Pottinger v George

[1967] HCA 25

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan and Taylor JJ.

POTTINGER v. GEORGE

(1967) 116 CLR 328

24 August 1967

Specific Performance—Town Planning

Specific Performance—Sale of land and lease—Completion date specified—Time of the essence—Settlement deferred to secure lessor's consent to transfer of lease—Rescission by vendor—Whether purchasers absolved from making tender of balance of purchase money—Whether purchasers entitled to treat contract at an end. Town Planning—Specific performance of agreement for sale of land—Town Plan of City of Brisbane—Consent of Council—Site approval by one Department for use for shops and residence—Building approval by another Department for shops only—Each Department aware of approvals—Continuance of approvals after Town Plan coming into effect—The City of Brisbane Acts, 1924 to 1959 (Q.), Ordinances Ch. 8, Pt VI—The City of Brisbane (Town Plan) Act of 1959 (Q.).

Decision

August 24.
THE COURT delivered the following written judgment: -
This is an appeal from a decree of the Supreme Court of Queensland which directed that a contract for the purchase of certain land in Brisbane be specifically performed. The suit was instituted by the vendors, who are the present respondents, and the purchasers bring this appeal against the decree. (at p331)

2. The contract of sale was made on 19th March 1966 and by it the respondents agreed to sell and the appellants agreed to purchase property briefly described as being "586 to 594 Logan Road, Greenslopes, together with five brick shops erected thereon and registered lease No. D311590 from Amoco Australia Pty. Limited in favour of the vendors and giving right of access to Chatsworth Road, Greenslopes for the sum of $76,000". Of the purchase price $6,000 was paid at or before the time when the contract was made and the balance was, by cl. 1 of the conditions of sale annexed to the contract, to be paid within twenty-eight days from the date of the contract "in exchange for a properly executed memorandum of transfer capable of immediate registration in favour of the purchasers and the relative certificate of title free from encumbrances together with an assignment of lease No. D311590 and the vendors' copies of all executed leases as hereinafter referred to". The leases thereinafter referred to were specified as being three separate leases of three of the shops on the land which the respondents acknowledged that they had agreed to grant to specified persons upon specified terms. By cl. 19 of the contract possession of the property was to be given upon a date to be mutually agreed upon but not later than twenty-eight days "from the date hereof" and by cl. 21 time was to be in all cases and in every respect "deemed to be the essence of the contract". (at p332)

3. The appellants resisted a decree for specific performance, firstly, on the ground that the respondents had failed to complete within a period of twenty-eight days from the date of the contract whereupon the appellants had rescinded the contract and, secondly, on the ground that the then existing use of the land was not in conformity with the Town Plan of the City of Brisbane (which came into force on 21st December 1965 pursuant to The City of Brisbane (Town Plan) Act of 1959) and that the Council's consent to the existing use had not been obtained. It was asserted that the contract was on this account illegal in that the contemplated use of the shop premises as such would contravene cl. 6 of Pt II of the Town Plan and that the leases specified in the contract were illegal since they had been granted for the purpose of enabling the lessees to use the shop premises as such and such use would also contravene cl. 6. The latter defences seem to have been raised only when the suit was ripe for hearing and were, apparently, an afterthought on the part of the appellants or their advisers. (at p332)

4. As far as the first ground of defence is concerned it may be observed that the last day for settlement was, according to the terms of the contract, Saturday 16th April 1966. However, a difficulty arose because it was not until 12th April 1966 that the appellants' conveyancer, Mr. Brown, returned to the solicitor acting for the respondents, Mr. Kelly, the memorandum of lease from Amoco Australia Pty. Limited with an accompanying memorandum of transfer of the lease to the appellants which he had prepared for the purpose of settlement. Thereafter, on 14th April, Mr. Kelly, having ascertained that it would be necessary for the memorandum of transfer to be sent to Sydney so that the consent of Amoco Australia Pty. Limited might be indorsed thereon under its common seal, spoke to Mr. Brown on the telephone and informed him to that effect. The substance of their conversation is set out in the reasons of the learned judge of first instance and he concluded, that the arrangement made between Mr. Brown and Mr. Kelly was that settlement "could be deferred until Amoco's consent to the transfer of the lease was formally indorsed on the instrument of transfer". Settlement did not take place on or before 16th April 1966 and on 19th April, Brown wrote on behalf of the appellants intimating that he had been requested by his clients "to advise that as your clients were not in a position to finalize the transaction on settlement date, viz., 14th April" (sic), they now considered the contract to be at an end. (at p333)

