Trevor Clarence Nash and John Albert Nash (as vendors) to the Purchaser (as purchaser), dated on or about the date of this Contract.
Clause 37 of the Estate Land contract of sale follows.
37. Interdependency
37.1 This contract is interdependent with the Related Contract.
37.2 The parties agree that:
(a) if the Related Contract is not executed and exchanged contemporaneously with this contract, either party may terminate this Contract by giving written notice to the other party at any time before the Related Contract is executed and exchanged;
(b) a default by the Vendor under the Related Contract is a default by the Vendor under this contract;
(c) a default by the Purchaser under the Related Contract is a default by the Purchaser under this contract; and
(d) if the Related Contract is rescinded or te1minated for any reason then this contract will simultaneously be rescinded or terminated without any further action or notice by either party.
…
37.4 Settlement and all actions regarding settlement under the Related Contract will be deemed to take place simultaneously and no delivery or payment will be deemed to have been made until all deliveries and payments under this contract and the Related Contract due to be made at or immediately after settlement have been made.
37.5The Purchaser’s satisfaction of special condition 38.1(d) under this Contract is deemed to be satisfaction by the Purchaser of the corresponding special condition in the Related Contract.
Clause 38 of the Superannuation Land contract of sale follows:
38. Interdependency
38.1 This contract is interdependent with the Related Contract.
38.2 The parties agree that:
(a) if the Related Contract is not executed and exchanged contemporaneously with this contract, either party may terminate this Contract by giving written notice to the other party at any time before the Related Contract is executed and exchanged;
(b) a default by the Vendor under the Related Contract is a default by the Vendor under this contract;
(c) a default by the Purchaser under the Related Contract is a default by the Purchaser under this contract; and
(d) if the Related Contract is rescinded or te1minated for any reason then this contract will simultaneously be rescinded or terminated without any further action or notice by either party.
…
38.4 Settlement and all actions regarding settlement under the Related Contract will be deemed to take place simultaneously and no delivery or payment will be deemed to have been made until all deliveries and payments under this contract and the Related Contract due to be made at or immediately after settlement have been made.
38.5The Purchaser’s satisfaction of special condition 39.1(d) under this Contract is deemed to be satisfaction by the Purchaser of the corresponding special condition in the Related Contract.
The deposits were paid under both contracts. The balance of the purchase price under both contracts is payable on the date of settlement, namely on 28 June 2022.
Evidence
The first plaintiff relies on an affidavit of his solicitor, Mr Anthony Leo Raso, sworn on 13 October 2020.
The defendants rely on an affidavit of their solicitor, Ms Amy Beth Fisher, sworn on 30 October 2020 and the affidavit of Mr Nicholas John Ashton, national executive director of Charter Keck Cramer (‘Charter’), sworn on 4 August 2020.
The parties referred to the following correspondence in their oral submissions:
(a) an email dated 13 February 2019, from Mr Josh Baldacchino of Baker McKenzie, solicitor for Charter, to Mr Tom Wallace of Charter, advising that ‘it will not be possible to prepare one single contract of sale for all three properties’;[9]
[9]Exhibit ‘ABF-3’ to the Fisher affidavit (emphasis in original).
(b) a letter dated 28 May 2019, from Charter to Mr Raso and Ms Fisher, containing a recommendation for its preferred purchaser;[10]
[10]Exhibit ‘ABF-9’ to the Fisher affidavit.
(c) a letter dated 4 June 2019, from Mr Raso to Mr Wallace, stating, amongst other things, that ‘[a]t this stage, my clients are looking at a minimum of a selling price which will be in excess of $30 million plus GST’;[11]
[11]Exhibit ‘ABF-10’ to the Fisher affidavit, 4.
(d) a letter dated 11 June 2019, from Mr Wallace to Mr Raso and Ms Fisher, providing his opinion of apportionment based upon a hypothetical sales price;[12]
(e) an emailed dated 25 June 2019, from Ms Nicole Khoo of Sladen, solicitor for the purchaser, to Mr Baldacchino, stating the purchaser’s position as to the apportionment of the contract price for each parcel of land comprising the Development Land;[13] and
(f) the marketing material of the land.[14]
[12]Exhibit ‘ALR-4’ to the Raso affidavit, 4.
[13]Exhibit ‘ABF-14’ to the Fisher affidavit.
[14]Exhibit ‘ABF-6’ to the Fisher affidavit.
First plaintiff’s submissions
As two separate contracts of sale were entered into for the Development Land, the Superannuation Land was not ‘sold jointly’ with the Estate Land. Therefore cl 7(a)(iv) of the Deed does not apply.
As to how ‘sold jointly’ should be construed here, the following submissions are made.
Firstly, the words must be given their ordinary meaning, be considered objectively and in context. The Court should assume that the parties intended to produce a commercial result.
Secondly, the Sale Agreement and the Deed must be construed together. The Sale Agreement does not purport to vary the Deed nor is it expressed as a supplementary deed. The Deed is referred to in the recital and annexed to the Sale Agreement as sch 1. Clause 2 provides the Sale Agreement and the Deed ‘constitutes the entire agreement and understanding of the parties with respect to the subject matter’. By implication, the provisions of cl 7 of the Deed are incorporated into the Sale Agreement.
Thirdly, cl 7 of the Deed refers to the Sale Agreement annexed. Clause 7(a)(i) of the Deed contemplates that each of the properties comprising the Development Land might be sold either jointly with one of the other properties or separately. Clause 11 of the Sale Agreement contemplates two alternatives, either: cl 11(a) where the parcels of land are ‘settled separately’ or cl 11(b) where the land is ‘sold jointly’.
