Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd

[2007] NSWSC 638

Reported Decision: (2007) NSW Conv R 56-186

New South Wales

Supreme Court

CITATION:	Rivat Pty Ltd v B & N Elomar Engineering Pty Ltd [2007] NSWSC 638 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	19 – 21 June, 11 - 13 & 15 December 2006, 1 & 27 March 2007
JUDGMENT DATE :	21 June 2007
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton J
DECISION:	Contract for sale of land validly rescinded by vendor.
CATCHWORDS:	CONTRACT [5] – General contractual principles – Offer and acceptance – Matters not giving rise to binding contract – Vagueness and uncertainty – Severability – Development application by reference to which one term of contract proceeded not annexed to contract or otherwise identified - CONTRACT [135] – Discharge, breach and defences to action for breach – Repudiation and non performance – Election and rescission – Generally – Rescission – Justification by circumstances not relied on at time of rescission - CONVEYANCING [4], [7] – Relationship of vendor and purchaser – Matters arising between contract and conveyance – Conditions of sale – Condition giving right of rescission – Other matters – Adequacy of notice of rescission – Unequivocal act terminating contract – Conditions precedent and subsequent – Consents of third persons – Local government approvals – Obligations of parties to obtain – Use of “best endeavours” or “all reasonable endeavours” – Whether necessary to undertake onerous obligations to obtain approval - INTERPRETATION [9] – General rules of construction of instruments – Where inconsistencies – Instruments partly written and partly printed – General principles.
LEGISLATION CITED:	Trade Practices Act 1974 (Cth) s 52
CASES CITED:	Ashdown v Kirk [1999] 2 Qd R 1 Barton v Fitzgerald (1812) 15 East 530 at 541; 104 ER 944 Caltex Oil (Aust) Pty Limited v Alderton (1964) 81 WN (Pt 1) (NSW) 297 Chamber Colliery Company Limited v Twyerould [1915] 1 Ch 268n Concut Pty Ltd v Worrell (2000) 75 ALJR 312 Consolidated Credit Network v Illawarra Retirement Trust (No 2) [2005] NSWSC 1007 Dalsor Pty Limited v Roberts (2003) NSW ConvR 56-058 Foran v Wight (1989) 168 CLR 385 Glen Ayr Pastoral Pty Ltd v Terry Scott Pty Ltd (1974) 2 BPR 9215 Hardy v Wardy [2001] NSWSC 1141 Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 735 Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 In Re Weston and Thomas’s Contract [1907] 1 Ch 244 In the Goods of De Rosaz (1877) 2 PD 66 Joyce v Realm Marine Insurance Co (1872) LR 7 QB 580 Layman Pty Ltd v Murray [1973] 2 NSWLR 863 Lewis v Barnett (1982) 264 EG 1079 North Shore Demolitions Pty Ltd v McKay [1978] 1 NZLR 454 Re Strand Music Hall Co Ltd (1865) 35 Beav 153; 55 ER 853 Rieger v Eaton & Sons Pty Ltd (1990) 6 BPR 13,770 Robertson v French (1803) 4 East 135; 102 ER 779 Shepherd v Felt and Textiles Co of Australia Ltd (1931) 45 CLR 359 State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 Surf Road Nominees Pty Ltd v Tass James [2004] NSWSC 61 W R Clough & Sons Pty Ltd v Martyn [1978] 1 NZLR 313 Wardy v Hardy [2002] 11 BPR 20,227 Waters Lane Pty Ltd v Sweeney [2006] NSWSC 222 Butt, The Standard Contract for Sale of Land in New South Wales (2nd ed, 1998) [19.5], [28.4] Carter, Peden and Tolhurst’s Contract Law in Australia (5th ed, 2007) [31-03] Halsbury’s Laws of Australia vol 6, tit Contract [110-2260], [110-2300], vol 10, tit Deeds and Other Instruments [140-560], [140 570] Lewison, The Interpretation of Contracts (2004) [7.02] Odgers’ Construction of Deeds and Statutes (5th ed, 1967) 76
PARTIES:	Rivat Pty Ltd (P) B & N Elomar Engineering Pty Ltd (D)
FILE NUMBER(S):	SC 2022/05
COUNSEL:	G A Sirtes (P) T S Hale SC and M A Izzo (D)
SOLICITORS:	Martin Place Lawyers (P) Bartier Perry (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

HAMILTON J

THURSDAY, 21 JUNE 2007

2022/05 RIVAT PTY LTD v B & N ELOMAR ENGINEERING PTY LTD

JUDGMENT

1 HIS HONOUR:

Introduction

2 These proceedings concern a contract whereby the defendant on 14 August 2003 agreed to sell to the plaintiff industrial land at 5 Junction Street Auburn for $1,950,000. The parties’ dealings under the contract have followed a particularly tortuous course. The plaintiff claims to be entitled to specific performance of the contract. The defendant claims to have rescinded or terminated the contract under various provisions in the contract and also by accepting under the general law a repudiation of the contract by the plaintiff. The defendant also relies in resisting relief by way of specific performance on the defences of hardship and of laches, acquiescence and delay by reason of delay by the plaintiff in commencing the proceedings.

