SAS Global Forrestdale Pty Ltd v Sherrin Investments Pty Ltd
[2009] WASC 186
•3 JULY 2009
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SAS GLOBAL FORRESTDALE PTY LTD -v- SHERRIN INVESTMENTS PTY LTD [2009] WASC 186
CORAM: ACTING MASTER CHAPMAN
HEARD: 21 MAY 2009
DELIVERED : 3 JULY 2009
FILE NO/S: CIV 1409 of 2009
BETWEEN: SAS GLOBAL FORRESTDALE PTY LTD (ACN 108 212 031)
Plaintiff
AND
SHERRIN INVESTMENTS PTY LTD (ACN 053 280 970)
Defendant
Catchwords:
Summary judgment - Sale of land - Conditional contract subject to subdivisional approval - Sale of lot in proposed subdivision - Ability to withdraw from and terminate contract
Legislation:
Planning & Development Act 2005 (WA), s 136, s 138, s 140, s 145
Result:
Summary judgment granted
Category: B
Representation:
Counsel:
Plaintiff: Mr S Penglis
Defendant: Mr I R Freeman
Solicitors:
Plaintiff: Mendelawitz Morton
Defendant: Lavan Legal
Case(s) referred to in judgment(s):
Casella v Hewitt [2008] WASCA 13
Turner v Bladin (1951) 82 CLR 463
ACTING MASTER CHAPMAN:
Application
The plaintiff by chamber summons filed on 27 March 2009 seeks judgment for specific performance of 10 contracts and in particular an order that the defendant pay the deposits as defined in the contracts to the deposit holder to be held pursuant to the terms and conditions of the contracts. This matter was heard on 21 May 2009 and supplementary submissions were filed on 28 May and 4 June 2009.
General principles
The parties are in agreement to the well settled general principles that govern the exercise of a discretion to order summary judgment. In general I adopt the principles as recorded at pars 2 ‑ 10 of the written submissions of the plaintiff dated 30 April 2009.
The facts
The relevant facts can be summarised as follows:
1.On or about 15 March 2008 the parties entered into 10 contracts for the sale of land.
2.The contracts provided for a deposit to be 'paid now and to be held by De Freitas & Ryan Trust Account'.
3.On or about 13 November 2008 the plaintiff gave the defendant default notices in relation to the non‑payment of the deposits.
4.None of the deposits have been paid.
5.The respective land were not lots as defined in the Planning & Development Act 2005 (WA) (the Act).
6.The SAS Global Forrestdale Standard Industrial Conditions (the Conditions) formed part of the contracts and Condition 9 is set out below.
7.Condition 9.3 required the Western Australian Planning Commission (the Commission) to give its approval of the subdivision by 15 December 2008.
9.On 12 February 2009 the Commission issued a document titled 'Approval Subject to Conditions Freehold (Green Title) Subdivision' in relation to application number 135551 relating to deposited plans 29950 and 27726.
10.The document stated the Commission 'is prepared to endorse a deposited plan in accordance with the plan date‑stamped 23 July 2007 once the conditions set out have been fulfilled'. The document contains 19 conditions.
11.There is no evidence that any of those conditions had been satisfied at the date of this application.
12.The defendant was not aware of the conditions until 1 May 2009.
13.There is no evidence that the defendant has given written notice as provided in Condition 9.5.
Condition 9 of the Conditions
Condition 9 of the Conditions reads as follows:
9.SUBDIVISION OF LAND
9.1If the Land is not a Lot as defined in the Planning and Development Act 2005 as at the Contract Date, this Contract is subject to and conditional upon the approval of the Commission to the subdivision of the Original Land being obtained in order to create a separate lot or lots in respect of the Land in accordance with Section 140 of the Planning and Development Act 2005.
9.2If it has not already done so, SAS must at its cost make an application to the Commission for the approval of the subdivisions of the Original Land within three (3) months from the Contract Date.
9.3For the purposes of Section 140 (3) of the Planning and Development Act 2005, this Contract is subject to and conditional upon the Commission giving its approval to the subdivision of the Original Land, on or before the date mentioned in the Schedule.
9.4In the event that any conditions are imposed in relation to the subdivision of the Original Land and the Land which are not acceptable to SAS in its absolute discretion then SAS may by giving written notice to the Buyer within thirty (30) days of such conditions being imposed terminate this Contract whereupon the Deposit and any other money paid by the Buyer under the Contract shall be repaid to the Buyer together with any interest earned in accordance with General Condition 1.9.