The definition of ‘settlement’ in the Sale Agreement means ‘completion of a Contract and “settled” has a corresponding meaning’. Completion of the contract means payment of the purchase price.
Where the parcels of land are sold by separate contracts, each providing for the sale price of the respective parcels of land, then the land cannot be regarded as being ‘sold jointly’ as otherwise there would be a conflict between cls 11(a) and (b). Accordingly, the Development Land would be ‘sold jointly’ where there is a single purchaser (or more than one purchaser, purchasing as tenants-in-common or joint tenants) entering into a single contract with a total sale price for all of the Development Land. ‘Joint’ can be distinguished from ‘several’. ‘Joint’ contemplates either a joint or shared obligation or a joint or shared entitlement.
Fourth, cl 7(a)(iii) of the Deed provides Charter with the authority to give instructions to estate agents and solicitors on the terms on which the land is to be sold, including price. Clause 7(a)(iii) gives Charter the power to enter into contracts with separate prices. There is no separate agreement as to price. The sale price could only be known once the contracts were signed. It would be odd to provide Charter with the power in cl 7(a)(iii) and for land sold by separate contracts to then be considered a joint sale for the purpose of apportioning the sale price per cl 7(a)(iv).
Fifth, recital X in the Deed is relevant to the purpose as it contemplates the land might be sold together, creating the possibility that there may be a total price for land owned by different parties without an apportionment. Clause 7(a)(iv) of the Deed and cl 11(b) of the Agreement therefore have the purpose of enabling apportionment where it is necessary because there is not an agreed price in respect of the separate parcels of land. This would be the case if the parcels of land were sold separately pursuant to different contracts.
Sixth, the term ‘sale price’ in cl 7(a)(iv) indicates that the clause was intended to apply when more than one of the properties comprising the Development Land were sold for the one price. In that case, the single price needed to be apportioned, at least if one of the properties was the Superannuation Land which had different vendors than the other two properties, otherwise there would be no need for cl 7(a)(iv).
Clause 7(a)(iv) has no work to perform in respect of the sale of the Superannuation Land sold by a separate contract for a price agreed to be paid for it alone. Clause 11(b) limits the circumstances in which the ‘net proceeds of sale’ shall be apportioned by Charter to where ‘all of the Development Land is sold jointly’. Accordingly, there is no reason why two owners of separate properties cannot jointly sell them to a third party and any practical difficulty is overcome in circumstances where, as here, there is an agreement as to how the proceeds of the sale will be apportioned.
If the defendants’ contentions were accepted, the sale price of the Superannuation Land for the purposes of Capital Gains Tax (‘CGT’) and Stamp Duty would be inconsistent with the apportionment which would determine the actual amount to be received. The construction which avoids those inconsistencies and uncertainties is to be preferred. It would be a commercial nonsense to have different contract prices agreed for the sale of land by the proprietors of that land and yet have a different apportionment of the sale price.
Seventh, joint marketing of the Development Land and negotiation of an aggregate price does not create a joint sale. There could be no joint sale when no sale was made. The Development Land is not ‘sold’ until a contract, or contracts, of sale is executed. A reasonable business person in the position of the parties would have understood that cl 7(a)(iv) would only apply to the sale of more than one of the properties comprising the Development Land by the same contract, for a sale price which was not apportioned between the properties. In that case, it would be necessary to apportion the sale price between the respective properties and that is the evident purpose of the clause.
Clause 7 of the Deed must be considered along with other provisions in the Deed and its evident purpose. For example, cl 12 provides:
Donald and the Estate Trustees shall each be entitled to receive one half of the net proceeds of the sale of land of which they are owners as tenants in common in equal shares upon settlement of the sale of the land.
This clause supports the construction of cl 7(a)(iv) because it reinforces the intent of the Deed that the first plaintiff and the Trustees are each entitled to one half of the net proceeds of sale of land that they own as tenants-in-common.
The land here was not ‘sold jointly’ for the following reasons.
Firstly, applying the construction above, there was not a global sale price or a single sale. Instead there were two sales pursuant to two contracts of different parcels of land. The settlement under each contract involves different obligations between different parties notwithstanding the interdependency clauses. Although interdependent, the contracts contained individual prices and therefore do not require apportionment.
Secondly, each of the three properties comprising the Development Land was not ‘sold’ until the contract of sale by which it was sold had been executed. The Superannuation Land was sold by a contract of sale in which it was the only land sold. The only parties were the registered proprietors of the Superannuation Land and the purchaser. Consequently, the Superannuation Land and other properties comprising the Development Land, were not ‘sold jointly’ as the registered proprietors under each contract of sale were not parties to the other contract of sale. In answer to the Court’s question, if the land was ‘sold jointly’, there would be a single purchaser, a common vendor and a global sale price. Here, there was no common vendor.
Thirdly, as the properties were not ‘sold’ until the contracts were executed, there cannot have been a joint sale on the basis that the Development Land was marketed jointly, and an aggregate price negotiated prior to the separate properties being sold pursuant to separate contracts.
Two points are made about subsequent events.
