Taylor v Allmark Developments P/L

[2000] QSC 276

SUPREME COURT OF QUEENSLAND

[2000] QSC 276

Registry: Brisbane

Number: S 7542 of 2000

Before Justice Ambrose

Applicant:  ANDRE ROBERT TAYLOR

AND

First Respondent:       ALLMARK DEVELOPMENTS PTY LTD
  (ACN 055 458 903)

AND

Second Respondent:  QUEENSLAND MUSHROOM SUBSTRATE PTY LTD
  (ACN 010 109 207)

AND

Registry: Brisbane

Number: S 7543 of 2000

Applicants:  ROBERT RALPH TAYLOR and BRIGITTE MADELAINE
  TAYLOR

AND

First Respondent:       ALLMARK DEVELOPMENTS PTY LTD
  (ACN 055 458 903)

AND

Second Respondent:  QUEENSLAND MUSHROOM SUBSTRATE PTY LTD
  (ACN 010 109 207)

REASONS FOR JUDGMENT : B.W. AMBROSE J

Delivered: Fifth day of October 2000

CATCHWORDS:          CONTRACT – INTERPRETATION – TIME OF THE ESSENCE – whether extension to time to satisfy conditions required to be effected prior to purported rescission for non-compliance with condition

Laurinda Pty Ltd & Ors v Capalaba Park Shopping Centre Pty Ltd (1988–89) 166 CLR 623

Appearances:                 Mr P. McQuade of counsel for the applicants

Mr P.L. Challen (solicitor) for the respondents

Solicitors:Goodfellow & Scott for the applicants

Hawthorn Cuppaidge & Badgery for the respondents

Hearing date:                  7 September 2000

1. These are applications by purchasers under contracts dated 17 March 1999 for the purchase of units in a block of units called “Mornington at Morningside”.

1. Because the terms of the contracts are for all practical purposes identical, I will deal with the points argued upon both applications in the one judgment. 

1. The applications also seek a declaration that a purported forfeiture of deposit by the respondents is unlawful and for further and other orders.

1. The parties agreed that I should treat the applications in the same way as a vendor and purchaser summons under s 70 of the Property Law Act 1974 (Qld) would be treated.  In this respect, I treat the contracts canvassed in this case as valid originally and the issue for determination is whether upon the facts as to which there is no dispute, the applicant purchasers lawfully terminated those contracts.

1. The contracts in issue were each executed on 17 March 1999.

1. The construction point must be determined having regard to the content of clauses 3, 17 and 20 of those contracts.

1. It is convenient to set out the relevant parts of those clauses, the effect of which is the matter in dispute.

Conditions Precedent

3.1     Conditions

This Contract is subject to the Seller satisfying the following conditions precedent on or before 30 June, 2000:-

(a)     the construction works for the Building being finally completed (as defined in the Building Contract);

(b)     registration of the Plan under the Land Title Act;

(c)     recording of the Community Management Statement establishing the Scheme under the BCCM Act;

(d) issue of a Certificate of Classification under the Building Act for the Building.

3.2     No Waiver

The Seller has no right to waive compliance with any of the Conditions Precedent.

3.3     Unreasonable Conditions

The Seller must take all reasonably available steps to satisfy the Conditions Precedent.  However if any competent authority refuses to grant or revokes any necessary permit or approval, or refuses to seal the Community Management Statement or the Plan or imposes any conditions on any permit, certificate or approval with which the Seller is unwilling to comply, then the Seller may cancel this Contract by notice to the Buyer.

3.4     Delays

If the failure to satisfy the Conditions Precedent by 30 June 2000 is due to delays attributable to:-

(a)     damage by fire, explosion, earthquake, lightning, storm, war, civil commotion or labour dispute;

(b)     legal proceedings concerning the Land the Building or the Development;

(c)     delay of any government authority in issuing any necessary approval or permit if the Seller has taken all reasonable steps to obtain such permit approval;

(d)     inclement weather;

(e)     unavailability of materials or labour for the construction of the Building or the Development;

(f)      any other cause beyond the control of the Seller;

then the Seller may extend the date for satisfaction of the Conditions Precedent by a period equal to the period of the delay beyond the Seller’s control.  A certificate by the Seller’s architect for the Development, certifying as to the causes and period of any delay is sufficient proof the things stated in the certificate.

