Threadgold Architecture Pty Ltd v Staunton Developments Pty Ltd - [2024] WASC 199

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   THREADGOLD ARCHITECTURE PTY LTD -v- STAUNTON DEVELOPMENTS PTY LTD [2024] WASC 199
CORAM:   ACTING MASTER MCDONALD
HEARD:   17 AUGUST 2023 & 6 DECEMBER 2023
DELIVERED          :   31 MAY 2024
FILE NO/S:   CIV 1397 of 2023
BETWEEN:   THREADGOLD ARCHITECTURE PTY LTD
Plaintiff
AND
STAUNTON DEVELOPMENTS PTY LTD
Defendant

Catchwords:

Practice and Procedure - Summary judgment application - Construction of contract - Meaning of 'allow' and 'cause' - No obligation on defendant to remove sand pursuant to agreements - Alternate construction not open - Leave to bring application out of time

Legislation:

Rules of the Supreme Court 1971 (WA), O16 r 1

Result:

Leave granted to bring summary judgment application out of time
Summary judgment application allowed

Category: B

Representation:

Counsel:

Plaintiff	:	D Purdy & SM Davies SC
Defendant	:	M Hotchkin

Solicitors:

Plaintiff	:	Pragma Lawyers
Defendant	:	Hotchkin Hanly

Case(s) referred to in decision(s):

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Casella v Hewitt [2008] WASCA 13
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
Goldsmith v Sandilands [2002] HCA 31; (2002) 76 ALJR 1024
Huntingdale Village Pty Ltd (Receivers & Managers Appointed) v Corrs Chambers Westgarth [2018] WASCA 90
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
NRW Contracting v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80
Theseus Exploration NL v Foyster (1972) 126 CLR 507
Westpac Banking Corporation v Anderson [2017] WASC 106

ACTING MASTER MCDONALD:

Summary

Stuart Wayne Threadgold is an architect. He is the sole director of Threadgold Architecture Pty Ltd (Threadgold), an architecture company and the plaintiff in this matter.
Up until 26 November 2021, Mr Threadgold was the owner of 157 Haag Road in Yelverton (Land).
In June 2017, Mr Threadgold entered into an agreement with the plaintiff that allowed the plaintiff to remove sand from the Land and to retain all proceeds from the sale of the sand.
On 15 March 2021, the plaintiff entered into an agreement with Cotton Holdings Pty Ltd trading as APH Contractors (APH) which granted APH an exclusive right to remove specified sand from the Land on certain terms and conditions. I will refer to this as the Sand Removal Agreement.
On 19 October 2021, Staunton Developments Pty Ltd, the defendant, purchased the Land from Mr Threadgold. The Land was transferred to the defendant on 26 November 2021. Also on 19 October 2021, the plaintiff and the defendant entered into an agreement whereby they agreed to share the revenue from the removal of sand from the Land pursuant to the Sand Removal Agreement. I will refer to this as the Revenue Sharing Agreement.
APH did not remove sand from the Land pursuant to the Sand Removal Agreement, or at all. Consequently, the plaintiff commenced these proceedings against the defendant alleging that the defendant is in breach of the Revenue Sharing Agreement and seeking, inter alia, a declaration that, on a proper construction of the Revenue Sharing Agreement, the defendant was obliged to use all reasonable endeavours to cause the removal of the specified sand from the Land.
By chamber summons dated 9 May 2023, the defendant applied for summary judgment on the basis that the action brought by the plaintiff is so clearly untenable that it could not possibly succeed at a trial in the ordinary way. The application is made pursuant to O 16 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC). The plaintiff, in the alternative, sought an order pursuant to O 20 r 19(1)(a) and (or) (c) of the RSC, that the statement of claim be struck out and there be judgment for the defendant. The parties, both in written and oral submissions, proceeded on the basis that the only matter before the court was the defendant's application for summary judgment. In keeping with that approach, I only consider the summary judgment application in these reasons.
For the reasons that follow, I find I am satisfied that the plaintiff's case is so clearly untenable that it could not possibly succeed at trial. I am also satisfied that the defendant should be granted leave to apply for summary judgment out of time. Therefore, judgment is entered for the defendant.
In these reasons, I deal with following topics:
(1)the evidence;
(2)the plaintiff's statement of claim;
(3)legal principles applicable to the summary judgment application;
(4)determination of the summary judgment application; and
(5)orders.

