Re Waddell, Waddell & Chandale Pty Ltd

[1995] QSC 289

IN THE SUPREME COURT
OF QUEENSLAND

O.S. No. 757 of 1995

Brisbane

Before the Hon. Justice Mackenzie

[Re Waddell, Waddell & Chandale Pty Ltd]

IN THE MATTER OF Section 70 of the Property Law Act 1974

and

IN THE MATTER OF DARRELL GORDON WADDELL AND JUDITH ANN   WADDELL AND CHANDALE PTY LTD

JUDGMENT - MACKENZIE J

Judgment delivered 17 November 1995

CATCHWORDS:           VENDOR AND PURCHASER - Purchaser's claim for return of deposit - whether contract of sale validly terminated pursuant to special condition.

Counsel:  P. O'Neill for applicant
  C.D. Coulsen for respondents      

Solicitors:  V. Pennisi & Associates for applicant
  A.F. Askew & Co for respondents

Hearing date:  7 November 1995

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane  O.S. No. 757 of 1995

Before the Hon. Mr Justice Mackenzie

IN THE MATTER OF Section 70 of the Property Law Act 1974

IN THE MATTER OF DARRELL GORDON WADDELL AND JUDITH ANN WADDELL AND CHANDALE PTY LTD

REASONS FOR JUDGMENT - MACKENZIE J

Judgment Delivered  17 November 1995

On 2 May 1995 the Waddells entered into a contract for sale of land at Wavell Heights to Chandale Pty Ltd.  The purchase price was to be $175,000 and a deposit of $5,000 was paid.  The contract was subject to special conditions one of which, 2(a), was in the following terms.

"This contract is conditional upon the purchaser obtaining Development Approval for the construction of five (5) units on the subject property from the Brisbane City Council within 60 days from the date hereof.  Should the purchaser be unable to obtain approval within the aforesaid period or should any of the terms and conditions of the approval in the opinion of the purchaser being unacceptable, then the purchaser may determine this Contract by giving notice in writing to the vendor and all moneys paid by the purchaser by way of deposit shall be refunded to it."

There were delays in obtaining Council approval.  Extensions of time for completion were granted by the vendors the final one being offered on 17 July 1995 and accepted on 20 July 1995.  The new date for completion was to be 11 August 1995.  Further correspondence from the vendors' solicitor on 2 August and 3 August reinforced that settlement was expected on 11 August.  The latter letter advised that if the purchaser was unable to effect settlement on 11 August the solicitor had instructions to terminate the contract.
          The critical question is the construction of correspondence from the purchaser's solicitor on 11 August.  At 10.38am a letter was sent by the plaintiff's solicitor containing the following paragraph:-

"We refer to the writer's telephone discussion with Theresa from your office and confirm that our client's architect was yesterday advised that our client's application to the Council had been approved by it.  We further confirm that there remains a thirty (30) day period for objections to be lodged.  Our client is not prepared to settle prior to the expiration of the objection period."

In the following paragraphs an appropriate extension of time was requested, and an assertion made that the price was reasonable and unlikely to be bettered.  The letter advised that the purchaser was "genuinely interested and desirous of purchasing the property".
          At about 12.57pm a letter containing the following paragraph was sent by the purchaser's solicitor to the vendors' solicitor:-

"We note that we have not received a response to our facsimile transmission to you today and that our client has not obtained development approval in terms of Special Condition 2(a) of the Contract.  As a consequence, we have now received instructions from our client to hereby terminate the Contract."

About half an hour later the vendors' solicitor communicated in the following terms:-

"We refer to your facsimile transmission received in our office at 10.38a.m. on 11th instant and note your advices that approval has been granted.  The Contract has clearly become unconditional in terms of Special Condition 2(a)."