Firstly, Charter’s opinion of apportionment is irrelevant to the proper distribution of proceeds of sale of the Development Land because the land was not ‘sold jointly’. Clause 7 of the Deed authorised Charter to do all things necessary to facilitate the sale of the Development Land, including the authority to give instructions on terms including the price pursuant to cl 7(a)(iii). The sale price for the parcels of land comprising the Development Land was agreed by Charter in accordance with their authority pursuant to cl 7(a)(iii).
Secondly, the opinion expressed by Baker McKenzie that the Development Land could not all be sold under one contract is not accepted. The defendants have not referred to any principle or authority to support the proposition that a single contract could not have been executed. Nor is there any expert evidence about conveyancing practice.
Fifth defendant’s submissions
As to how ‘sold jointly’ should be construed here, the following submissions are made.
Firstly, ‘sold jointly’ should be construed in the context of recital X of the Deed. It is clear from recital X that the parties were aware that they would all be better off if the land were to be sold together. Accordingly, the Court should infer that the purpose of the apportionment provision in cl 7(a)(iv) of the Deed is that if there is a sale of land together, and the price is greater than it would be for separate sales, all of the parties should benefit fairly from the proportionate increase in the value of their land which has been brought about by selling the land together.
Secondly, the parties provided in the Deed that they would engage Charter and it would determine the apportionment of the sale price: cl 7(a)(iv). The Deed itself did not provide for an apportionment. They agreed to engage Charter and, as part of that, in the event that there was a sale of the land jointly, Charter would do the apportionment. The method of apportionment by Charter is found in cl 11 of the Sale Agreement.
Thirdly, ‘sold jointly’ in cl 11(b) is consistent with the Deed and simply means ‘sold together’. ‘Jointly’ is defined as an adverb meaning ‘together … in combination’[15] and ‘in common’.[16] ‘Sold’ does not mean settled. A reasonable person entering into the Deed would not have understood the term ‘sold jointly’ to be concerned with the conveyancing mechanics of the sale of the Development of Land. Rather, they would have understood ‘sold jointly’ to be concerned with the commercial reality of whether the land was sold together and in common to the same purchaser. The parcels of land would be ‘sold jointly’ if they were sold to the same purchaser in multiple contracts of sale which contain interdependency clauses.
[15]Henry Cecil Wylde, The Universal Dictionary of the English Language (1989, Wandsworth).
[16]Webster’s Compact English Dictionary (2007, Geddes & Grosset).
Fourth, the Deed is not a commercial agreement. It is an attempt to resolve a family dispute. Ultimately, it is to resolve a dispute over the distribution of a deceased estate. The Deed must be construed mindful of the parties’ purpose to resolve that dispute to their mutual benefit, and to sever ties by reason of joint ownership of the land. The Deed is between a commercial arrangement and a lay one. It is relevant that the parties received legal advice. The question is what an objective person entering into the Deed would have understood ‘sold jointly' means. The intention of the Deed is to get the best outcome for everyone, not give a windfall to someone. Restricting the meaning of ‘sold jointly’ to ‘sold in one contract’ does not accord with the parties’ intentions. Moreover, the Sale Agreement does not state if land is ‘sold in one contract’ then there is no apportionment.
The land here was not ‘sold jointly’ for the following reasons.
Firstly, applying the construction above to the sale of the Development Land, the parcels of land were ‘sold jointly’ notwithstanding the subsequent breakdown in the price across the two contracts of sale. The Deed and Sale Agreement did not place any limitation on the concept of ‘sold jointly’ and none should be implied. During the sale process, the parcels of land were marketed together, each offer was a global figure for all of the Development Land, the parties conducted negotiations on the basis of a sale of all of the Development Land to the same buyer, and the successful bid was for all of the Development Land. The letters exchanged on behalf of the parties evidence an agreement between the vendors and purchaser to sell the land together for an agreed price. It was agreed the purchaser would apportion the ‘contract price’.[17]
[17]Exhibit ‘ABF-14’ to the Fisher affidavit.
Secondly, the only reason separate contracts of sale were prepared was because the solicitors for Charter advised that it was not possible to prepare a single contract. As to the ultimate division of the purchase price between the two contracts of sale, this was a requirement of the purchaser. The position taken by the first plaintiff ignores the facts and seeks to gain a commercial advantage from the need for separate documents to record the sale and from the purchaser’s request for different prices to those assessed by Charter. Charters’ view is that the values in the contracts do not reflect the value of the land. Charters prepared an opinion on apportionment which contains different values. The first plaintiff agreed to be bound by the apportionment of Charter and he is so bound.
The contracts of sale should be looked at in context. The sale prices recorded in those documents ought to be looked at as one sale price for the purposes of the Deed and the Sale Agreement. Notwithstanding the two contracts of sale, the land was ‘sold jointly’ within the meaning of cl 11 of the Agreement and cl 7 of the Deed. In answer to the Court’s question, if the land was ‘sold separately’, each lot would be sold for a separate price individually agreed. The lots would be marketed and sold separately. That is not what occurred here.
Thirdly, the Development Land was sold together as it was sold to the same purchaser for a global price on terms that provided that if one contract did not settle, the other contract could not settle. Each contract of sale provided that it was ‘interdependent’ with the other contract of sale. The contracts were executed on the same day, namely 28 June 2019, and both provided for payment of a 10% deposit on the day of sale, a further 10% on the first anniversary and the payment of the balance at settlement, namely 3 years after the day of sale. Critically, each contract provided that it was ‘interdependent’ with the other: cls 37 and 38 of the contracts of sale, respectively.