Facts

3 The facts of this case are not seriously in dispute and may be taken to be as follows.

4 The land sold could not be transferred at the time of the contract because what was sold included part of a lot which had not been, and still has not been, subdivided. That lot is Lot D DP 179389.

5 The contract is in the form of the Standard Contract for the Sale of Land – 2000 edition. There are incorporated in the contract special conditions (“SC”) of which the following are material to these proceedings:

“8 In the event of any conflict between these special conditions and those contained in the printed conditions to this contract, these additional conditions shall prevail.

……

11 Completion of this agreement shall take place on the later of the following:

(a) Six (6) weeks from the date of this agreement or
(b) Twenty-one (21) days from the date upon which the Vendor notifies the Purchaser or its solicitor in writing that the Plan of Subdivision for Lot D, DP 179389 has been registered at the Land & Property Information Service (LPI), notwithstanding that a separate Folio Identifier may not have issued for the proposed Lot 1 in such Plan of Subdivision, provided that the Vendor shall hand to the purchaser at completion a direction to the LPI to hand the Folio Identifier for such Lot 1 to the Purchaser upon its issue from the LPI.


12 The Purchaser acknowledges that part of the land the subject of this agreement is included in a plan of subdivision of Lot D in DP 179389, a copy of which is annexed hereto and marked “AA” and that as at the date of this agreement the Auburn Council has given its approval to such plan of subdivision. The Vendor shall use its best endeavours to secure registration of the said plan at the Land & Property Information Service provided that if such registration has not been effected within six (6) calendar months of the date of this agreement the Purchaser may by notice in writing rescind this agreement.

14 Completion of this agreement is conditional upon the Auburn Council granting substantial approval to the development applications annexed hereto and marked “P”.

Such application shall be lodged by the Purchaser with the Council within a reasonable time after the date of this agreement at the Purchaser’s expense and the Vendor shall provide the Purchaser with the necessary authority to make the application.”

6 In relation to SC 12, the acknowledgment or statement that at the date of the agreement the Auburn Council had given its approval to the plan of subdivision was quite incorrect. That had not occurred at the date of the contract. In relation to SC 14, no development application, marked “P” or otherwise, was annexed to the contract. On the evidence, there was no such development application in existence at the time the contract was entered into.

7 In relation to SC 11 and SC 12, there is an overlapping clause in the printed portion of the contract as follows:

“ 28 Unregistered plan

28.1 This clause applies only if some of the land is described as a lot in an unregistered plan.

28.2. The vendor must do everything reasonable to have the plan registered within 6 months after the contract date, with or without any minor alteration to the plan or any document to be lodged with the plan validly required or made under legislation .

28.3 If the plan is not registered within that time and in that manner –
28.3.1 the purchaser can rescind ; and
28.3.2 the vendor can rescind , but only if the vendor has complied with clause 28.2.


28.4 Either party can serve notice of the registration of the plan and every relevant lot and plan number.

28.5 The completion date becomes the later of the completion date and 21 days after service of the notice.

28.6 Clauses 28.2 and 28.3 apply to a plan that is to be registered before the plan is registered.”

On 5 November 2003, the defendant’s solicitor wrote to the plaintiff’s solicitor indicating that that plan of subdivision had been approved by the Council and that they would “now proceed to registration within the next ten to fourteen days”.

8 Neither at that time nor at any subsequent time before the communication of 17 June 2004 set out in [14] below did the plaintiff complain about the misstatement as to the approval of the subdivision contained in SC 12. Having learnt no later than early November 2003 that the acknowledgment in SC 12 was incorrect, the plaintiff proceeded with the contract and is now suing for specific performance.

9 On 15 December 2003, Auburn Council issued a notice of determination of development application granting conditional approval of the necessary subdivision. The conditions of approval include the following:

“4 Remove boundary encroachments

All structures that encroach the proposed subdivision boundaries, shall be removed or demolished prior to approval of the subdivision plan.

Reason :- to ensure that structures do not encroach subdivision boundaries. ……

9 Approval of subdivision plan

The final plan of subdivision and subdivision certificate will not be endorsed by Council unless the subdivision has been completed in accordance with the conditions contained in the notice of determination of development application DA 288/03 and approved plans.

Reason :- to ensure the development proceeds in accordance with the approved plans.”

The effect of the foregoing is that the registration of the plan of subdivision cannot take place until the boundary encroachments have been removed.

10 The evidence shows that the removal of the encroachments involves not only demolition work, but also expensive work in the modification of existing buildings and the relocation of electrical, gas storage, and air compression facilities. The evidence, which is not seriously challenged, is that the cost of that work would be about $570,000.