5. It was the appellants' contention on this branch of the case that Brown had no authority on their behalf to extend the time for completion but the learned judge of first instance, relying on answers to certain interrogatories, held that they established that Brown had authority on behalf of the appellants to make the communication which he had made to Kelly on 14th April. We agree with his Honour and find it unnecessary to examine the evidence which was given concerning the ambit of the authority of a solicitor or conveyancer employed to carry a contract for the sale of land through to completion or to decide whether, apart from the answers to the relevant interrogatories, there was evidence that Brown had authority to extend the time for completion. (at p333)

6. There is, however, a further reason why the appellants were not at liberty on 19th April to treat the contract as at an end. Following the conversation Brown had with Kelly on 14th April he wrote to Kelly on the same day. By his letter he confirmed their conversation, mentioned that his clients were then in a position to settle the transaction on Friday 15th April and that Kelly had advised him that as one of the documents had not yet been returned to him the matter could not be settled. The letter then proceeded "Please note that my clients are anxious to finalize the matter in accordance with the terms of the contract, and I shall be glad to hear from you re same". This confirms Brown's note of the conversation from which it appears that "no specific request" was made to him to extend the time for completion, that the reason for the delay had been disclosed to him, "that there was no hope of settling tomorrow" (i.e. 15th April 1966) and that "he (Kelly) will contact me as soon as ready". (at p333)

7. But April 16th, not April 15th, was, according to the contract, the last day for settlement and it seems that neither representative had any intention of settling on the Saturday. It is plain from the dealings between the representatives of the parties that as settlement could not take place on 15th April they agreed, whether with the authority of their respective clients or not, that the settlement should be postponed and that it should take place at some later time, probably, during the following week. In these circumstances, there was no conduct on the part of the respondents' solicitors which absolved the appellants from their obligation to make a tender of the balance of the purchase money on 16th April 1966 if they proposed to insist on their strict rights under the contract. Furthermore there is nothing to show that if the appellants' conveyancer, notwithstanding his own delay in the matter, had so insisted the respondents' solicitors could not have adopted some expeditious means of obtaining the consent of Amoco Australia Pty. Limited to the memorandum of transfer of the lease by 16th April. In these circumstances this ground of defence must fail. (at p334)

8. The other ground of defence, however, requires somewhat closer examination. The relevant provisions of the Town Plan of the City of Brisbane - which, as already appears, came into operation on 21st December 1965 - and of the former Ch. 8, Pt VI of the Ordinances in force up to that date are set out in the reasons of the learned judge of first instance and we do not repeat them in detail. But it is important to notice that prior to the last-mentioned date cl. 1 of Pt VI of Ch. 8 of the Ordinances prohibited the use of any land, or the erection of any building or part of any building on any land, within the city, for any purpose other than residential purposes. By cl. 3 of the Ordinance this prohibition could be relaxed by the Council Registration Board which, by resolution, might have permitted the use of any such land, or the use or erection of any building or part of a building on such land, for the purpose stated in such resolution. With these provisions in mind the respondents had, on 1st April 1964, made an application to the Board through the Town Clerk for permission to erect a building on the subject land "for the purpose of three retail shops and rooms for doctor's surgery and dental surgery with residential apartment over". This application was forwarded under a covering letter of the same date which indicated that the "building proposals provide for construction of five shops (or six within the same area) with a three-bedroom flat to be constructed over the shops with access from a walkway at the side and with escape to the service area at the rear". In this somewhat confused state of affairs the Town Clerk wrote on 1st June 1964 informing the respondents that the Council Registration Board had "granted the necessary permission to erect a part single, part two (2) storey building of the size and in the position indicated on the site plan . . . for the purpose of shops, a doctor's surgery and a dental surgery on the ground floor and single family residential accommodation on the two (2) storey section". The permission was said to be granted subject to a number of conditions which need not be referred to but it was pointed out that "before commencing building operations, you must submit plans and specifications of the proposed structure to the Manager, Department of Planning and Building, City Hall, as required by Ch. 23 of the Council's Ordinances and obtain his approval thereof". The consent given to the proposal was to "lapse and cease to have effect upon the expiration of a period of twelve (12) calendar months from the date hereof, if the erection or use of the building has not been substantially commenced prior to the expiration of such period". On 26th July 1965 the respondents supplied the Council's building surveyor with three copies of plans and specifications defining the works which they proposed to carry out and sought the approval of the Council to erect five retail shops in a single-storey building. This application was still pending on 13th August 1965 when approval was sought on behalf of the respondents to an extension of time so that the "site approval of 1st June 1964 remain current until such time as the building application" should be approved. On 28th September 1965 an extension of time for a further period of twelve months was granted by the Council Registration Board. In the meantime a notification, dated 22nd September 1966 had been received by the respondents that the building application had been approved and they commenced to erect upon the land a single-storey building containing five shops. (at p335)