3.5     Failure of Conditions

If the Conditions Precedent are not satisfied by 30 June 2000 or any later date that may by authorised under clause 3.4, then either party may terminate this Contract by written notice to the other.

17.1   Settlement Date

When the last Condition Precedent in clause 3 is satisfied, the Seller must give notice to the Buyer that all Conditions Precedent have been satisfied.  Settlement is due fourteen (14) days after the Seller gives that notice.

17.2   Place for Settlement

Settlement must take place in Brisbane at a place to be nominated by the Seller, between the hours of 9.00am and 5.00pm at a time nominated by the Seller.

17.3   Transfer Documents

The Seller must prepare the Transfer documents.

If the Buyer pays the Seller’s reasonable expenses, the Buyer may require the Seller to produce the Transfer documents at the Office of State Revenue in Brisbane, for stamping prior to Settlement.

On receipt of the Undertaking from the Buyer’s solicitors that the Transfer documents will be used for stamping purposes only pending completion, the Seller will lend the Transfer documents to the Buyer’s solicitors.

17.4   Procedure at Settlement

In exchange for payment of the Balance Price, the Seller must deliver to the Buyer at Settlement:-

(a)     any instrument of title for the Land required to register the Land to the Buyer;

(b)     unstamped Transfer documents capable of immediate registration (after stamping);

(c)     any keys, codes or devices in the Seller’s possession or control for all locks and security systems on the Lot;

(d)     vacant possession of the Lot and title to the Chattels.

21.1   Time

Time is of the essence of this Contract, except regarding any agreement between the parties on a time of day for Settlement.

1. The contracts dealt with on this application are the standard form “off the plan” contracts designed to be executed before completion of the units sold.

1. The applicant purchasers did not receive any notice that all conditions precedent in clause 3 had been satisfied by 30 June 2000.  Neither did the applicants receive any notice that there had been an extension of the date for satisfaction of the conditions precedent pursuant to clause 3.4.

1. Each applicant therefore on 4 July 2000 faxed to the solicitors for the vendors (the respondents to these applications), a letter in the following terms:-

“We have today ascertained that clause 3.1(b) and possibly (c) has not been satisfied. 

Our clients therefore terminate the contract of sale pursuant to clause 3.5 of the contract of sale.

You should treat this as a notice pursuant to clause 24 of the contract of sale.”

1. No reply was received to this letter until 19 July 2000 when the solicitors for the vendor/respondent sent to the solicitors for the applicant purchasers a letter in these terms:-

“We refer to your facsimile dated 4 July 2000 in which you advised that the buyer terminates the contract pursuant to clause 3.5.  This clause also provides for an extension of the date by which the conditions precedents are to be satisfied (namely 30 June 2000) to a date authorised under clause 3.4.

We enclose a copy of the certificate issued by Mark Tanner Architect who is the Seller’s Project Manager for the development.  Pursuant to clause 3.4, the seller hereby extends the date for satisfaction of the conditions precedent to 11 August 2000;

The plan of subdivision and first community management statement have been lodged with the Department of Natural Resources.  Registration is expected within a week.”

1. The certificate of the architect (undated) reads as follows:-

“I certify the construction of the buildings and registration of the plan of subdivision by the Department of Natural Resources was delayed for a period at least 6 weeks by a combination of the following factors outside the control of the seller:-

1.      Bad weather; and

2.      Unavailability of materials and labour for the construction of the building during the coarse of the project;

3.      Delays by the Brisbane City Council in issuing final approval due to problems with its internal procedures.”

1. The solicitors for the applicant purchasers replied on 20 July 2000 to this letter and enclosure:-

“We confirm that our client considers the contract to be at an end.”