In reply, it is denied that Charter was authorised to determine the price for each property under the Deed. Instead, Charter was engaged as an agent to give instructions to estate agents and solicitors concerning the reserve price and the terms on which the land was to be sold after receiving instructions from the registered proprietors. It is preposterous to suggest that Charter itself determined the price. Indeed, it was an offer for a global sale price for the Development Land which was accepted.
Applicable principles
The parties are in agreement as to the applicable principles:[18]
[18]KDR Victoria Pty Ltd v JC Decaux Pty Ltd [2020] VSC 390 (3 July 2020), [17] (per Riordan J).
To construe the terms of a commercial contract, the Court asks, ‘what a reasonable businessperson would have understood those terms to mean’.[19] To answer that question, ‘the reasonable business person [is] placed in the position of the parties’,[20] and the Court applies the following principles:
[19]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656–7 [35] (French CJ, Hayne, Crennan, and Kiefel JJ) (‘Woodside’); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, 116 [47] (French CJ, Nettle and Gordon JJ) (‘Mount Bruce’).
[20]Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544, 551 [16] (Kiefel, Bell and Gordon JJ).
(a)The terms are construed objectively and the subjective intentions of the parties are irrelevant.[21]
[21]Ibid.
(b)The objective approach requires reference to the text and its ordinary meaning, together with:
(i)the context, being the entire text of the contract including matters referred to in the text; and
(ii) the purpose.
These matters will ordinarily be identified by reference to the contract alone,[22] but evidence of mutually known objective background circumstances relevant to the purpose is admissible ‘no matter how clear the “ordinary meaning” of the words’.[23] Identification of purpose may allow admission of evidence of the genesis of the transaction, the background, the context and the market in which the parties are operating.[24]
[22]Eureka Operations Pty Ltd v Viva Energy Australia Ltd [2016] VSCA 95, [45]–[47] (Santamaria, Ferguson and McLeish JJA); Mount Bruce (2015) 256 CLR 104, 116 [46]–[48] (French CJ, Nettle and Gordon JJ); Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd (2012) 45 WAR 29, 50 [76] (McLure P, with whom Newnes JA and Le Miere J agreed) (‘Hancock’).
[23]Lopes v Taranto [2018] VSCA 288, [66]–[72] (Kyrou, McLeish and Hargrave JJA), quoted with approval in Canale v G W & R Mould Pty Ltd [2018] VSCA 346, [45] (Whelan and McLeish JJA with whom Tate JA agreed). Cf Hancock (2012) 45 WAR 29, 50 [76] where the Western Australian Court of Appeal took the contrary view.
[24]Mount Bruce (2015) 256 CLR 104, 116–7 [46], [49] (French CJ, Nettle and Gordon JJ).
(c)Unless a contrary intention appears in the contract, the court is entitled to approach the task of interpretation on the assumption that the parties intended to produce a commercial result, and should construe it so as to avoid a commercial nonsense.[25] However, the court does not weigh the commerciality of the agreement, and business commonsense is a topic on which reasonable minds may differ.[26]
(d)If, after completion of this process, the language used in the contract ‘is ambiguous or susceptible of more than one meaning’, then evidence of surrounding circumstances external to the contract (‘surrounding circumstances’) is admissible to assist with the interpretation of the contract.[27]
(e)Surrounding circumstances are:
events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties are operating.[28]
(f)However, ‘evidence of the parties’ statements and actions reflecting their actual intentions and expectations’ is inadmissible.[29] Although evidence of prior negotiations is admissible to establish objective background facts known to both parties and the subject matter of the contract, evidence of negotiations reflective of actual intentions and expectations is not receivable.[30]
(g)Post contractual conduct is inadmissible to construe the terms of the contract.[31] However, the parties’ subsequent communications may be relevant to determine whether the parties intended to enter into a binding contract.[32]
[25]Woodside (2014) 251 CLR 640, 656–7 [35] (French CJ, Hayne, Crennan, and Kiefel JJ).
[26]Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181, 198 [43] (Gleeson CJ, Gummow and Hayne JJ).
[27]Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352 (Mason J) (‘Codelfa’). See Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45, 62–3 [39] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); Western Export Services Inc v Jireh International Pty Ltd (2011) 282 ALR 604, 605 [2]–[5] (Gummow, Heydon and Bell JJ); Mount Bruce (2015) 256 CLR 104, 116–7 [46]–[49], [52] (French CJ, Nettle and Gordon JJ).
[28]Mount Bruce (2015) 256 CLR 104, 117 [50] (French CJ, Nettle and Gordon JJ).
[29]Ibid.
[30]Codelfa (1982) 149 CLR 337, 352 (Mason J); Golf Australia Holdings Ltd v Buxton Construction Pty Ltd [2007] VSCA 200, [28] (Nettle and Redlich JJA, with whom Neave JA agreed). As Gordon J said in Construction Forestry Mining Energy Union v Bovis Lend Lease Pty Ltd [2008] FCA 1669, [15]: ‘the back-and-forth of the parties in concluding the transaction’ is not considered in construing the document.
[31]FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, 350.
[32]Queensland Phosphate Pty Ltd v Korda [2017] VSCA 269, [37] (Tate, Beach JJA and Sifris AJA).
Analysis
What is the proper construction of ‘sold jointly’ in cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed?
What would a reasonable business person placed in the position of the parties have understood the term ‘sold jointly’ in the Sale Agreement and Deed to mean?
