Questcrown Pty Ltd v. Insignia Towers (Southport) Pty Ltd

[2007] QSC 74

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

[2007] QSC 074

FRYBERG J

No 2353 of 2007

QUESTCROWN PTY LTD (ACN 099 232 407)	Applicant
and
INSIGNIA TOWERS (SOUTHPORT) PTY LTD (ACN 116 729 783)	Respondent

BRISBANE

..DATE 29/03/2007

ORDER

HIS HONOUR:  I have before me an application for the removal of a caveat, a declaration that a deposit has been validly forfeited and for judgment for the balance of the deposit.    The applicant today seeks relief in respect of all three of those claims.

The first, the removal of the caveat, is not opposed.  That is because the arguments on both sides of the case propound the view that there is no valid contract in place.  That being so, it follows that a caveat claiming an interest as a purchaser, as does the respondent's in the present case, can not be sustained.  There therefore must be an order in accordance with paragraph 1 of the application.

To understand paragraphs 2 and 3A of the application it is necessary to say something of the facts.  The parties entered into a contract dated 20th of September 2006 for the purchase of land at Southport for $14 million.  It is apparent that there is a building erected on the land.

The contract contained standard conditions relating to the payment of the deposit and interest on it and also in relation to the termination of the contract in the event of a failure to pay the deposit in full.  Time was of the essence.

Certain special conditions of the contract provided for the deletion of standard terms relating to a certificate of classification, environmental matters, errors and misdescriptions and the requirements of authorities and matters adversely affecting the land.  There was a clause subjecting the contract to a due diligence examination by the respondent and that duly took place.

Clause 6 of the special conditions provided that the land was purchased as is, where is, and that no objection in the sense of termination or other action in relation to the contract could be made in respect of any deficiency in the building.

It is therefore a very unusual contract.  But it is one which on its face clearly places the burden on the purchaser in respect of the condition of the building. 

The contract was varied subsequently by deeds of variation.  Under these, the deposit was increased to $1 million payable by four instalments.  The first three totalling half a million dollars were paid and it is that sum which is the subject of the forfeiture declaration sought in paragraph 2 of the application.  The balance of the deposit, half a million dollars, was payable under the varied contract no later than 5 p.m. on the 16th of February.  Completion under the contract was extended to the 26th of February and time was confirmed to be of the essence.

The fourth instalment was not paid on the due date but the vendor, the applicant, did not then rescind, it reserved its rights.  On 26th February the respondent did not complete the contract but instead asserted that the applicant was in breach of section 73 of the Workplace Health and Safety Regulations and reserved its right to terminate the contract and recover the deposit.

Later that same day, the applicant's solicitors terminated or purported to terminate the contract on account of the respondent's failure to pay the fourth instalment of the deposit and the failure to complete.

The applicant then elected to forfeit the deposit and reserved its rights in relation to the outstanding instalment.

The following day the respondent's solicitors purported to terminate the contract.  Then a few days later they purported to withdraw the termination and called for completion of the contract.  Today they come to Court and argue that the contract was void ab initio.

The problem that has arisen appears to be that the building on the site contains asbestos.  The material discloses nothing which, apart from that fact, would be capable of resisting the claims made by the applicant in paragraphs 2 and 3A of the application.

The existence of asbestos in a building is a matter of some significance. It is, as the respondent points out, a matter which subjects the owner of a building to the need to comply with the National Occupational Health and Safety Commission's Code of Practice for management and control of asbestos in workplaces. Under section 24 of the Workplace Health and Safety Act 1995 a person on whom an obligation is imposed by that Code must discharge the obligation.

Section 73 of that Act is relied upon by the respondent.  It provides that the owner of a structure must comply with the Code on or before the 1st of January 2008.  However, that obligation is brought forward in the event of the sale of a building which was built under an approval given before the 1st of January 1990.  Apparently that includes the structure in the present case and the consequence is that if a relevant event - that is to say a sale - is proposed before the 1st of January 2008 the owner must comply with the Code before selling the building.

...