1. By letter dated 21 July 2000,the solicitors for the respondent vendor advised that:-

“We refer to our facsimile dated 19 July 2000 and advise that the plan and community management statement for the above development have now been registered. 

---

Pursuant to clause 17.1 of the contract, settlement is to occur on or before 4.00pm on 4 August 2000.”

1. By further letter of 25 July 2000, the solicitors for the vendor respondent advised:-

“We refer to your facsimile of 24 July 2000.

We note that despite our facsimile of 19 July 2000, wherein we notified you that the date by which the conditions precedent are to be satisfied, has been extended to 11 August 2000 pursuant to clause 3.4 your client maintains that he has lawfully terminated the contract pursuant to clause 3.5.

Our client relies on clause 3.4 to lawfully extend the relevant date in clause 3.1 of the contract.  Accordingly, the buyer’s right to lawfully terminate the contract pursuant to clause 3.5 does not exist. Your client’s action in terminating the contract on 20 July 2000 in blatant disregard of the lawful extension of the date under clause 3.1 to 11 August 2000 constitutes a wrongful repudiation in breach of the terms of the contract.  Our client accordingly declares the deposit forfeited.

We are instructed to advise that our client elects to accept this wrongful repudiation by your client.  The forfeiture of the deposit now claimed by our client will be a matter for determination by the court.  Any further damages sought in excess of the deposit will only be known when our client has resold the property.  The insurance bond from Royal & Sun Alliance Insurance will be called to be paid to the trust account of our firm as stakeholder pursuant to clause 14.5 of the contract until the court has ruled on the facts as to whether the buyer’s or seller’s view is correct.”

1. The applicants did not of course purport to terminate the contracts on 20 July 2000; they purported to do so on 4 July 2000 more than a fortnight before they were notified on 19 July of the purported extension of time for compliance with the conditions precedent and the consequent postponement of settlement date.

1. The letter from the applicants’ solicitors of 20 July merely purported to confirm the repudiation notified on 4 July 2000 in the light of the purported extension by the respondent on 19 July 2000.

1. From the material to which I will not refer in detail, it emerges that all conditions precedent referred to in clause 3.1 were not met until at least 21 July 2000.

1. For the applicants it is contended that any extension under clause 3.4 had to be effected by the vendor either:-

(i)     Prior to 30 June 2000; or

(ii)     Prior to the election of the purchaser to rescind the contract subsequent to 30 June 2000 for non-compliance with the conditions precedent prior to that date.

1. It is contended for the applicants that notice of extension of time for compliance with the conditions pursuant to clause 3.4 must be provided to the buyer so that the buyer is in a position to make an election to terminate pursuant to clause 3.5.

1. It is contended that time was expressly made of the essence of the contract.

1. It is unnecessary to determine what may have been the position had the applicant purchasers not elected to rescind the contract for non-compliance with clause 3.1 but allowed the contract to remain on foot.  Clause 3.5 in its terms gives both vendor and purchaser the option to avoid the contract should there be non-compliance with clause 3.1.  Should each have elected to not avoid the contract but to permit it to remain on foot then circumstances may have been such that time would no longer have been treated as being of the essence.  In that situation, perhaps reasonable notice of intention to repudiate in the event of undue delay in compliance with clause 3.1 may have been necessary before the contracts could lawfully have been repudiated for the delay in compliance with those conditions.  Indeed, it was contended for the vendor respondent that observations in Laurinda Pty Ltd & Ors v Capalaba Park Shopping Centre Pty Ltd (1988–89) 166 CLR 623 supported the proposition that “where an essential term is to be performed within a reasonable time there being no stipulated day for performance and the time passes without performance then the innocent party does not acquire a right to rescind unless the defaulting party has repudiated its obligations to perform”.