The dictionary definition of ‘jointly’ is ‘together; in common’.[33] I find the ordinary meaning of the term ‘sold jointly’ means ‘sold together’. I find a reasonable business person in the position of the parties to the Deed would construe the terms according to their ordinary meaning. Moreover, such a construction is supported by the context of the terms and the purpose of the Deed and Sale Agreement in which they arise.
[33]Macquarie Dictionary (online) ‘jointly’.
I reject the first plaintiff’s contention that the term ‘sold jointly’ should be construed as settlement of the sale of land in one contract with a common purchaser and vendors. That is more restrictive than the ordinary meaning discussed above. Moreover, it is inconsistent with the purpose and context of the term in the Deed and Sale Agreement.
Turning now to the purpose of the Deed and Sale Agreement. The Deed was executed first in time.
The recitals in the Deed record a range of disputes concerning James’ estate including the realisation and disposition of assets. Recital FF records that the parties have agreed to settle the disputes on terms and conditions in the Deed.
In respect of the sale of the Development Land, recital X is revealing. It refers to the potential for future development of the land. Recital X records the parties’ ‘believed that if two or more of these properties are sold together it is likely that a price which is greater than the total price obtained if they are sold separately will be obtained’.
Accordingly, the provisions of the Deed relevant to the sale of the Development Land were for the purpose of resolving the existing dispute between the parties and producing a commercial result by sale of the Development Land for the greatest possible price. Clauses 6 and 7 of the Deed are operative of that purpose.
Clause 6 provides for the parties to jointly engage Charter to act as their agents for the purpose of managing the sale of the land either jointly or separately.
Clause 7(a) engages and authorises Charter to do all things necessary to manage and facilitate the sale of the land. It is directed to a final resolution of disputes between the parties in a manner that maximises financial benefits from sale of the Development Land. As recited above, the sub-paragraphs to cl 7 state that this includes Charter undertaking a range of actions including: (i) engaging estate agents to market the land either separately or together, (ii) engaging solicitors to prepare contracts and act on the sale, (iii) giving instructions to solicitors and estate agents regarding reserve price and terms of sale, (iv) where the land is ‘sold jointly’, to determine an apportionment as experts and the parties agree that determination is to be binding and final, and (v) apportioning any joint costs and expenses as experts and the parties agree that determination is to be binding and final.
The remainder of cl 7 appears focused on realising sale of the land in a manner that minimises any further disputes. Clause 7(b) of the Deed provides for the parties agreeing to do all things necessary to facilitate the sale and provide all reasonable assistance and co-operation with Charter for that purpose. Clause 7(c) of the Deed provides that all costs and expenses in relation to the sale of the Development Land shall be paid out of the sale proceeds.
Clause 8 is a process by which further land may be added to the land being sold in cl 7. Clause 9 provides for the sale of other land, described as the ‘Remaining Land’. It provides that those parcels of land may be sold either jointly or separately. By cl 10, Charter is engaged to manage and facilitate the sale of that land. By cl 11, there is agreement as to what will occur in the period before settlement with respect to the Remaining Land that is co-owned by Donald and the Estate Trustees as tenants in common in equal shares. By cl 12, Donald and the Estate Trustees are each entitled to receive one half of the net proceeds of the sale of land which they own as tenants in common in equal shares.
Pausing there, I reject the first plaintiff’s submission that cl 12 supports their interpretation of ‘sold jointly’. Clause 12 appears to relate to the Remaining Land. This is necessary as there is no provision for Charter to do an apportionment with respect to sale proceeds of the Remaining Land. Even if I am wrong on this, it would not override the specific provision in cl 7(a) in respect of the Development Land.
By cl 35 of the Deed, there are mutual releases in relation to all matters set forth in the Deed. By cl 36 of the Deed, the parties may plead it as a bar to proceedings. Clause 39 of the Deed records that the parties were legally advised when entering into the Deed.
Before moving to the Sale Agreement, I will address the first plaintiff’s submission that ‘sale price’ in cl 7(a)(iv) of the Deed refers to a single sale price between the properties and therefore cl 7(a)(iv) cannot apply where individual prices for the properties have been agreed. I do not accept that submission. The clause is predicated on the land being ‘sold jointly‘ or sold together. The question is whether or not the land has been sold jointly. If it is, then Charter does the apportionment. In circumstances where the land is sold jointly, it matters not that individual sale prices have been agreed. I am reinforced in this by cl 33(a) of the Deed. It provides that unless context or subject matter otherwise require, a reference to the singular includes a reference to the plural.
The Sale Agreement was executed approximately 11 months after the Deed. It gives effect to the agreement reached in the Deed. The statement in the Background to the Sale Agreement provides the purpose of the Sale Agreement (underlined) is to engage Charter jointly to manage and facilitate the sale and, if there is a joint sale, to apportion the sale price.
Pursuant to Deed of Settlement dated 30 November 2017 (“the Deed”) as annexed hereto in Schedule 1, the Registered Proprietors have agreed to jointly engage Charter to act as their agent for the purpose of managing the sale of the Development Land either jointly or separately as they see fit and to do all things necessary to manage and facilitate the sale of the Development Land.
The Registered Proprietors have agreed that in the event the Development Land is sold jointly, Charter is to determine the apportionment of the sale price of the Development Land between the Registered Proprietors and Charter’s determination shall be final and binding on the Registered Proprietors.