The evidence

In support of its application for summary judgment, the defendant relies upon the following affidavits:
(1)affidavit of Jonathan Paul Timms sworn on 9 May 2023 (Timms Affidavit);
(2)affidavit of Nicholas William Kalmund sworn on 9 May 2023 (Kalmund Affidavit); and
(3)affidavit of Darren Kurt Zusman sworn on 4 July 2023 (Zusman Affidavit).
In opposition to the application for summary judgment, the plaintiff relies upon the following affidavits:
(1)affidavit of Daniel Robert Purdy sworn on 23 May 2023 (First Purdy Affidavit); and
(2)affidavit of Stuart Wayne Threadgold sworn on 15 June 2023 (Threadgold Affidavit).
The plaintiffs seek leave to adduce further evidence in the form of the affidavit of Daniel Robert Purdy sworn on 28 November 2023 (Second Purdy Affidavit). Given the affidavit was filed after I had heard the summary judgment application on 17 August 2023, the plaintiff requires leave to rely upon the Second Purdy Affidavit.
The plaintiff submits that leave ought to be granted for it to rely upon the Second Purdy Affidavit because the facts deposed to therein arose after the hearing of the summary judgment application and there is no prejudice to the defendant if leave is granted.
The defendant opposes leave being granted for the plaintiff to rely on the Second Purdy Affidavit on the basis that the facts deposed to therein are irrelevant to the summary judgment application.
Irrespective of the stage at which evidence is sought to be adduced, the primary rule of evidence is that a court will only receive evidence that is relevant to the issues. Evidence is relevant if it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the action.[1]
[1] Goldsmith v Sandilands [2002] HCA 31; (2002) 76 ALJR 1024.
In my view, leave should not be granted for the plaintiff to rely upon the Second Purdy Affidavit because, for reasons which I will detail later, the evidence adduced therein is not relevant to the issues to be determined in the summary judgment application - those being the proper construction of the Revenue Sharing Agreement and the Sand Removal Agreement.