9.5In the event that any conditions are imposed by a Relevant Authority in relation to the subdivision of the Land which will have a material adverse effect on the Buyer's proposals for the Development of the Land then the Buyer may within fourteen (14) days of such conditions being notified to the Buyer give written notice to SAS that it terminates this Contract together with full details of the effect of such conditions on the proposed Development of the Land. If SAS agrees that there will be a material adverse effect on the Buyer's proposals for the Development of the Land then SAS shall notify the Buyer accordingly whereupon this Contact shall be terminated and the Deposit and any other money paid by the Buyer under the Contract shall be repaid to the Buyer together with any interest earned in accordance with General Condition 1.9. If SAS does not agree that there will be a material adverse effect on the Buyer's proposals for the Development of the Land then SAS shall notify the Buyer accordingly but no later than 14 days after receiving the Buyer's notice. If the parties cannot reach agreement then the dispute shall be submitted for arbitration in accordance with the Commercial Arbitration Act (WA) 1985 before an arbitrator whose appointment is agreed by the parties or appointed [by] the President of the Australian Property Institute (Inc) Western Australian Division.
9.6If a separate Certificate of Title to the Land is not issued by Landgate on or before the date mentioned in the Schedule or if servicing of the Land to be undertaken by SAS has not been completed by that date then either party may by giving written notice to the other terminate this Contract whereupon the Deposit and any other money paid by the Buyer under the Contract shall be repaid to the Buyer together with any interest earned in accordance with General Condition 1.9 PROVIDED THAT if there is any delay in obtaining the issue of the Certificate of Title or SAS completing the servicing of the Land and such delay is beyond the reasonable control of SAS that date shall be extended by a period equivalent to the period of such delay. (original emphasis)
Relevant legislation
The following provisions of the Act are relevant to this application:
136.Approval required for certain transactions where land not dealt with as a lot or lots
(1)Subject to sections 139 and 140 a person is not to -
…
(c)sell or agree to sell land; or
…
without the approval of the Commission unless the land is dealt with by way of such lease, licence, agreement or option of purchase as a lot or lots.
…
138. Approval of Commission
(1)The Commission may give its approval under section 135 or 136 subject to conditions which are to be carried out before the approval becomes effective.
…
140. Saving of certain agreements
…
(3)Without prejudice to the operation of section 141, the agreement referred to in subsection (1) has no effect, unless and until the Commission gives its approval -
(a)within a period of 6 months after the date of the agreement or within such further period as is stipulated in that agreement; or
(b)within such further period as is stipulated in a subsequent agreement in writing made -
(i)by all the parties to the first mentioned agreement; or
(ii)when the subsequent agreement is made after the death of any of those parties, by the surviving party or parties and the legal personal representative of any deceased party.
…
145.Endorsement of approval upon diagram or plan of survey of subdivision
(1)A person to whom approval of a plan of subdivision has been given may, within the prescribed period -
(a)submit to the Commission in the prescribed manner and form a diagram or plan of survey of the subdivision, accompanied by the prescribed fee; and
(b)request the Commission to approve the diagram or plan of survey of the subdivision.
…
(4)Subject to subsection (6), if the Commission is satisfied that -
(a)the diagram or plan of survey is in accordance with the plan of subdivision approved by the Commission; and
(b)if that approval was given subject to conditions -
(i)the conditions have been complied with or will be complied with at the time a certificate of title is created or registered; or
(ii)in the case of a diagram or plan of survey submitted in relation to a stage of subdivision, the conditions imposed in relation to that stage of subdivision, or that in the opinion of the Commission are relevant to that stage of subdivision or the subdivision as a whole, have been complied with or will be complied with at the time a certificate of title is created or registered,
the Commission is to endorse its approval on the diagram or plan of survey.
Parties position
The defendant submits that the effect of Condition 9.1 of the Conditions is the contracts were conditional upon the plaintiff obtaining approval for subdivision of the land in order to create each of the proposed lots. It is accepted that the Commission was entitled to give approval under s 138 of the Act subject to conditions as it did on 12 February 2008. However, the defendant contends the approval, so far as Condition 9 of the Conditions is concerned, is not satisfied until those conditions are met and correctly asserts the plaintiff has filed no evidence to suggest the conditions had been satisfied by 15 December 2008.
In the alternative the defendant argues that it is entitled to terminate the contracts under Condition 9.5 of the Conditions.
The plaintiff contends that the approval given by the Commission satisfies Condition 9, and that the defendant is not entitled to terminate the contracts under Condition 9.5.
Conditions 9.1 and 9.3
As far as I am aware there is no judicial authority upon the meaning of the words 'conditional upon the Commission giving its approval to the subdivision of the Original Land' as found in Condition 9.3 of the Conditions. Nor the similar words found in Condition 9.1. Counsel for the plaintiff referred me to Casella v Hewitt [2008] WASCA 13. This is not specifically on point but despite what counsel for the defendant says I consider it is of some assistance in this matter.