9. The question which immediately arises is, as we see it, whether permission having been granted by the Council Registration Board to erect a part single and part two-storey building on the land for the purpose of an unspecified number of shops, a doctor's surgery and a dental surgery on the ground floor and single family residential accommodation on the two-storey section, the respondents, thereupon, acted strictly in accordance with their legal rights in erecting a single-storey building containing five shops in accordance with plans approved by the Council. Without more we should, perhaps, incline to the view that they did not. But the Council Registration Board - which was concerned only with the question whether site approval should be given or withheld - and the Council's Department of Planning and Building - which was concerned with the question whether approval should be given to the erection of any proposed building - seem to have been well aware of the terms of the approval originally given by one another. Indeed the application for site approval and the covering letter were sent to the Town Clerk and the notification that approval had been granted was forwarded to the respondents by the Town Clerk whilst much of the correspondence relating to both applications was addressed to and emanated from the Town Clerk. Then on 3rd February 1966 the Town Clerk wrote to the male respondent noting the fact "that the building presently being constructed does not conform to permanent levels in that the shops on one side of the property will be approximately two feet above the footpath level and as it is your desire to obviate the provision of steps at the entrances to the three shops which have a set back of twenty feet from the new alignment of Logan Road, the Council should on its part, relax the condition requiring car parking on the twenty feet set back area, thereby allowing the sloping of the footpath over such set back area to a degree which will eliminate the necessity for steps". The letter then proceeded: "From information made available, the Council Registration Board is aware of the differences in the levels and also to the fact that the land has a slight crossfall, but the opinion is held that the elimination of the parking bay as suggested by you, would in no way bring about an improvement as the position can be met by a slight increase in the grading of the twenty feet set back, which grading would require two steps only to two of the shops and a single step to the third shop. It is also pointed out that the position of the door giving access to this third shop, is such that steps could terminate clear of the doorway and would not be required to cover the full frontage of the shop. You are accordingly advised that following a close perusal of the whole of the circumstances, the Registration Board is of opinion that the elimination of the parking bay as suggested by you, is not justified and it has decided that such parking bay is to be retained in the development scheme for the site. You are further advised that the Board offers no objection to the construction of steps with a maximum of two treads along the frontage of shops within the footpath on the set back area which steps will need to conform to the requirements of the Council's building surveyor, and I point out that by the contemplated increase in the crossfall of the set back section and footpath, height of steps required will be reduced to 1.5 feet as against the previous assumed height of 1.89 feet, thereby providing for a maximum of two treads along the frontage." (at p336)

10. It seems to us that this letter makes it abundantly clear that both the Council and the Council Registration Board were well aware of the structure which was then in the course of erection, that neither body offered any objection to work proceeding and, indeed, that, at the very least, there was tacit approval of the use which was being made of the land. But what cl. 3 of Pt VI of Ch. 8 of the Ordinances provided was that the Board might by resolution permit the use of any such land or the use or erection of any building or part of a building on such land, for the purpose stated in such resolution. Whether or not any resolution of the Board preceded or succeeded the letter of 3rd February 1966 does not appear. However, by 3rd February 1966, Ch. 8 of the old Ordinances had ceased to operate and the Town Plan of the City of Brisbane was in operation. (at p337)