11 From about December 2003 to about January 2004, negotiations took place concerning the purchase by the defendant from Bonfoal Pty Ltd of land adjoining the subject land (“the Bonfoal land”) and its resale to the plaintiff. This would have facilitated the performance of the original contract in relation to the subdivision. The negotiations for the purchase of the Bonfoal land did not result in the acquisition of the Bonfoal land before the notice of rescission of the contract on which the defendant relies.

12 On 30 January 2004, the defendant’s solicitor wrote to the plaintiff’s solicitor a letter containing the following:

“The original Contract is still conditional upon our client obtaining subdivision approval and registration of the Plan of Subdivision relating to certain of the land, the subject of the original Contract, and we understand from our client that approval and registration of that Plan of Subdivision is imminent.”

13 By April 2004, the parties had entered into negotiations to rescind the contract by deed and to exchange at the same time a replacement contract. Although that replacement contract was never formally exchanged, the plaintiff made an alternative claim that the replacement contract came into existence and that it is the replacement contract that should be specifically performed. However, this claim was not really pressed. It seems to me plain on the evidence that the negotiations never reached finality and that the replacement contract was not entered into, and I so find.

14 On 17 June 2004, the defendant’s solicitor sent a fax to the plaintiff’s solicitor as follows:

“This matter is going nowhere and it now looks as if we will end up in litigation with our client claiming damages for misrepresentation that the plan had been approved by Council

Is there any way forward or should we now end negotiations as clearly your client cannot give title to what they contracted to sell

In the meantime we believe the deposit should be returned to the agent”

On 28 June 2004, the plaintiff’s solicitor gave to the defendant a notice to complete the contract on 20 July 2004.

15 Despite the fax of 17 and notice of 28 June 2004, the defendant’s solicitors on 3, 4 and 5 August 2004 were furthering the negotiations for the replacement contract of sale. Those negotiations were continued on 31 August 2004. However, in late September and early October 2004 the solicitors were corresponding concerning arrangements for the settlement of the contract in its original form. On 14 October 2004, the plaintiff’s solicitor sent a fax to the defendant’s solicitor enclosing a draft settlement statement and enquiring whether the defendant was ready to settle.

16 However, on 19 October 2004, the defendant’s solicitor wrote to the plaintiff’s solicitor as follows:

“We are instructed to advise that our client will not proceed with the Contract. Your client’s delay in organising its finance and the consequent delay in completion is a fundamental breach of the Contract and has changed, fundamentally, the nature of the original agreement. That agreement was entered into in August of 2003. In addition, our client relies upon your client’s failure to gain Council approval to its development application in breach of special condition 14.

Without prejudice, although it is entitled to terminate the Contract, our client is prepared to refund your client’s deposit and to regard the Contract as rescinded as at the date of this letter.

Our client reserves its rights to rely upon other breaches of the Contract by your client and to seek damages in the event that your client does not accept our client’s right to rescind.”

17 On 22 October 2004, the plaintiff’s solicitor wrote a letter including the following:

“I now have instructions that we do not accept that you have the right to terminate and that I am now to commence proceedings for specific performance and/or damages unless you advise by Tuesday next at 5pm that you are prepared to settle without further delays.”

18 There was thereafter correspondence about the defendant’s intention to commence building factory premises on the land the subject of the contract, which the defendant deemed to be urgent because of the impending expiry of a development consent that could not be replaced. These proceedings were commenced on 25 May 2005. The building of the factory did thereafter proceed at a cost in the vicinity of $1.5 million to $2 million.

Matters for determination

19 The defendant’s first line of defence was that the contract was terminated by its letter of 19 October 2004. There was therefore no basis for specific performance or contractual damages. To the specific performance claim the defendant also raised a defence of hardship and other discretionary defences. In addition to contractual damages, the plaintiff claimed damages pursuant to s 52 of the Trade Practices Act 1974 (Cth) (“the TPA”) on the basis of the misleading statement as to the existence of the subdivision approval in SC 12.

20 Obviously the first matter for determination is whether or not there is a subsisting contract as a basis for relief by way of specific performance or damages. This depends on whether or not the defendant effectively terminated the contract on 19 October 2004. To determine that, it is necessary to answer the following questions:

(1) Was the letter of 19 October 2004 apt to rescind the contract if the defendant was entitled to do so?
(2) Is SC 14 operative?
(3) If so, was reliance on it waived?
(4) Is the defendant entitled to rely on the non registration of the plan of subdivision to support its rescission?
(5) Is the defendant entitled to rely on the delay in completion to support its rescission?

21 The defendant served an alternative notice of rescission contained in a letter dated 3 January 2006. However, it does not in its pleadings rely upon this notice of rescission, but only upon the notice of rescission of 19 October 2004.

(1) Is the letter of 19 October 2004 apt to rescind the contract?

