Pilot Farm Holdings Pty Ltd v Inbiz Investments Pty Ltd as Trustee for the Pilot Farm Unit Trust

[2011] QSC 99

SUPREME COURT OF QUEENSLAND

CITATION:

Pilot Farm Holdings Pty Ltd v Inbiz Investments Pty Ltd as Trustee for the Pilot Farm Unit Trust [2011] QSC 99

PARTIES:

PILOT FARM HOLDINGS PTY LTD
(applicant)
v
INBIZ INVESTMENTS PTY LTD AS TRUSTEE FOR THE PILOT FARM UNIT TRUST
(respondent)

FILE NO/S:

2183 of 2011

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED EX TEMPORE ON:

11 April 2011

DELIVERED AT:

Brisbane

HEARING DATE:

11 April 2011

JUDGE:

Daubney J

ORDER:

1.   The application is dismissed

2.   The applicant pay the respondent’s standard costs of the application.

3.   The applicant refund the $200,000 paid by way of deposit under the December deed.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – INTERPRETATION OF MISCELLANEOUS CONTRACTS AND OTHER MATTERS – whether a particular clause could be severed from the void agreement and compel the respondent to enter into a new or fresh put and call agreement – whether the particular clause could still operate notwithstanding s 19 of the Land Sales Act 1948 (Qld) rendering the contract void

Land Sales Act 1948 (Qld), ss 8, 9, 19

Day Ford Pty Ltd v Sciacca [1990] 2 Qd R 209, cited

COUNSEL:

S J Given for the applicant
P D Tucker for the respondent

SOLICITORS:

Hallett Legal for the applicant
Nicholsons Solicitors for the respondent

HIS HONOUR:  Central to this application by the applicant for,

amongst other things, a declaration about the proper

construction of a particular clause of the contract, and

specific performance of that contract, is consideration of

both the terms of the contract itself and the current status

of that contract as a matter of law.

It is sufficient for present purposes to note that the

relevant contract in question between the parties is a deed

dated 22 December 2010 which provided for put and call options

in respect of certain property which was proposed to be

subdivided and contained on a plan of proposed subdivision. 

The applicant is the putative developer of the industrial

estate within which the land is contained.  The material

discloses a history of dealings between the parties over the

last few years including a number of deeds entered into in

2007 and 2008 providing, in effect, for a put and call option

in respect of the proposed lot.  As I have said, however, the

relevant contractual document is the deed that was entered

into in December 2010.

It is not in issue between the parties that the Land Sales Act

1994 applies to this deed and indeed, the 2010 deed expressly

provided that it was subject to and conditional upon the

respondent, "obtaining an exemption, pursuant to the

provisions of section 19 of the Land Sales Act 1948 (the Act)

from the provisions of sections 8 and 9 of that Act."

The terms of clause 16.1 then imposed on the respondent an

obligation to apply to the Registrar of Titles for that

exemption within the period prescribed in section 19(7) of the

Act.  The applicant as vendor consented to the respondent

making that application.

As events transpired, however, the respondent did not make the

necessary application for exemption and accordingly no such

exemption was obtained.  Amongst other things the fact that no

such exemption was obtained had the effect of bringing the

terms of the Land Sales Act into operation. In particular

section 19(8) of the Act provides, "Where application for

exemption for the purposes of subsection (6) is not received

by the registrar within the time prescribed by subsection (7)

the instrument in question referred to in subsection (6) is

void  and any person who has paid money thereunder shall be

entitled to recover the amount thereof, together with the

amount of interest (if any) that has accrued in respect of the

money since it was so paid, by action as for a debt due and

owing to the person by the person to whom the money was paid."

There is no issue before me that this section had effect in

the present case to render the 2010 deed void.  The

applicant's case, however, turned on the terms of clause 16.3

of the deed which provided:  "In the event that the Exemption

is not obtained within sixty (60) days of the date of this

Deed, the parties will use their best endeavours to make such

other arrangements to ensure their intentions as expressed in

this deed will remain binding, valid and enforceable as

between themselves at all relevant times."

It was submitted for the applicant that, notwithstanding the

operation of the Land Sales Act to render this deed void,

clause 16.3 would and could properly be severed from the void

agreement and then find operation in such a way as to

effectively compel the respondent to enter into a new or fresh

put and call agreement essentially on the same terms as that

which was rendered void as a consequence of the fact that the

necessary exemption was not obtained.  It seems to me,

however, that the argument advanced by the applicant fails in

limine.  The operation of the statute in my view is clear - it

is, in the circumstances of this case, to render the December

2010 deed void.  This is not a case such as was referred to in

the authorities relied on by the applicant of severing a

clause in circumstances of illegality attaching to the

formation or performance of a contract, rather this is a case

of a contract which was perfectly legal in formation and

performance which was, as a consequence of statutory

prescription, rendered void.

As was pointed out by Macrossan CJ in Day Ford Pty Ltd v

Sciacca [1990] 2 Queensland Reports 209 at 215, the effect of

the statutory avoidance is to render the contract "avoided in

its entirety".  That means that clause 16.3 of the 2010 deed

falls away and is not available now to be relied on by the

applicant.

Even if I am wrong about that, and clause 16.3 still has life

as a severed clause, it seems to me that the effect of clause

16.3 is either or both uncertain or susceptible to leading

to avoidance of the statutory intent contained in the Land

Sales Act.  The terms of clause 16.3, albeit couched as a

"best endeavours" clause, link the obligation on the parties

to use best endeavours to make unidentified "other

arrangements" which it is said will ensure their intentions as

expressed in the deed will remain binding.

That clearly smacks of an agreement to agree and as such would

be difficult to maintain.  But, in any event, it seems to me,

as was discussed in the course of argument, that the

difficulty with clause 16.3 is that giving effect to it in the

way now sought by the applicant would lead to the inelegant

outcome of a subversion of the statutory intent provided for

in, amongst other things, section 19 of the Land Sales Act.

In all the circumstances therefore it is appropriate for the

application to be dismissed.

...

HIS HONOUR:  Despite Mr Given's urgings I propose ordering the

applicant to pay the respondent's costs. Apart from the fact

that that is the usual order for an unsuccessful litigant to

pay the successful litigant's costs, the application, for the

reasons I mentioned before, was in my respectful view doomed

to failure.  Another outcome short of litigation might simply

have been to walk away from the void contract and refund the

monies that had been paid under the contract.

There will be an order that the applicant pay the respondent's

standard costs of the application and there will be an order

as requested by counsel for the respondent and not opposed by

counsel for the applicant, that the applicant refund the

$200,000 paid by way of deposit under the December deed.

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