1. It is contended for the respondent that it followed from Laurinda Pty Ltd & Ors v Capalaba Park Shopping Centre Pty Ltd that once 30 June 2000 had passed without the vendor having given any notice under clause 17.1, before the applicant purchasers could rescind they were obliged to ask the vendor respondent whether it intended to give a notice extending time for completion of the conditions under clause 3.1 pursuant to clause 3.4.  It was further contended that that case is authority for the proposition that once 30 June 2000 had passed, if the applicants wanted again to make time of the essence, they were required to give the vendor respondent a notice to that effect selecting a reasonable time within which compliance with clause 3.1 must be achieved.

1. It is further contended for the respondent that there was no obligation on the vendor to give any notice extending time for completion of the conditions under 3.1 prior to 30 June 2000.  It was contended:-

“It is only when the plan failed to register by that due date and therefore clause 3.1(b) had not been satisfied by that due date and accordingly also clause 3.1(c) because that must follow after the registration of the plan, it is only then that the seller has an obligation to ask its architect ‘what period of time will you certify for any valid extension of time’”? 

The evidence is that an architect’s notice was issued on 19 July and it stipulated 6 weeks extension beyond 30 June 2000.

1. In my view, Laurinda Pty Ltd & Ors v Capalaba Park Shopping Centre Pty Ltd gives no support to this proposition. 

1. In my view, under these contracts where time was expressly made of the essence, the contract could be avoided by the applicant purchasers should the conditions in clause 3.1 not be “satisfied” on or before 30 June 2000. 

1. The respondent of course may have elected pursuant to clause 3.4 to extend the due date for satisfaction of those conditions.  It was not of course obliged to do so.  One might think that the state of the market for units of the sort which were the subject of the contracts may, in some cases motivate a vendor not to seek an extension so that it might terminate the contract under clause 3.5.

1. In my view, it is clear upon the material that the obligation on the vendor respondent to satisfy the conditions under clause 3.1 on or before 30 June 2000 remained a binding one in the absence of any extension under clause 3.4 at all times prior to the purported avoidance of the contract by the applicants by their letter of 4 July 2000.  It could not be suggested on the material that they affirmed the contract or elected not to avoid it for the respondent vendor’s non-compliance with the obligations under clause 3.1.

1. The contention advanced on behalf of the vendor respondent that it had an option to extend time for satisfaction of the conditions under clause 3.1, at any time within the period of 6 weeks after 30 June 2000 certified by the architect as the period of time by which compliance with the conditions in clause 3.1 was delayed by factors outside the control of the respondent, would in my view, lead to quite unacceptable uncertainty in the performance of the parties’ contractual obligations under the contract.

1. In my view, upon the proper construction of each of the contracts in issue, any extension under clause 3.4 was required to be effected prior to the applicants’ avoidance of the contracts for non-compliance with clause 3.1 on 4 July 2000.

1. In my view, it is strongly arguable that such an extension should have been effected prior to 30 June 2000.  However, it is unnecessary for me to determine that point on the undisputed facts in the present case.

1. I do not propose to make any declarations or orders in the wide terms sought in the amended application because it would not be appropriate in my view to do so having regard only to the undisputed facts which have been canvassed before me on this application which is in the nature of a vendor and purchaser application under S 70 of the Property Law Act.  I therefore content myself with making the following declaration and orders:-

(1)     Each of the purported extensions of the date for satisfaction of the conditions precedent under clause 3.1 notified to the applicants on 19 July 2000 was ineffective to extend the date for satisfaction of those conditions precedent to 11 August 2000 because it was given subsequent to 30 June 2000 and subsequent to the purported avoidance by the applicants of their obligations under the contracts on 4 July 2000.

(2)     I order that the respondent pay to the applicants their costs of and incidental to the applications to be assessed.

(3)     I give the parties liberty to apply for such relief as they may wish to seek consequent upon this construction of the contracts of sale.