In Casella v Hewitt condition 13 of the 'Joint Form of General Conditions for the Sale of Land 2002 revision' was considered. Conditions 13.1, 13.2 and 13.5 read:
13.1When Clause applies
This clause applies only if the Land is not a Lot at the Contract Date.
13.2Contract conditional
The Contract is conditional on the following.
(a)An application for the subdivision of the Lot from the Original Land being lodged with the Planning Commission within 3 months after the Contract Date.
(b)The Planning Commission granting approval for the subdivision of the Lot from the Original Land within 6 months after the Contract Date, or any longer period as specified in:
(1)the Contract; or
(2)a subsequent agreement in writing between the Parties.
…
13.5Unacceptable condition imposed by Planning Commission
If the Planning Commission grants approval for the subdivision of the Lot from the Original Land subject to a condition with which either the Seller or the Buyer, acting reasonably:
(a)is unwilling to comply with; or
(b)considers it to be prejudicial,
the Party who:
(c)would be bound to comply with the condition; or
(d)is prejudiced by the condition,
may within 10 Business Days of being notified of the condition elect by Notice to the other Party to withdraw from and terminate the Contract.
Whilst the wording of General Condition 13.2(b) is not identical to the wording of Conditions 9.1 and 9.3 of the Conditions I consider they are in substance the same. In Casella v Hewitt EM Heenan AJA said:
All parties accepted before the master, and on this appeal, that the grant of subdivisional approval by the WAPC, referred to in general condition 13.2(b) and 13.5, accommodated the situation where the WAPC granted subdivisional approval on conditions - indeed that is the notorious and the almost invariable practice of the WAPC. This must also be regarded as the correct approach because s 138(1) of the Planning and Development Act 2005 (WA) provides that:
'The Commission may give its approval under section 135 or 136 subject to conditions which are to be carried out before the approval becomes effective.'
Although the Planning and Development Act was not in effect at the time of these contracts, its predecessor, the Town Planning and Development Act 1928 (WA), contained equivalent provisions in s 20(1)(a). Plainly, it is the legislative framework for the grant of subdivisional approval which general condition 13 is intended to address. It is therefore proper to treat the construction of general condition 13.5 as reflecting the meaning of approval for subdivision contained in that legislation [101].
In this case the defendant does not accept the subdivisional approval on conditions meets the requirement of Conditions 9.1 and 9.3 of the Conditions or at least not until the conditions have been met. However, it is to be noted that EM Heenan AJA in Casella v Hewitt was of the view that the approach adopted by the parties in that case was correct. With respect I agree. Indeed s 138(1) of the Act itself recognises the Commission may grant its approval subject to conditions notwithstanding the conditions have to be carried out before the approval becomes effective. Conditions 9.1 and 9.3 of the Conditions refer to the Commission giving its approval, they do not require that approval become effective.
In the case before me the intention of Condition 9 of the Conditions is to address the legislative framework for the grant of subdivisional approval in the same way which General Condition 13 was held in the case before his Honour. The applicable legislative framework is set out above. Section 138(1) provides that the approval may be given subject to conditions. Section 145 deals with the Commission's endorsement of approval upon a diagram or plan or survey of a subdivision. Section 145(1) makes it clear that such an approval can only be sought from a person whom has received approval of a plan of subdivision. Section 145(4) recognises that that approval may have been given subject to conditions and if that is the case the Commission's endorsement of approval on the diagram etc will only be given if the conditions have or will be met.
In my view the meaning of 'approval' in the legislative framework and in particular s 140(3) is approval which is either subject to conditions or not. This is consistent with the provisions of Condition 9. Clearly Conditions 9.4 and 9.5 contemplate the approval referred to in Condition 9.3 maybe with no conditions, or subject to, conditions.
In the circumstances of this case I am of the view that the approval given by the Commission on 12 February 2008 satisfies the requirement of Conditions 9.1 and 9.3 of the Conditions.
Condition 9.5
In the case before me the plaintiff knew of the conditions the Commission had made in relation to the approval prior to the entering into of the contract. This apparently is not novel. In Casella v Hewitt EM Heenan AJA said:
On one view of these contracts for sale, significant parts of general condition 13 may be inapplicable because the conditional subdivisional approval had been granted by the WAPC before the dates of the contracts. On that basis there would, therefore, be no scope for the application of general condition 13.2, 13.3(a)(1), 13.4(a) and, more critically, even general condition 13.5 which provided for the withdrawal from, or termination of, the contract in the event of any unacceptable condition being imposed by the WAPC. This is because an application for subdivisional approval had already been made and granted on specified and disclosed conditions annexed to each contract of sale. However, this is not the basis upon which the case was argued before the learned master or decided by him, nor was it advanced by any party in the course of this appeal [111].