22 No great formality is required of a notice to rescind. What is required is that the notice indicate an unequivocal intention to bring the contract to an end. In Dalsor Pty Limited v Roberts (2003) NSW ConvR 56-058, Davies AJ said at [11]:

“A party exercising the right to rescind must make his or her intention unequivocally clear to the other party. In Lakshmijit v Sherani [1974] AC 605 at 616, Lord Cross, delivering the judgment of Lord Diplock, Viscount Dilhorne and himself, said:

‘No particular form of communication is needed. It is sufficient if the vendor make it unequivocably clear to the purchaser that he is treating the agreement as being at an end: see Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525.’”

23 Thus, if a letter contains clear words of rescission, but the whole of the letter is declared to be “without prejudice”, the letter will not operate to effect a rescission: In Re Weston and Thomas’s Contract [1907] 1 Ch 244.

24 The letter of 19 October 2004 is not elegantly or entirely clearly drafted. However, it does state unequivocally in its first sentence that the defendant regards the contract as at an end. The last paragraph reserves the defendant’s rights to rely “upon other breaches of the Contract by your client … in the event that your client does not accept our client’s right to rescind”. This confirms that the defendant is rescinding and relying upon an entitlement to do so.

25 The middle paragraph, which opens with the words “without prejudice”, is the least clear. However, it is reasonably plain that what is intended is that the defendant, without prejudice to the rescission it claims to have effected, is prepared to refund the plaintiff’s deposit. The words “without prejudice” preserve the rescission against the suggestion that it is compromised by the offer to return the deposit: in my view they do not operate to qualify the unconditional nature of the rescission itself. The final words of the paragraph are again confirmatory of the fact that the defendant regards the contract as immediately rescinded.

26 Despite its shortcomings, it is my view that the overall thrust of the letter is clear and unqualified, and that, provided that there was an entitlement to rescind at the time of its delivery, it was effective to do so.

(2) Is SC 14 operative?

27 There is no doubt that the development application referred to in SC 14 as annexure “P” was absent from the contract and, indeed, did not exist at the time the contract was entered into. The plaintiff claims that it was well known between the plaintiff and the defendant that the application was to be for the use of the premises as auction rooms, that being the business in which the plaintiff was engaged.

28 There are various pieces of evidence about what was said and known about the development application. The evidence as to what was to be contained in the development application and what was communicated to or known by the defendant concerning it is exiguous. There is a statement in a letter by the plaintiff’s solicitor on 2 February 2004, long after the contracts were exchanged, that the defendant’s agent “certainly knew that our client wished to occupy the premises to move their existing business (Moorebank Auctions)”.

29 There are in correspondence between the solicitors after the exchange of contracts various references, generally imprecise, as to the plaintiff’s proposed use of the premises. However, the question is whether they may be used to fill the blank in the contract, bearing in mind their lateness in time, their imprecise nature, and the parol evidence rule.

30 The parol evidence rule, as is well known, excludes the use of “extrinsic evidence (except as to surrounding circumstances), including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, vary or contradict the language of a written instrument”: Halsbury’s Laws of Australia vol 10, tit Deeds and Other Instruments [140-560]. The same work contains at [140-570] a useful list of the exceptions to this rule. The exceptions that are most possibly relevant in the present circumstances are evidence of pre contractual statements said to constitute terms of contract and identification of the subject matter of the contract and the identity of the parties or their relationship.

31 As to blanks in documents, the traditional rule was stated by Sir J Hannen P in In the Goods of De Rosaz (1877) 2 PD 66 at 69. That case concerned a blank in a will. His Lordship said:

“A complete blank cannot be filled up by parol testimony, however strong. Thus a legacy to Mr ----- cannot have any effect given to it: Baylis v Attorney General 2 Atk 239, nor a legacy to Lady ------: Hunt v Hort 3 BroCC 311. But if there are any words to which a reasonable meaning may be attached, parol evidence may be resorted to to shew what that meaning is.”

32 The Full Court of this Court in Caltex Oil (Aust) Pty Limited v Alderton (1964) 81 WN (Pt 1) (NSW) 297 dealt with a guarantee where the amount to which the guarantee was to be limited was left blank. Sugerman J at 297 stated the general principle thus:

“A blank left in an instrument generally renders meaningless the portion of the instrument in which it appears. But this may leave the instrument as one which is capable of being carried into effect and enforced, disregarding the meaningless provision, just as may happen where some inessential provision of a contract is so vague and uncertain as to be incapable of any precise meaning: Nicolene v Simmonds [1953] 1 QB 543).”

In the circumstances of that case, the Court took the view that it should regard the limitation clause rather than the entire guarantee as rendered meaningless, so that the guarantee operated as an unlimited guarantee. The Court held that the correct conclusion in the circumstances was to sever the meaningless limitation clause from the balance of the document.