The Background above demonstrates that the Sale Agreement is to be read alongside the Deed. Clauses 2 and 4 of the Sale Agreement recognise that the Deed forms part of the agreement:
2 AGREEMENT
This Agreement and the Deed constitutes the entire agreement and understanding of the Parties with respect to its subject matter and supersedes all prior oral and written communication between the Parties with respect hereto. …
…
4 TERM
This Agreement shall be deemed to have commenced on 17 January 2018 and will continue until settlement of the Development Land and all other functions devolved to Charter by the Deed have taken place or until it is terminated in accordance with Clause 5.
Clause 11(b) of the Sale Agreement itself expressly refers to cl 7(a)(iv) of the Deed as setting out the manner in which the net proceeds of the sale of the Development Land are to be apportioned by Charter in the event the Development Land is ‘sold jointly’. Therefore, the Deed and the Sale Agreement must be read together.
Turning now to context. Clause 1 of the Sale Agreement contains definitions. As outlined above, ‘Contract’ means ‘any agreement entered into between the Registered Proprietors and a purchaser for the sale of all, or any parcel, of the Development Land during the Term of this Agreement’. Unsurprisingly, ‘sale’ is not defined. ‘Settlement’ is defined as ‘the completion of a Contract and “settled” has a corresponding meaning’. Settlement is the final step between vendor and purchaser in the sale process. Consistently with that, cl 4 provides that the term of the Sale Agreement will continue until settlement of the Development Land and all other functions devolved to Charter by the Deed have taken place (or until terminated in accordance with another clause).
Clause 7 states that Charter agrees to provide services set out in sch 2. It refers to a proposal to provide property advisory and transaction management services.
Clause 9 provides, amongst other things, that the registered proprietors of the Development Land will ‘provide all reasonable assistance and co-operation to Charter to facilitate the sale of the Development Land’.
Clause 10 provides, amongst other things, that costs and expenses in relation to the Development Land will be paid out of any deposit monies released and if there are any outstanding at settlement, they are to be paid out of the proceeds of sale.
Clause 11 of the Sale Agreement contemplates that the parcels of land making up the Development Land could either be ‘settled separately’ or ‘sold jointly’. These two options must be read together with cl 7 of the Deed. As will be recalled, they provide for the land being sold jointly or sold separately. Consistently with this context, ‘sold jointly’ should not be given the restrictive meaning contended by the first plaintiff, namely settled in one contract of sale. The option of selling the land together could be frustrated if cl 11(b) were read as applying only in circumstances where a single of contract of sale is executed.
The first plaintiff submitted that it would be a ‘commercial nonsense’ to read ‘sold jointly’ in a manner where there could be separate contract prices agreed with a purchaser for sale of the parcels of the Development Land and yet a different apportionment of the sale price between vendors. I reject that submission. As discussed above, recital X of the Deed recognises that there is likely to be a higher price if the land is sold together rather than separately. In other words, the sum is greater than the individual parts. Clause 7(a)(iv) provides that Charter will determine apportionment ‘as experts’. Although not determinative here, as things materialised, Charter did go onto provide an apportionment which took into account various factors such as whether or not the future use of the land was likely to be industrial, commercial or residential, or a blend. The effect of cl 7(a)(iv) was for the vendors to outsource the apportioning exercise to Charter to avoid a dispute between themselves in the event that the land was sold jointly. They agreed to rely upon Charter’s expertise to do the apportionment. As discussed above, they agreed that Charter’s determination ‘shall be final and binding upon the parties’.
The first plaintiff submits it would be commercial nonsense to have separate prices for sale and apportionment of the sale proceeds because of the consequences for CGT and Stamp Duty. There was no evidence to support this submission.
Was the Development Land ‘sold jointly’ for the purposes of cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed, the Estate Land contract of sale and the Superannuation Land contract of sale?
Having found that ‘sold jointly’ in cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed is properly construed to mean the parcels of land comprising the Development Land were ‘sold together’ to the one purchaser, the next issue to determine is whether, pursuant to the two contracts of sale executed, the Development Land was ‘sold jointly’ for the purposes of cl 11(b) of the Sale Agreement such that the net proceeds of the sale of the Development Land should be apportioned by Charter in accordance with cl 7(a)(iv) of the Deed.
The first plaintiff objected to the fifth defendant’s reliance on evidence relating to the sale process and other events subsequent to the execution of the Sale Agreement. However, at the hearing, counsel for the first plaintiff conceded that while those materials could not be relied upon to construe the Sale Agreement and the Deed they could be relied upon to determine events that occurred and how the proceeds of sale under the contracts of sale are to be distributed.
Mr Nicholas Ashton of Charter deposed that Charter engaged various consultants to facilitate the sale of the Development Land, including: estate agents, land surveyors, civil engineers, environmental consultants, a town planner and Baker McKenzie to acts as solicitors.[34] Biggin & Scott were appointed as estate agents for the sale of the Development Land. Charter and Biggin & Scott advised that the three parcels of land comprising the Development Land should be sold together.[35]
[34]Ashton affidavit, [7].
[35]Ibid [31].
An email dated 13 February 2019, from Mr Josh Baldacchino of Baker McKenzie to Mr Tom Wallace of Charter, stated:
2. Identity of the vendors for the Development Land
Donald Nash and David, John and Trevor Nash (as personal representatives of James Nash) are the registered proprietors of both Lot 2, 705-775 Princes Highway, Lara and 76-156 Canterbury Road, East Lara. This is in line with the previous Nash properties we have been engaged to sell.
