Schult v Petan Pty Limited

[2014] TASSC 47

[2014] TASSC 47

COURT:                  SUPREME COURT OF TASMANIA

CITATION:              Schult v Petan Pty Limited [2014] TASSC 47

PARTIES:  SCHULT, Martin Bruce
  v
  PETAN PTY LIMITED

FILE NO:  489/2014
DELIVERED ON:  22 August 2014
DELIVERED AT:  Hobart
HEARING DATE:  22 August 2014
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Conveyancing – The Contract and Conditions of Sale – Other Particular Conditions – Other Cases – Condition that at the Contract Date no Restriction on Residential Use – Heritage Listing – Need for Permit for Routine Maintenance and Repair – Extra Cost of Maintenance and Repair to Ensure Conformity with Heritage Values – Whether Restriction on Use.

Aust Dig Conveyancing [1051]

REPRESENTATION:

Counsel:  
           Applicant:  A Wood with M J Goldberg 
           Respondent:  B R McTaggart SC
Solicitors:
           Applicant:  Tierney Law   
           Respondent:  McCulloch & Associates     

Judgment Number:  [2014] TASSC 47
Number of paragraphs:               17

Serial No 47/2014
File No 489/2014

MARTIN BRUCE SCHULT v PETAN PTY LIMITED

EDITED REASONS FOR JUDGMENT  HOLT AsJ
(DELIVERED ORALLY)  22 August 2014

1. By written contract made 11 February 2014 the applicant contracted to purchase from the respondent a residential property in Sandy Bay containing three apartments.  There is no evidence of the factual matrix surrounding the execution of the contract and the purpose and object of the transaction is self-evident. 

1. The contract was subject to a condition precedent to completion in terms that at the contract date, there were no legal restrictions on the use of the Property that may hinder or prevent the purchaser from using the property for residential use.

1. The applicant has brought proceedings applying for the determination of the following question: 

"Does the permanent entry of the property at 1 Lincoln Street, Sandy Bay, in the State of Tasmania on the Tasmanian Heritage Register under s21 of the Historic Cultural Heritage Act 1995 give rise to any legal restriction that may hinder the Applicant from using it as a residential dwelling within the meaning of a contract for sale of that property entered into between the Applicant as purchaser and the Respondent as vendor and dated 11 February 2014?".

1. The application has been brought under the Conveyancing and Law of Property Act 1884, s39, which relevantly provides that a vendor or purchaser of real estate may apply in a summary way to a judge in respect of any question arising out of the contract.

1. The property was on the contract date, and still is, registered under the Historic Cultural Heritage Act 1995. The register includes the following recordings in relation to the property:

"The place is important in demonstrating the principal characteristics of a class of place in Tasmania's history. 

The house and barn are of cultural heritage significance because they demonstrate the principal characteristics of weatherboard Victorian Georgian farm buildings.  These characteristics are found in the external form, construction methods and the detailing, both externally and internally.

The place has a strong or special association with a particular community …

This place has strong meaning for the community because it demonstrates aspects of Victorian society and contributes, in conjunction with its neighbours, to a relatively intact late nineteenth and early twentieth century streetscape."

1. The effect of the registration is that changes to the fabric of the building require a permit under the Act.

1. Here the purchaser does not suggest that the use of the property for residential purposes is directly impacted by the registration.  The contention of the purchaser is that things which might ordinarily be done without a permit in the course of maintenance and repair, such as repainting, re-roofing and re-fencing would at the time of the contract have required a permit because of the operation of the Act.  In practical terms routine maintenance and repair work may be more time consuming, more difficult and more expensive than would have been the case if the property was not registered. 

1. The question is whether the heritage registration was a legal restriction on use which may hinder the purchaser from using the property for residential purposes.

1. Routine maintenance and repair is a necessary incident of the use of a building and is usually not subject to legal restriction.  Examples might be the replacement of a leaky slate or terracotta tile roof with a cheaper tin or colorbond roof.  The cladding of a dilapidated timber wall.  Replacing old light fittings with modern and more efficient lighting.  Replacing rotten timber decking with modern more weather resistant materials.  Replacing defective doors or windows with perhaps less detailed doors or windows at a cheaper cost than repairing the original or replacing doors or windows to  original specifications.

1. In O'Brien v Reeve (1985) TASSC 110 Cosgrove J held at par[6] that requirements which increase costs are requirements which hinder. Counsel for the respondent did not challenge the correctness of this decision. It was submitted, however, that the case is distinguishable because it was concerned with a restriction on building a house on a building allotment whereas the present case is concerned with the use of an existing building. In O'Brien the reasoning that extra cost amounted to a hindrance was not affected by the distinction identified by counsel. Accordingly, I reject the submission that the case should be distinguished. 

1. Counsel for the respondent referred to Gairsay Pty Ltd v Berkley Farm Pty Ltd [2002] TASSC 92 where Blow J (as he then was) said at par[18] that a clause, such as the present, would apply to any restriction prohibiting or significantly limiting the use specified in the contract.

1. Plainly non-material restrictions or hindrances could not have been intended by the parties to attract the operation of the clause.  Counsel for the respondent submitted that the need to seek approval from the Heritage Council for works is not a significant limitation.  However, the effect of the registration of the property goes beyond a mere requirement to obtain a permit.  It carries with it a real prospect that routine maintenance and repair work will have to be undertaken in a way which would not be as cost efficient as merely replacing existing materials with cheaper materials.  This, in my view, amounts to a significant limitation.

1. Counsel for the respondent made some further submissions which I can deal with briefly.

1. Reliance was placed on the principle of caveat emptor or let the buyer beware.  It was submitted that the purchaser could have ascertained, prior to signing the contract, that the property was heritage listed.  I accept that this may be so, but in my view it has no impact on the construction of the clause under consideration.

1. It was noted that the contract contained a condition that it was subject to the purchaser confirming that the three dwelling units had Council approval.  It was submitted that this indicates that the restriction, under the clause which I am being asked to consider, is a restriction which must exist at the date of the contract.  This is clearly so, it being self-evident from the clause which on its face links the legal restriction to the date of the contract.  However, the words in the clause "may hinder" are plainly a reference to post-contractual possibilities.

1. For these reasons I conclude that the registration of the property on the Heritage Register constitutes a legal restriction existing at the contract date on the property which may hinder the purchaser's use of the property for residential purposes. 

1. The question posed in the Originating Application is answered in the affirmative.