33 Recently, in State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503, Einstein J dealt with a construction contract which contained a provision for dispute resolution by expert determination. The provision omitted the name of the nominator of the relevant expert. One side contended that only the provision for nomination should be treated as meaningless and severed; the other side contended that the whole dispute resolution clause should be severed and treated as void for uncertainty. Einstein J cited with approval the passage from the judgment of Sugerman J in Caltex set out above and referred to the decision that the limitation portion should be severed from the guarantee: see [34], [35]. His Honour decided in the context of Banabelle that the whole of the dispute resolution clause should be treated as void for uncertainty and severed, leaving, as the parties agreed, the balance of the construction contract intact. And see generally Odgers’ Construction of Deeds and Statutes (5th ed, 1967) 76.

34 In this case, I bear in mind that this was a contract for the sale of land that was not to have contractual force until a formal exchange of documents; the non attachment to the contract of the development application; the non existence of the development application at the time of the exchange of contracts; the uncertain nature on the evidence of the proposed content of the development application; the exiguous nature of the evidence of any communication to or knowledge of the defendant of the proposed content of the development application; and the parol evidence rule itself.

35 In this case, the contract as exchanged did not specify the requisite development consent by reference to its content. It proceeded by reference to a particular development application said to be appended to the contract, but which was not appended and which did not exist.

36 In the circumstances of this case, and on the evidence available, it is not established that there is any justification for making an exception to the parol evidence rule. Even if it was a case in which an exception might be contemplated, there is no evidence on which the “blank” can be filled up, or the clause rewritten, by reference to some communication between the parties or knowledge on the part of the defendant concerning the development application. In this case, I find that SC 14 has no content and therefore no effect. However, the provision is inessential and there is no difficulty in severing SC 14 from the rest of the contract, leaving the contract intact to operate according to its other terms. See Halsbury’s vol 6, tit Contract [110-2260], [110-2300].

(3) Was reliance on SC 14 waived?

37 The plaintiff has pleaded in its reply that reliance on SC 14 was waived, or the defendant is estopped from relying on the condition. These matters are not pleaded in respect of the term relating to the registration of the plan of subdivision. In view of my conclusion that SC 14 is not operative, it is not necessary to determine these matters.

(4) Is the defendant entitled to rely on the non registration of the plan of subdivision to support its rescission?

38 The contract contains different clauses relating to this subject matter. One is the printed cl 28 and the other is SC 12. Clause 28, on which the defendant relied, provides for rescission by the vendor as well as the purchaser in case of non registration. SC 12 provides for rescission by the purchaser only.

39 The defendant claimed to rely upon its right of rescission in cl 28. The plaintiff objected that the defendant was not entitled to do so on two grounds:

(A) that upon the proper construction of the contract, the defendant had no entitlement to rescind pursuant to cl 28; and

(B) that this ground of rescission contained in cl 28 was not mentioned in the notice of rescission.

(A) Did the defendant have a right of rescission under cl 28?

40 The plaintiff contended that there is such a conflict between the provisions of cl 28 and of SC 12 that the result of the application of SC 8 is that cl 28 is deprived of all operation and the defendant had no right of rescission on that ground. The defendant contended that, while the provisions of cl 28 as to rescission by the purchaser may have been replaced by SC 12, there is no reason why the provisions of cl 28 as to rescission by the vendor should not continue to operate.

41 There are two well known principles of construction that are relevant to the determination of this question.

42 The first principle is that, to arrive at the true interpretation of a document, a clause must not be considered in isolation, but must be considered in the context of the whole of the document. In Barton v Fitzgerald (1812) 15 East 530 at 541; 104 ER 944 at 948 Lord Ellenborough CJ said:

“It is a true rule of construction that the sense and meaning of the parties in any particular part of an instrument may be collected ex antecedentibus et consequentibus; every part of it may be brought into action in order to collect from the whole one uniform and consistent sense, if that may be done.”

In Chamber Colliery Company Limited v Twyerould [1915] 1 Ch 268n Lord Watson said at 272:

“I find nothing in this case to oust the application of the well known rule that a deed ought to be read as a whole, in order to ascertain the true meaning of its several clauses; and that the words of each clause should be so interpreted as to bring them into harmony with the other provisions of the deed, if that interpretation does no violence to the meaning of which they are naturally susceptible.”

And see Lewison, The Interpretation of Contracts (2004) [7.02].

43 The second principle is that, in case of inconsistency between typed provisions and printed provisions forming part of a standard form used in a written contract, the written provisions will prevail. This is a common law principle which is adopted by and is the same in substance as SC 8.

44 In Robertson v French (1803) 4 East 135 at 136; 102 ER 779 at 782 Lord Ellenborough CJ said:

“The only difference between policies of insurance and other instruments in this respect is that the greater part of the printed language of them being invariable and uniform has acquired from use and practice a known and definite meaning, and that the words superadded in writing (subject indeed always to being governed in point of construction by the language and terms with which they are accompanied) are entitled nevertheless, if there should be any reasonable doubt upon the sense and meaning of the whole, to have a greater effect attributed to them than to the printed words, inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning, and the printed words are a general formality adapted equally to their case and that of all other contracting parties upon similar occasions and subjects.”