We note however that the property at 785-805 Princes Highway, Lara (described as Superannuation Land in the Supreme Court Deed) is owned by David James Nash and Linda Florence Nash (1/3), T C Nash Holdings Pty Ltd (1/3) and J A N Nominees Pty Ltd (1/3).
Given the different vendors for the separate pieces of land, it will not be possible to prepare one single contract of sale for all three properties. Instead, we propose to prepare one contract of sale for Lot 2, 705-775 Princes Highway, Lara and 76-156 Canterbury Road, East Lara (being owned by the Nash family members) and a separate contract of sale for the Superannuation Land. The practical impact of this is that the sale price of the Land will need to be apportioned between the two contracts of sale. Sure, happy with this.
If you require that we provide a separate Contracts of Sale for each of the properties owned by the Nash family members (in particular, in case there are different purchasers for each of those 2 parcels of land), please let us know and we will do so.[36]
[36]Exhibit ‘ABF-3’ to the Fisher affidavit (emphasis in original, underline added).
From April 2019, the three parcels of land comprising the Development Land were marketed together through an expression of interest campaign. The marketing material of the land, referred to by the fifth defendant, is extracted as figure 2 below.[37]
Figure 2 Extract from marketing material
[37]Exhibit ‘ABF-6’ to the Fisher affidavit.
By letter dated 28 May 2019, Charter wrote to Mr Raso and Ms Fisher stating that the expression of interest campaign closed on 8 May 2019 and a second round of expressions of interest was conducted which closed on 17 May 2019.[38] The submissions from the second round were summarised by Charter identifying three parties as the most likely to acquire the property.
[38]Exhibit ‘ABF-9’ to the Fisher affidavit.
By letter dated 4 June 2019, Mr Raso wrote to Mr Wallace stating, amongst other things, that ‘[a]t this stage, my clients are looking at a minimum of a selling price which will be in excess of $30 million plus GST’.[39] It can be inferred from Mr Raso’s letter that the minimum selling price was for all of the Development Land being sold together.
[39]Exhibit ‘ABF-10’ to the Fisher affidavit, 4.
By letter dated 11 June 2019, Mr Wallace of Charter wrote to Mr Raso and Ms Fisher providing an opinion of apportionment for the Development Land (’11 June 2019 opinion’).[40] The letter commences:
In accordance with our formal Service Agreement between Nash Family Members (“Vendors”) and Charter Keck Cramer (“Charter”) for the Development Land, dated 19 October 2018, and pursuant to the Deed of Settlement dated 30 November 2017, Charter have been engaged to firstly act for the Vendors for the purpose of managing the joint sale of the “Development Land” as well as determine the apportionment of the sale price of the “Development Land” between the various parcels and registered proprietors...[41]
[40]Exhibit ‘ALR-4’ to the Raso affidavit.
[41]Ibid 1.
The letter then refers to cl 7(a)(iv) of the Deed before stating:
With the joint sale campaign currently underway, Charter now provide the following advice in relation to our determination as to the apportionment of the sale price of the “Development Land” between the various lots.[42]
[42]Ibid 2.
Under the heading ‘Hypothetical Opinion of Value’, Charter opines:
In order to understand the apportionment of value to each individual parcel which makes up the total combined site, we have for the purpose of our assessment assumed that the entire site has a hypothetical value of $30,000,000. Having regard to the sales evidence noted above, Charter has assessed a suitable Land Value rate (per Ha) to each of the parcels which reflects each allotments future use outcome.[43]
[43]Ibid 4.
The summary of that assessment provides the following (rounded) assessed values for each parcel of land comprising the development land:
(a) 705-775 Princes Hwy: $12,140,000
(b) 785-805 Princes Hwy: $8,800,000
(c) 76-156 Canterbury Road East $9,060,000[44]
[44]Ibid.
That section of the letter also includes the following:
With reference to Sale documents prepared by BakerMcKenzie for the sale of the combined site, we note that differing ownership structures across the three sites has resulted in two (2) contracts being prepared; the first relating to 705‑775 Princes Hwy & 76-156 Canterbury Rod [sic] East, whilst the second relating 785-805 Princes Hwy (“Super Land”). Under the scenario where the entire combined site achieves a sale price of say, $30m, our analysis herein suggests a sale price apportionment as follows: …[45]
[45]Ibid 5 (underline added).
A table then sets out the ‘apportionment as part of combined site value’ for the Estate Land at 70% and the Superannuation Land at 30%.
Following that campaign, by letter dated 17 June 2019, Charter recommended to Mr Raso and Ms Fisher the identity of the ultimate purchaser of the Development Land as being the ‘preferred party’ with whom the Vendors engage directly with in an effort to complete the transaction’.[46] The preferred party’s bid was summarised as including a ‘Price (final bid)’ of $30 million.[47]
[46]Exhibit ‘ABF-13’ to the Fisher affidavit.
[47]Ibid.
An email dated 25 June 2019, from the purchaser’s solicitor, Ms Khoo of Sladen, to Mr Baldacchino of Baker McKenzie, attached amended contracts of sale expressed to comprise ‘the final terms of our client’s final draft contract to purchase the Lara Properties (Final Offer)’.[48] The draft contracts were not in evidence, however, the email included the purchaser’s position as to the apportionment of the contract price for each of the parcels of land under the two contracts of sale.[49]
[48]Exhibit ‘ABF-14’ to the Fisher affidavit.
[49]Ibid.