There is a significance difference in the facts considered by his Honour and those before me. In the case before his Honour the disclosed conditions were annexed to each of the contracts of sale and thus known to all parties. In the case before me it is alleged that the plaintiff withheld the nature of the conditions until such time as they were included in an affidavit in support of this application which was served on the defendant on 1 May 2009.
Attached to the affidavit of Mr Andrew Guy Johnson sworn on 24 April 2009 is correspondence which passed between the solicitors for the parties. From that correspondence it would appear the plaintiff by 5 March 2009 had not told the defendant that approval had been given. On 6 March 2009 the defendant was told of the approval whereupon the defendant requested a copy of it together with any conditions. This was followed up on 10 March and again on 26 March 2009.
At Annexure AGJ‑5 to the affidavit the following is recorded in a facsimile from the solicitors for the defendant:
Clauses 9.1 and 9.3 of the Contracts provide that the contracts are subject to and conditional upon the Commission approval to the subdivision of the original land being obtained.
If the approvals have not been obtained by your client, then our client hereby terminates all of the Contracts.
If, on the other hand, the approvals have been obtained, then our client reserves its rights in respect to termination of the Contracts pursuant to clause 9.5 on the basis that any conditions will have a material adverse effect on our client's proposals for the development of the Land.
At Annexure AGJ‑6 to the affidavit the following is recorded in a facsimile from the solicitors for the plaintiff:
2.The critical reason for the Seller's reluctance to provide the Buyer with a copy of the documents that its demands, is that the Buyer has shown a total lack of good faith by its failure, refusal or neglect to pay the subject Deposits in the sum of $374,865.00 notwithstanding the Seller's requests, the Seller's demands and the Buyer's own written promises in this regard.
3.The Seller is concerned that the Buyer, maintaining its refusal to pay the Deposits, will attempt to manufacture an excuse for non‑payment based upon the terms of the WAPC Approval, notwithstanding the innocuous nature thereof and that the Buyer will attempt to negotiate from a position whereby it benefits from its non‑payment of the Deposits whereas, if the Deposits were already paid, as they should be, then the Buyer would take a materially different approach.
4.The Deposits are a security for the Buyer's further performance of its contractual obligations. The Seller should not be faced with any arguments premised upon clause 9 of the SAS Global Forrestdale Standard Industrial Conditions ('SIC') or any other basis until the Buyer has paid the Deposits.
5.It is disingenuous of the Buyer to assert the Seller's contractual obligations to provide the documents that the Buyer demands whilst at the same time the Buyer refuses to perform its own basic and fundamental contractual obligations to pay the Deposits.
6.Further, we have advised your office that the Seller has complied with clause 9.2 of the SIC and we have confirmed with your office that the Commission has given its approval on or before the relevant date in fulfilment of clause 9.3 of the SIC.
The defendant is now aware that the approval of the Commission has been given subject to conditions. Condition 9.5 of the Conditions sets out the process to address any conditions the defendant considers will have a materially adverse effect on the defendant's proposals for development of the land. At page 7 of the transcript counsel for the plaintiff concedes that the wording of Condition 9.5 is probably broader than conditions the Commission may have made the approval subject to. I am inclined to agree but I am not told whether or not there are such conditions and if there are whether the defendant yet knows of them. Leaving aside for the moment whether or not the defendant has been notified of the conditions in accordance with Condition 9.5 the evidence before me does not establish the defendant has given the notice required to set in train the process as detailed in that Condition.
The parties agree that the 2002 General Conditions are incorporated into each of the contracts so far as they are not varied by or inconsistent with the conditions or special conditions of each of the contracts. The defendant argues that Condition 22 of the 2002 General Conditions apply which makes time of the essence in relation to the provisions of the contracts. It further argues that Condition 9.5 contemplates the plaintiff will notify the defendant of any conditions imposed by the Relevant Authority. It is clear the plaintiff knew of the conditions contained in the Commission approval prior to the contracts being entered into and yet it did not notify the defendant of them. In fact the plaintiff refused to do so. The defendant did not become aware of these until 1 May 2009 over 12 months later.