In Homburg Houtimport BV v Agrosin Ltd [2004] 1 AC 735 at [11] Lord Bingham of Cornhill said:

“Secondly, it is common sense that greater weight should attach to terms which the particular contracting parties have chosen to include in the contract than to pre-printed terms probably devised to cover very many situations to which the particular contracting parties have never addressed their minds. It is unnecessary to quote the classical statement of this rule by Lord Ellenborough in Robertson v French (1803) 4 East 130, 136, cited with approval by Lord Halsbury in Glynn v Margetson [1893] AC 351, 358 and by Scrutton LJ in In re an Arbitration between L Sutro & Co and Heilbut, Symons & Co [1917] 2 KB 348, 361-362.”

In Joyce v Realm Marine Insurance Co (1872) LR 7 QB 580, Blackburn J said at 583:

“The ordinary and general rule in the case of a policy of insurance, of course, is that we must construe the policy as we find it; it is a printed form, with written parts introduced into it, and we are to take the whole together, both the written and the printed parts. Although it has sometimes been endeavoured to be argued that we ought to bestow no more attention on the written parts than on the printed parts which are uniform in most policies of insurance, there is no doubt that we do, and ought to, make a difference between them. The part that is specially put into a particular instrument is naturally more in harmony with what the parties are intending than the other, although it must not be used to reject the other, or to make it have no effect.”

45 The last of his Lordship’s words must be treated with some caution. It is clear that if the written or typed words are really inconsistent with the printed form, then the written or typed words must prevail. But his Lordship should be taken to be emphasising that the written words should not lightly or automatically prevail and that the contract should be read so as to give effect so far as possible to all its provisions.

46 This last principle was stated as follows by Lord Romilly LR in Re Strand Music Hall Co Ltd (1865) 35 Beav 153 at 159; 55 ER 853 at 856:

“The proper mode of construing any written instrument is, to give effect to every part of it, if this be possible, and not to strike out or nullify one clause in a deed, unless it be impossible to reconcile it with another and more express clause in the same deed. I think that I must, if possible, give effect to both these clauses in the articles in question …”

More recently, in Lewis v Barnett (1982) 264 EG 1079 at 1080 Stephenson LJ said:

“I have not the smallest hesitation in saying that no principle of construction and no authority of any court compels or even justifies a judge in finding one paragraph in a written document (in this case a sealed lease) to have effect. Effect must be given to the paragraph if it possibly can be.”

47 In my view, what flows from these principles is that, whilst clearly inconsistent provisions of the printed form must be treated as excluded by the typed provisions, the operation of the printed clauses should be preserved so far as is possible. The Court should not lightly accede to a submission that the typed provision covers the field and excludes in whole the corresponding printed clause, if parts of that provision can coexist with the typed clause and still be given effect. In this regard, I note the decision of Ashdown v Kirk [1999] 2 Qd R 1, in which McPherson JA said at 8:

“For all these reasons, there is no basis for supposing that Special Condition 3 was designed to be exhaustive or in some way to ‘cover the field’ of non-payment of the deposit moneys to the exclusion of the detailed provisions of Standard Condition 13.3. Indeed, in at least two instances (cll 2 and 8) where it was intended to displace provisions of the Standard Conditions, the Special Conditions expressly so provide.”

48 It is submitted on behalf of the plaintiff that the subject matter of SC 12 is the obligations concerning registration of the plan of subdivision and the consequences of non registration within six months, and that the existence of that clause should be taken as prevailing over all parts of the provisions of printed cl 28.2. The defendant contends that the provisions of SC 12 are not inconsistent with the purchaser, too, having a right to rescind upon non registration of the plan, and that the portion of cl 28.2 that confers that right should be regarded as continuing in operation. I am of the view that the defendant’s contention is essentially correct, and that the two clauses can and should be given operation together in the following way:

1 The vendor’s obligation concerning registration of the plan is an obligation to use its best endeavours to secure registration: SC 12.
2 In case of non registration within six months, the purchaser may by notice in writing rescind the agreement: SC 12.
3 These provisions of SC 12 replace the provision for rescission by the purchaser contained in cl 28 and cl 28.3.1 is rendered inoperative. However, there is no conflict between SC 12 and the continued operation of the vendor’s right of rescission contained in cl 28.
4 If the plan is not registered within six months, the vendor can rescind: cl 28.3.2.
5 The vendor can rescind only if it has complied with cl 28.2, which thus operates as a proviso to the vendor’s right to rescind. The requirement of cl 28.2 is that the vendor must do everything reasonable to have the plan registered within six months. In my view, this requirement does not differ in substance from the requirement of SC 12 to use “best endeavours”, which is to be construed as “using all reasonable endeavours”, or “doing everything reasonable”: Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 per Gibbs CJ at 64; see also Butt, The Standard Contract for Sale of Land in New South Wales (2nd ed, 1998) [28.4]. The conspectus by Rein AJ in Waters Lane Pty Ltd v Sweeney [2006] NSWSC 222 at [47] - [60] and articles referred to therein seek to establish whether there is any difference between the “best endeavours” and the “all reasonable endeavours” formulae. I find it very difficult to see that there is in reality any difference. But even if there be some slight difference between the endeavours requirements of SC 12 and cl 28.2, that does not prevent cl 28.2 from operating in its terms as a proviso to the vendor’s right to rescind.