HIS HONOUR:  The relevant event is defined (relevantly for

present purposes) as the structure being offered for sale or lease.  Significantly, the definition of relevant event does not include the sale of the property.  The structure of the statutory provisions is to place a personal obligation on the owner of the building for breach of which he commits a criminal offence.  However, the act does not in terms purport to prohibit transactions of any particular nature.  Specifically, it does not purport to prohibit a sale taking place at a time when the obligation upon the owner has not been complied with.  Nonetheless, the respondent submits that because there are substantial penalties which could be imposed upon an owner in breach of these provisions, it is to be inferred that by reason of public policy, a contract which results from conduct in breach is void ab initio.

I will assume, although I am uncertain about whether or not it

is demonstrated in the evidence, that the contract arose out

of an offer by the vendor rather than an acceptance of an

offer made by the purchaser.  I will also assume that the

vendor was in fact in breach of its obligations to maintain a

register consequent upon the statutory provisions that I have

already referred to.  The question is what consequence flows

from that situation.

The respondent submits that imposing obligations on entities

in the position of the respondent to complete contracts when a

prior Workplace Health and Safety obligation has not been

complied with by the vendor would be unacceptable as a matter

of public policy.  It further submits that because the

regulation clearly states that an owner must comply with the

Code before the structure is offered for sale, it must follow

that a contract made consequent upon an offer made in breach

of that obligation must be one which is void ab initio.  It

follows from this that notwithstanding the presence in the

contract of an "as is where is" clause and the other clauses

to which I have referred to relating to due diligence, the

contract is of no effect and is a nullity.

In the alternative to the argument that this is the effect

produced by the Act, the respondent submits that the Act

creates a situation at least where even if it does not

directly make the contract void ab initio, it creates an

obligation of disclosure, or such an obligation to say

something, that to sell the building without mentioning the

correct position constitutes misleading and deceptive conduct.

In other words, it submits that in a situation where the act imposes an obligation to disclose, the respondent is entitled to rely upon non-disclosure for section 52 of the Trade Practices Act and the other provisions which are in that act.

There is no material in the evidence before me relating to the

circumstances in which the contract was made and neither party

has sought to show by evidence what the surrounding

circumstances were.  The respondent puts its case simply on

the bald basis that it is necessarily misleading and deceptive

conduct to enter into a contract of this sort.

In my judgment, the Workplace Health and Safety Act and

regulation do not produce the results for which the respondent

contends.  It does not seem to me that one can infer statutory

intention to void contracts ab initio merely from the fact

that penalties are provided for breach of the Act and from the

fact that the regulation requires conduct to be performed

prior to offering the building for sale.

Likewise, I do not think that those provisions must

necessarily produce the result that any contract made when

they have not been complied with will necessarily be the

result of misleading and deceptive conduct.  I do not say that

there is no situation where silence about the presence of asbestos or about a failure to comply with the provisions of the Act and regulation would not amount to such conduct.  There may be cases where the surrounding circumstances make a vendor's conduct misleading and deceptive.  It does not seem to me that the evidence in the present case discloses sufficient to demonstrate that there has been such conduct in the present case.  I would therefore reject both limbs of the respondent's argument.

There is in consequence no obstacle to the making of the

declaration sought in paragraph 2.  The relief sought in

paragraph 3A would not be granted if there were any

substantial dispute of fact upon which the question depended.

However, in the present case, no such dispute exists.

Technically, the applicant should, I think, have filed an

interlocutory application for summary judgment in the

application, but since the amendment is adequate to raise the

issue and no adjournment is sought by the respondent, it would

seem to be an empty procedural requirement to insist upon the

filing of such an affidavit.

I am satisfied that the applicant has shown that the

respondent has no real prospect of successfully defending the

balance for the claim of the deposit and that there is no need

for a trial in respect of that matter.  In these

circumstances, there should be orders in accordance with

paragraphs 1, 2 and 3A of the application.

...

HIS HONOUR:  There will be an in order in accordance with the

draft, initialled by me and placed with the papers.

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