At par 8 of the defendant's outline of responsive submissions filed on 4 June 2009 the defendant submits:
Given the plaintiff's lack of reasonableness and refusal to provide the information contemplated by clause 9.5 of the Conditions, the defendant terminated the contracts on 1 April 2009 (Affidavit Andrew Johnson: AGJ7 and AGJ9). It is important to note that it was only after the plaintiff commenced proceedings and after the defendant had terminated the contracts, that the plaintiff provided the defendant with a copy of the relevant conditions to the approval. The approval, together with the conditions, were annexed to the second affidavit of John Beamish sworn 28 April 2009 at annexure marked AJB7.
The letters referred to read respectively:
1 April 2009
Mendelawitz Morton Lawyers
PO Box 501WEST PERTH WA 6872
Attention: John Cook
By facsimile to (08) 9481 8911Number of pages: 1
Dear Mendelawitz Morton Lawyers
Sherrin Investments Pty Ltd - Writ of Summons from SAS Global Forrestdale Pty Ltd. Property: Proposed Lots 270, 271, 342 ‑ 349 Forrestdale Business Park (Lots)
We refer to your fax of 27 March 2009.
Your client's refusal to co‑operate with our client is noted. We therefore assume that valid grounds to terminate the contracts exist.
The contracts are terminated effective immediately.
Yours faithfully,
HOLDING REDLICH
Copy to: Lavan Legal (attention Mark MacLennan)
By Email: [email protected]
2 April 2009
Mendelawitz Morton Lawyers
PO Box 501WEST PERTH WA 6872
Attention: John Cook
By facsimile to (08) 9481 8911Number of pages: 1
Dear Mendelawitz Morton Lawyers
Sherrin Investments Pty Ltd - Writ of Summons from SAS Global Forrestdale Pty Ltd. Property: Proposed Lots 270, 271, 342 ‑ 349 Forrestdale Business Park (Lots)
We refer to your letter dated 1 April 2009 and confirm that our client has terminated the 10 contracts relating to the above properties.
Our client will be opposing your client's application for summary judgment and we expect to be in a position to serve our client's material shortly. We note in passing that your client's affidavit does not refer to the termination of the contracts, and will draw this to the attention of the Court.
We confirm that our client's defence will be filed and served today.
Yours faithfully,
HOLDING REDLICH
Copy to: Lavan Legal (attention Mark MacLennan)
By Email: [email protected]
It is the first letter which purports to terminate the contract. Even if one accepts that time is of the essence and the significant delay in the plaintiff supplying the information requested by the defendant I do not consider the letter constitutes a valid termination of the contract. On what is before me I am not satisfied it is open to the defendant to argue that the contracts were terminated.
Payment of the deposits
The defendant admits that it has not paid any of the deposits and argues that it is not in breach of the contract because it terminated the contracts due to the plaintiff's failure to comply with Conditions 9.1 or 9.3 or alternatively terminated the contract pursuant to Condition 9.5.
The obligation to pay the deposit arose at the time the contract was entered into. Because of the delay in the defendant's effecting the payment the date for obtaining the relevant approval from the Commission has now passed. From what I have said I am of the view that the approval given by the Commission satisfies the requirements of Conditions 9.1 and 9.3.
Further, I am of the view there has not, at this point in time, been a termination of the contracts pursuant to Condition 9.5. Having reached that conclusion I am of the view that the deposits remain due and payable.
Relief sought
The plaintiff concedes that the only obligation presently due for performance is the payment of the deposits. It may be that the defendant will pursue any relief it has pursuant to Condition 9.5 and there are the further requirements contained in Condition 9.6. That being the case can those payments be enforced by way of specific performance at this juncture? Counsel for the plaintiff referred me to the following passage in Turner v Bladin (1951) 82 CLR 463 where the court said:
We are of opinion that the contract was specifically enforceable. We reject the contention that a contract, some part of which is not immediately performable, is not capable of specific performance. In our opinion proceedings for the specific performance of a contract which is of such a kind that it can be specifically enforced can be commenced as soon as one party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived. The court can then make a decree that the contract ought to be specifically performed and carried into execution, and can so mould its decree and order such inquiries, accounts and other proceedings under the decree as may be necessary to carry into effect all the promises of both parties whether they are presently performable or are only performable in the future (472).
I am of the view that the contracts the subject of this application fall into this category. I accept that there may be the potential for the contracts to be terminated at some time in the future in accordance with Conditions 9.5 or 9.6 of the Conditions. If this were to happen those Conditions set out the procedures to be followed which could be enforced if either party neglected to carry out their obligations under the contracts.
Conclusion
For the reasons given I am of the view that the contracts remain on foot and the deposits remain unpaid. I am further of the view that the defendant has no arguable defence, there is no real question to be tried and the contracts are specifically enforceable. I am inclined to make orders that the deposits be paid and held in accordance with the contracts but will hear further from counsel before I finalise any orders.
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