49 On this basis there is a purchaser’s right to rescind regulated by SC 12. Clause 28 continues to operate (apart from the provision of cl 28.3.1, which is replaced by SC 12) to give and define a vendor’s right to rescind. Reading the clauses together in this way, it is my view that the contract conferred upon the vendor (as well as upon the purchaser) a right to rescind upon non registration of the plan within six months, provided that the vendor had done everything reasonable to effect registration.

50 The next question that arises is whether the vendor was obliged, by the requirement in cl 28.2 to do everything reasonable to have the plan registered, to spend the $570,000 necessary to comply with the Council’s requirement to remove the boundary encroachments by doing work of demolition and modification of buildings and relocation of services. The ambit of the obligation to do everything reasonable was discussed by Bryson J in Hardy v Wardy [2001] NSWSC 1141 at [8] - [10]. His Honour’s approach was embraced by the Court of Appeal in Wardy v Hardy [2002] 11 BPR 20,227. The question is whether it was reasonable for the defendant to refrain from doing such extensive work and expending such a large sum of money to meet the Council’s condition in order to obtain registration of the plan of subdivision.

51 In Layman Pty Ltd v Murray [1973] 2 NSWLR 863 Mahoney J held that a vendor was not obliged to proceed with a subdivision where the Council had indicated that it would not consent to a subdivision into two lots, but only to a subdivision into three lots and on condition that one of the three lots be dedicated without compensation to the Council. His Honour’s decision turned in part upon the fact that the three lot subdivision to which the Council would consent was substantially different from the two lot subdivision contemplated by the contract. His Honour also said at 869:

“I do not think that the words ‘at his own expense’ are wide enough to oblige the defendant to give up an area of land of the size and value of that here in question.”

52 In Glen Ayr Pastoral Pty Ltd v Terry Scott Pty Ltd (1974) 2 BPR 9215, Holland J held that it was not reasonable that a vendor, in order to perfect a subdivision, should be required to accede to a Council condition of approval of the subdivision that the vendor grant a drainage easement over its adjoining land. In these circumstances, the vendor was entitled to treat the contract as at an end.

53 In W R Clough & Sons Pty Ltd v Martyn [1978] 1 NZLR 313, it was again held that it was not reasonable that a vendor should be obliged to accede to a condition which would have led to the imposition of a service lane reserve six metres wide and intended for public use over land the vendor was to retain.

54 In North Shore Demolitions Pty Ltd v McKay [1978] 1 NZLR 454, it was held that a vendor was entitled not to comply with a requirement to build extensive earthworks necessary to ensure that all lots in a subdivision had satisfactory building sites and vehicular access.

55 And in Rieger v Eaton & Sons Pty Ltd (1990) 6 BPR 13,770, Cohen J held that it was not unreasonable for the vendor to refuse to carry out a condition of subdivision that necessitated construction work to the extent of $27,000. (The report does not show the purchase price under the contract.) His Honour said at 13,777:

“Although an uninformed estimate was that these works would cost about $10,000 in fact the figure is now shown to be $28,000. I am of the opinion that it was not unreasonable of the vendor to refuse to accept that condition, even though there had been a suggestion that the plaintiff and perhaps one of the other purchasers of a lot in the subdivision would contribute to the cost. There was never any agreement reached as to this and the offer made on behalf of the plaintiff was based upon figures which had not been confirmed and have now been found to be considerably understated.

In all of the circumstances I consider that the defendant took all reasonable steps necessary to obtain the consent of the council and accordingly, up to that point, it had done all that was necessary to have the plan registered. In the event that this had not occurred by 6 October the defendant was entitled to rescind the contract, which it did by its letter of 7 October.”

56 Upon consideration of this body of authority, and the facts of this case, I have come to the conclusion that it was not unreasonable for the defendant to decline to meet the Council’s condition by undertaking the large body of work concerned and expending more than half a million dollars on it. I conclude that the defendant did everything reasonable to have the plan of subdivision registered within six months, and that, equally, it used its best endeavours to secure registration of the plan. In those circumstances, it was entitled to terminate the contract by reason that the plan of subdivision had not been registered within six months.