On 28 June 2019, two contracts of sale were executed for the sale of the Development Land: the Estate Land contract of sale and the Superannuation Land contract of sale. Both contracts of sale were executed with the same purchaser.
The Estate Land contract of sale expressly apportions the total price payable under that contract between the land at 705-755 Princes Highway, Lara and 76-156 Canterbury Road, East Lara. While the Superannuation Land contract of sale, for the land at 785-835 Canterbury Road, Lara, stipulates the price to be paid for that parcel of land. Both contracts of sale contain a condition making each contract interdependent upon the other and deeming that settlement, and all actions regarding settlement under each contract, will be deemed to take place simultaneously. The division of the purchase price in the contracts is in accordance with those requested by the purchaser in Ms Khoo’s 25 June 2019 email.
It is clear from the process of the marketing and sale of the Development Land it was in contemplation that the properties were to be sold together. However, as a result of Mr Baldacchino advising that ‘it will not be possible to prepare one single contract of sale for all three properties’ in his 13 February 2019 email,[50] it was envisioned that, notwithstanding that the properties were to be sold together, the sale of the Development Land would be effected through two contracts of sale.
[50]Exhibit ‘ABF-3’ to the Fisher affidavit (emphasis in original).
The 11 June 2019 opinion of apportionment makes clear that at that time Charter considered that, even under two contracts of sale, the Development Land was being ‘sold jointly’. I am reinforced in this, as although Charter’s view is not determinative, it indicates that none of the registered proprietors had ‘remove[d] themselves’ from the joint sale process at that point, as contemplated by the description of phase 3 in sch 2 of the Sale Agreement.
Importantly, the interdependency clauses in the two contracts of sale indicate that all of the Development Land was being sold together to the one purchaser, despite the sale not being effected through a single contract, with a global sale price for the Development Land. While the contracts of sale stipulate purchase prices for each parcel of land, the contract prices reflect the purchaser’s wishes rather than an intention of the respective registered proprietors to sell the parcels of land ‘separately’ for the purposes of the Sale Agreement and the Deed.
Furthermore, the interdependency clauses in the contracts of sale deem that settlement and all actions regarding settlement under each contract take place simultaneously, evincing an intention that they be settled together.
I reject the first defendant’s submission that Charter itself agreed the individual sale prices for the parcels of land comprising the Development Land in accordance with authority under cl 7(a)(iii). That clause empowers Charter to manage and facilitate the sale and give instructions to estate agents and solicitors, including on the reserve price. It does not empower Charter to sell the land without instructions from the registered proprietors on price.
I am reinforced in this as the services to be provided by Charter throughout the sale process pursuant to sch 2 of the Sale Agreement include ‘transaction negotiation and deal finalisation’. These are services to be conducted as an agent of the registered proprietors of the Development Land in order to ‘manage and facilitate the sale’. They do not themselves authorise Charter to itself determine or accept the sale price. This accords with cl 6 of the Deed which provides that the registered proprietors of the parcels of land comprising the Development Land ‘agreed to jointly engage Charter Keck Cramer to act as their agents for the purposes of managing the sale either jointly or separately as they see fit…’ (emphasis added). It is also reflected in the ‘Tasks’ for phase 3 of sch 2 where it is stated that Charter is to: act as a point of contract between ‘the appointed agent, other consultants, and the vendor’, ‘co-ordinate and critically evaluate offers’ and ‘co-conclude deal negotiation with respect to commercial terms’.
The evidence does not suggest that any of the registered proprietors of each parcel of land, nor Charter on their behalf, individually negotiated the contract price for each parcel of land with the purchaser notwithstanding that a global price had been agreed. The marketing of the Development Land proceeded on the basis that all of the Development Land would be sold together to the one purchaser. The evidence does not suggest that any of the registered proprietors sought to remove themselves from that process and sell their parcel of land separately.
In the circumstances, notwithstanding the fact that two contracts of sale were executed, all of the Development Land was ‘sold jointly’ within the meaning of cl 11(b) of the Sale Agreement. Accordingly, the net proceeds of the sale of the Development Land are to be apportioned by Charter in accordance with cl 7(a)(iv) of the Deed.
Conclusion
On the proper construction of cl 11(b) of the Sale Agreement and cl 7(a)(iv) of the Deed, ‘sold jointly’ means that the Development Land is sold together.
Pursuant to the contracts of sale, the Development Land is being ‘sold jointly’ within the meaning of cl 11(b) of the Sale Agreement. Accordingly the net proceeds of the sale of the Development Land are to be apportioned by Charter in accordance with cl 7(a)(iv) of the Deed.
I will give the parties an opportunity to propose an appropriate form of orders to give effect to this ruling and as to costs. As indicated at the hearing, I will hear the parties on what is to happen to the funds currently held in Court.
SCHEDULE OF PARTIES
| S ECI 2020 03213 | |
| BETWEEN: | |
| DONALD NASH | First Plaintiff |
| TREVOR CLARENCE NASH | Second Plaintiff |
| T C NASH HOLDINGS PTY LTD (as trustee of the Trevor Nash Superannuation Fund) | Third Plaintiff |
| - and - | |
| DAVID JAMES NASH | First Defendant |
| JOHN ALBERT NASH | Second Defendant |
| DAVID JAMES NASH AND LINDA FLORENCE NASH (as trustees of the D & L Nash Superannuation Fund) | Third and Fourth Defendants |
| J A N NOMINEES PTY LTD (as trustee of the JN & KSW Superannuation Fund) | Fifth Defendant |