11. In these circumstances the initial question is whether it has been shown that the use to which the land was being put when the contract of sale was made was unlawful. Primarily, this depends upon whether an appropriate consent had at that time been given to the use which was being made of the land. Whether an objection based upon the absence of any such consent constitutes, generally, an objection to title (as to which there has been considerable debate - See Stonham, Vendor and Purchaser, (1964), pp. 225, 226, and Voumard, The Sale of Land, 2nd ed. (1965), pp. 456-460 and cases cited in these passages) we do not have to decide, though it may be observed that the absence of such a consent would adversely affect the leases referred to in cl. 1 (a) of the conditions of sale. However, the appellants did not purport to rescind the contract on that account but raised it, merely, by way of answer to a claim for specific performance. It would not, of course, be proper to decree specific performance if in the result the appellants would be exposed to the risk of prosecution, or, if the absence of consent would render doubtful the validity of the leases referred to above. These leases, it may be noticed, were executed on 1st April 1966 and registered some two weeks later and the land, having been zoned as "residential" under the Plan, could not be lawfully used for, nor could any building lawfully be erected thereon as, shop premises, without the consent of the Council or its delegate under cl. 4 (a) of the Plan. (at p337)

12. Under the Plan the Council's authority to give consent pursuant to cl. 4 (a) to use the land for purposes other than those specified for a residential zone is exercisable by the Council Registration Board as the delegate of the Council and provision is made for applications for consent to be made in writing to the Town Clerk (cl. 2, Pt II, of the Town Planning Ordinance of 16th December 1965) and the Board may give or refuse its consent or give its consent "subject to reasonable and relevant conditions". We have no doubt that the Board, or the Council itself, may give its consent without any formal application being made and, again, it may be said that by the letter of 3rd February 1966, the Town Clerk, at the very least, tacitly purported to give consent. There is, of course, no evidence of a resolution of the Board, or the Council, to this effect but, likewise, there is no evidence that there was not. (at p337)

13. How then does the matter stand? No doubt, having regard to what had happened, the respondents were justified in thinking that they had all necessary consents to continue with their building operations after 21st December 1965 and it may, no doubt, be assumed that if a formal application for consent were now made it would be forthcoming. As the learned trial judge said: "The Council Registration Board, in granting a permission under Ordinance 3 of Pt VI of the old Ch. 8, was not concerned with details of buildings; it was concerned with the use of land, or with the use of buildings erected or to be erected on land. This is shown by the terms of the permission which it granted in this case. It concerned itself with the size and position of the building, but not with the details; it said that any building to be erected must be passed by the Department of Planning and Building." But a consent given at the present time would not avail the respondents for that would not obviate the difficulties which arise from the fact that the three leases were entered into at an earlier date and when, on the assumption that no earlier consent had been given, the use of the shops as such would have been unlawful. The vital questions, therefore, are whether prior to 1st April 1966 the Council had consented to the use of the land for the erection of shops, and their use as such, and whether this has been sufficiently clearly proved to justify the making of a decree for specific performance. In our view both of these questions must be answered in the affirmative. There is no doubt whatever that in September 1965 the Council had approved of the construction of five retail shops on the subject land in accordance with plans and specifications submitted to it. The application for approval clearly stated that "when completed the building will be used as retail shops" and approval was given subject to conditions which required supervision of the building operations from time to time. Further, it should be observed that the respondents were not lawfully entitled to erect a building otherwise than in conformity with the plans that had been submitted and approved. From the letter of 3rd February 1966 it is obvious that the delegate of the Council under the then existing Ordinances, the Council Registration Board, did not think that any further consent was necessary. In this the Board was, in our view, correct. The Council's approval to the erection of the five shops, constituted a continuing consent to the work of construction which apparently commenced before 21st December 1965 and which, upon the evidence, was still continuing in March 1966. The approval which had been given was not abrogated by the introduction of the Plan on the earlier date; nor was the approval which was given an approval only to the commencement of the construction - it was an approval which continued to operate and be fully effective during the work of construction. How, then, can it be said that the Council did not, after 21st December 1965, consent to the use of the land for the purpose of the erection of shops to be used as such? There is no suggestion on the part of the Council that it did not; on the contrary, the letter of 3rd February 1966 and that of 25th March 1966, in answer to Mr. Kelly's inquiries, suggest otherwise. In all the circumstances of the case we are of the opinion that the correct conclusion is that the Council, with full knowledge of the use to which the subject land was being put, did, after 21st December 1965, consent to the respondents making such use of the land. Accordingly, in our view, the appeal should be dismissed. (at p339)

Orders

Appeal dismissed with costs.