(B) That the ground of non registration of the plan of subdivision was not relied on in the notice of rescission

57 It is stated in Carter, Peden and Tolhurst’s Contract Law in Australia (5th ed, 2007) [31-03]:

“Although the promisee must justify termination, by reference to a legal right to do so, the promisee is not usually required to justify it on any ground given at the time of election, provided that a valid ground then existed.”

58 This doctrine appears to have originated in relation to actions arising from the dismissal by a master of a servant. The locus classicus in Australia is in the judgment of Dixon J in Shepherd v Felt and Textiles Co of Australia Ltd (1931) 45 CLR 359 at 377 - 378:

“It is true that the agreement between the appellant and the respondents does not amount to a contract of service. But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulations to rely upon a breach of conditions committed before his failure or refusal by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition, whether he was aware of it or not when he himself failed or refused to perform the stipulations of the contract.

‘It is a long established rule of law that a contracting party, who after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not.’

— per Greer, J, Taylor v Oakes, Roncoroni and Co , (1922) LT 267 at p 269; see too, per Lord Sumner, in British and Benningtons Ltd v North-West Cachar Tea Company , (1923) AC 48 at p 71; and, per Starke, J, in Henry Dean and Sons v O'Day , (1927) ALR 233 at p 244, 39 CLR 330 at p 359.”

And in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 611, Mason J said:

“… the general rule in contract is that a party can justify his termination or rescission of a contract by reference to grounds not taken at the relevant time ( Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359).”

59 The same learned Judge, when Chief Justice of the High Court, said in Foran v Wight (1989) 168 CLR 385 at 406:

“It is a view that is consistent with the proposition that a party who refuses to perform a contract can justify his action by pointing to grounds that justify his refusal, even if at the time of refusal he was unaware of those grounds: Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, at pp 377-378; Rawson v Hobbs (1961) 107 CLR, at pp 480, 491; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, at pp. 431-433; Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245, at pp 262, 279-280; Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401, at pp 443-446.”

60 There was a recent statement of the principle in this Court by Campbell J (as his Honour then was) in Consolidated Credit Network v Illawarra Retirement Trust (No 2) [2005] NSWSC 1007, where his Honour said at [69]:

“However, if a party terminates a contract for one reason, which is not a good reason, but has available another reason for termination, which is a good reason, it is possible to justify the termination by reference to the good reason – Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359.”

See also Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 262 and 278-280; Concut Pty Ltd v Worrell (2000) 75 ALJR 312 at [27] - [29]. And see the recent judgment of Einstein J in Surf Road Nominees Pty Ltd v Tass James [2004] NSWSC 61 at [208].

61 Although some of the statements concerning this matter refer to reliance on any other available breach, others refer to reliance on any available ground. The non registration of the plan of subdivision in this case did not, of course, constitute a breach of contract by the purchaser. But it did, on the findings I have made, constitute a ground for rescission on which the defendant was entitled to rely, and which existed at the time that the defendant delivered its notice of rescission. In my view, the principle in Felt and Textiles encompasses grounds for termination arising from the terms of the contract and available at the time that notice of termination was given, whether or not those grounds arose from a breach of contract by the other party.

62 The defendant did in its letter terminating the contract reserve its right to rely not only on the grounds specified but on any other breach. However, that reservation is not necessary to entitle it to rely upon a ground of rescission that was available, although not adverted to at the time.

Conclusion as to termination of contract

63 I hold that the defendant is entitled to rely upon the ground of non registration of the plan of subdivision to support its rescission of the contract as of 19 October 2004 and that its rescission as of that date was therefore effective. This means that it is not necessary to consider any of the discretionary defences.

64 In view of these conclusions, the plaintiff cannot succeed upon its claim for specific performance of the contract, or any claim for damages arising from the contract.

Claim for damages under the Trade Practices Act 1974 (Cth)

65 Those conclusions are not fatal to the plaintiff’s claim for damages under the TPA, provided that the plaintiff establishes that the defendant was guilty of misleading conduct in trade or commerce and that the plaintiff thereby suffered damage.

66 There are a number of problems with this claim. It is not clear that the defendant was engaging in trade or commerce in selling the premises on which it conducted its enterprise. There is a deal of debate about whether a claim for misleading and deceptive conduct can be based on statements made in an actual contractual document. However, it is not necessary to decide these matters. Whilst approval had not been granted by the Council to the subdivision application at the time the contract was entered into on 14 August 2003, the defendant’s solicitor informed the plaintiff’s solicitor that it had been granted by letter of 5 November 2003. The plaintiff thereafter adhered to and pressed for performance of the contract. Although in June 2004 it speculated about the possibility of litigation in which it might claim damages for misrepresentation, it has continued to press for performance of the contract to the extent of bringing these proceedings for specific performance. In those circumstances, it seems to me that it could not establish that it had suffered damage by the misleading or deceptive conduct, even if that were otherwise actionable.

Result

67 For the above reasons, the plaintiff’s claims fail, and the proceedings must be dismissed.

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27/07/2007 - Clerical error - Paragraph(s) Decision field