He also said that the vendors considered that the plaintiff had repudiated the contract and that the vendors were entitled to forfeit the deposit.  The applicant purchaser's submission was that the first letter on 11 August 1995 merely advised that the applicant's architect had been advised that the application had received Council approval.  It did not state that the terms of approval were satisfactory to the applicant, did not state that special condition 2 (a) had been satisfied and did not state that the contract was unconditional.  It was submitted that, given the emphasis on the finality of 11 August as the completion date for the transaction, it was understandable that the solicitor would inform the respondent's solicitors at the first opportunity of oral approval being received.  It was submitted that to make the contract unconditional the respondent had to be informed that Council approval had been obtained on terms satisfactory to the applicants and that special condition 2 (a) had been satisfied.  The second letter advised that development approval complying with special condition 2 (a) had not been obtained and had validly terminated the contract. 
          The respondent's primary submission was that once the vendors were advised  that Council approval had been given the contract became unconditional and special condition 2(a) could not afterwards be used to terminate it.  It was then submitted that the reason for the attempt by the applicant to terminate the contract was that approval had not been obtained in terms of special condition 2 (a), not that the conditions were unreasonable.  The question of unreasonableness  of conditions was raised for the first time in Mr Bossi's affidavit of 6 November 1995. 
          The correspondence of 11 August 1995 cannot be divorced from the context in which it occurred.  That day was the deadline for settlement.  The first paragraph of the first letter refers to the fact that the approval had been communicated to the respondent's architect the previous day, that the objection period only began to run from then and that the purchaser did not wish to settle until it had expired.  The third paragraph requested an extension for that period of time.  The second paragraph advances reasons why it was in the vendors' interest to grant the extension.  The existence of the right to object would not itself be a ground for  termination  under special condition 2(a).  However the letter does not unequivocally advise that special condition 2(a) has been satisfied.  It refers in specific terms only to communication of approval to the applicant's architect.  It does not say anything specific about the company's satisfaction with the terms and conditions.
          No doubt with the kind of argument about waiver which has also been raised in this matter in mind, the second letter at 12.57 pm on 11 August referred to lack of response to the first letter.  It advised that the applicant had not obtained development approval in terms of special condition 2(a).  Special condition 2(a) provides alternative bases for rescission, that the purchaser was unable to obtain approval within the specified period and that any of the terms and conditions of approval  were in the purchaser's opinion unacceptable.  The submissions that the fact that approval had been given had been previously communicated and  that the letter related to the first alternative are untenable.  The plain meaning, contrary to the respondent's submissions, is that the applicant had not received approval which met the test in special condition 2(a).  It is true that the basis upon which it was asserted that the conditions were unsatisfactory and that special condition 2(a) had not been  satisfied was not specified.  It is deposed by Mr Bossi in his affidavit of 6 November that the objections principally related to financial impositions imposed by the Council.  The proper construction of events is that the first letter was a "holding" letter  and the second letter is the first communication of the acceptability or otherwise to the applicant of the terms and conditions of approval.  The correspondence should be construed as effecting a valid termination of the contract.
          This construction of the correspondence is inconsistent with waiver.  Further I accept that  the applicant's submission that there is no evidence of reliance in the two hours between the two letters to the respondent's detriment has been established.  It was submitted that the absence of such evidence  was fatal to a claim that there had been waiver.  It is not necessary to explore the limits of the submission because of the view taken of the proper construction  of the correspondence.
         There was some evidence that  following the termination of the contract the property in question was sold to a purchaser described as "Trombetta Investments Pty Ltd & or Nominees" for a sum $10,000 less than the original contract price.  The transfer was ultimately made to Trombetta Investments and the present applicant.  Mr Trombetta is apparently associated with both companies because he signed both contracts.  No doubt this raised a suspicion in the minds of the vendors about the bona fides of the termination of the first contract.  However beyond that there is no evidence on the issue of how the second contract came into being.  No specific submission was made as to the consequences if the termination of the contract was not made in good faith.  It was submitted that the purchaser was obliged to act reasonably in holding the opinion that the conditions imposed were unacceptable.  It was submitted that if a condition was usual and lawful for development consents relating to that kind of project the purchaser could not rely on special condition 2(a) to terminate the contract.  However there is an absence of evidence as to what is usual in such cases and, more particularly, that the conditions were normal.  Counsel sought to avoid this difficulty by submitting that the onus fell on the purchaser to show that it had acted reasonably.  Such evidence as there is on the subject claims that the financial impositions by the Council were significant factors and even assuming that the respondent's submission as to onus is correct there is no basis to hold that it has not been discharged in the absence of evidence tending to displace what appears, prima facie, to be a reasonable reason. 
          In the result the applicant is entitled to succeed.  It is ordered as follows:

1.I order that Darrell Gordon Waddell and Judith Ann Waddell authorise the release to Chandale Pty Ltd of all deposit moneys paid by Chandale Pty Ltd under a contract between those parties dated 2 May 1995.

2.I order the respondents to pay the applicant's costs of and incidental to the application to be taxed.