The plaintiff's statement of claim

By its substituted statement of claim dated 29 March 2023 (SOC), the plaintiff pleads, at [8] of SOC, that as at 19 October 2021, the parties knew the following facts:
(1)prior to entry into the contract for the sale of the land, the plaintiff had substantially completed, alternatively, completed a material part, of the work, including the obtaining of approvals, necessary to enable sand to be lawfully removed from the Land on a commercial basis;
(2)the plaintiff and APH had entered into the Sand Removal Agreement and its terms and purpose;
(3)by development approval application 20/0437, the plaintiff had applied for development approval for removal of sand from part of the Land;
(4)by clearing permit application 8863/1, the plaintiff had applied for a clearing permit to facilitate the removal of sand from the relevant part of the Land;
(5)on 26 August 2021 the Department of Water and Environmental Regulation (DWER) had issued a letter providing in principle approval for clearing permit application 8863/1;
(6)in June 2017, the plaintiff and Mr Threadgold agreed that, in consideration of the plaintiff acting or causing to be taken all necessary steps to remove and sell sand from the Land, the plaintiff would be entitled to any proceeds or profits derived therefrom;
(7)the commercial purpose of the Revenue Sharing Agreement, in circumstances where:
(a)Mr Threadgold wished to sell, and the defendant wished to buy the Land;
(b)the plaintiff had undertaken work in respect of the Land which added value to the Land;
(c)the plaintiff had not been compensated for that work or otherwise rewarded for added of value;
(d)the defendant was to ensure that the plaintiff was compensated for that work notwithstanding the sale of the land by Mr Threadgold to the defendant.
By [9] of the SOC, the plaintiff pleads the proper construction of the Revenue Sharing Agreement as follows:
9.On a proper construction the Revenue sharing agreement the parties, relevantly, agreed:
(a)their agreement concerned the sand the subject of the Sand removal agreement (that is, the sand located on the part of the land identified in development approval application 20/0437) (specified sand);
(b)the plaintiff would procure development approval, the clearing permit, and any other approvals necessary to permit the lawful removal of the specified sand;
(c)the time for the plaintiff to procure the approvals was 13 months from the date of entry into the Revenue sharing agreement;
(d)the plaintiff would bear any costs incurred in procuring the approvals;
(e)the plaintiff agreed to assign and the defendant agreed to accept assignment of the plaintiff's interests, rights, and obligations in the Sand removal agreement and that the agreement effected the assignment;
(f)the defendant would cause the removal of the specified sand from the land;
(g)the specified sand removed would be sold by the defendant:
i.to APH, pursuant to the Sand removal agreement; or
ii.in the event the Sand removal agreement was not or ceased to be operative, on the best commercial terms available to a third party on an arm's length basis;
(h)the defendant and the plaintiff would share in equal parts the revenue from the sale of the specified sand removed;
(i)revenue meant the sum paid to the defendant for the specified sand removed including any GST;
(j)the defendant would not, whether by way of variation, termination, novation, renegotiation or otherwise, deal with those interests, rights and obligations in any manner that would affect adversely the plaintiff's interests under the Revenue sharing agreement;
(k)the Revenue sharing agreement would subsist until the earlier of the date of the completion of the removal of the specified sand and 5 years from the date on which the defendant became the registered proprietor of the land;
(l)the plaintiff and the defendant would each act in good faith in their dealings with each other in respect of or in connection with the Revenue sharing agreement;
(m)the plaintiff and the defendant would cooperate with each other in all respects in relation to or in connection with the operation of the Revenue sharing agreement; and
(n)the defendant would use all reasonable endeavours to ensure that all steps to be taken in the performance of the agreement occurred within the shortest time possible to enable the plaintiff's interest in the land to be extracted in the shortest time reasonably possible.
(emphasis added)
By [12] of the SOC, the plaintiff pleads the proper construction of the Sand Removal Agreement:
12.On a proper construction the Sand removal agreement materially provided that:
(a)the parties agreed to record that the plaintiff had (arising from the matters pleaded in paragraph 5 above and the performance by the plaintiff under the agreement pleaded therein) an interest in the land sufficient to enable the plaintiff to deal with the interests the subject of the agreement; and
(b)the plaintiff would obtain:
i.a development approval from the City of Busselton; and
ii.clearing permit CPS 8863/1;
for APH to remove sand from a part of the land (identified by plan) in accordance with the conditions set out in the development approval;
(c)subject to the development approval and the clearing permit being obtained, APH would during period provided for sand removal under the agreement remove the specified sand from the land;
(d)APH would cease to remove specified sand when APH had extracted 300,000 loose cubic metres of the specified sand from the land or the expiration of the development approval, whichever occurred earlier;
(e)on the last day of each month during the period provided for sand removal under the agreement APH would provide to the plaintiff a statement of the total tonnes of sand removed in the form of a purchase order;
(f)while and for so long as APH was exercising it rights and meeting its obligations under the agreement to remove sand, the plaintiff would not allow any other party to remove sand from the part of the land the subject of the agreement; and
(g)APH would pay $4 per tonne, plus GST, for the sand removed.
(emphasis added)
The plaintiff pleads that the development approval DA 20/0437 was granted on 6 May 2022[2] and the clearing permit CPS 8863/1 was approved in principle by 27 January 2023.[3]
[2] SOC [14].
[3] SOC [15].
The plaintiff pleads that the defendant, in breach of the Revenue Sharing Agreement:
(1)refused to advise DWER that the plaintiff was authorised to procure clearing permit application 8863/1 on the defendant's land;[4]
(2)on or about 14 July 2022, caused Gunner Developments Pty Ltd to apply for a clearing permit;[5]
(3)on or about 1 August 2022, the defendant itself applied for a clearing permit;[6]
(4)between the period of 12 July 2022 to at least 11 November 2022, acted in a manner that was likely to hamper, delay and prevent performance of the Sand removal agreement;[7]
(5)in circumstances that did not make time of the essence, asserted wrongfully that the plaintiff did not obtain the clearing permit within 13 months of the Revenue Sharing Agreement, and was relieved from its obligations and has failed and refused to perform its obligations under the Revenue Sharing Agreement.[8]
[4] SOC [16].
[5] SOC [18].
[6] SOC [19].
[7] SOC [20].
[8] SOC [16] ‑ [24].
The plaintiff pleads that, but for the defendant's breaches of the Revenue Sharing Agreement, the clearing permit would have been granted and the extraction of the sand from the Land would have commenced on or about 1 July 2022.[9]
[9] SOC [22] ‑ [23].
The plaintiff alleges that, by reason of the defendant's breaches of the Revenue Sharing Agreement, it has suffered loss and damage as it has been deprived of the opportunity of sharing in revenue from the sale of the sand extracted from the Land as provided for in the Revenue Sharing Agreement.
The plaintiff seeks the following relief:
A.A declaration that on a proper construction of the Revenue sharing agreement:
a.A failure by the plaintiff to obtain the clearing permit within 13 months from the entry into the agreement does not relieve the defendant from its obligations to the plaintiff under the agreement;
b.Further or alternatively in circumstances where the defendant did not make time of the essence a failure by the plaintiff to obtain the clearing permit within 13 months from the entry into the agreement does not relieve the defendant from its obligations to the plaintiff under the agreement;
c.Further or alternatively the obligation upon the defendant to perform under the agreement has not been discharged;
d.at all times during its subsistence the defendant is honestly obliged to use all reasonable endeavours to remove the specified sand from the land; and
e.The agreement between the plaintiff and the defendant remains on foot.
B.An order for specific performance of the Revenue sharing agreement in such form as to the Court shall deem fit.
C.Damages for breach of the Revenue sharing agreement.
D.Interest on damages awarded under section 32 of the Supreme Court Act 1935 (WA) from 1 July 2022 until judgment.
E.Costs.

Legal principles applicable to summary judgment application

Order 16 r 1 of the RSC deals with an application for summary judgment by a defendant. It provides, relevantly:
1.Application by defendant for summary judgment
(1)Any defendant to an action may within 21 days after appearance or at any later time by leave of the Court, apply to the Court for summary judgment, and the Court, if satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits, or that the action should be disposed of summarily or without pleadings, may order -
(a)that judgment be entered for the defendant with or without costs; or
(b)that the plaintiff shall proceed to trial without pleadings, or if all parties consent, may dispose of the action finally and without appeal in a summary manner.
The legal principles applicable to an application for summary judgment are not in dispute. Summary judgment will only be granted where there is no real question to be tried[10] and only when there is a high degree of certainty about the ultimate outcome if the matter went to trial.[11]
[10] Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99.
[11] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46].
In this case, the defendant is required to show that, by virtue of Recital D, cl 1 and cl 2 of the Sand Extraction Agreement and cl 2 of the Revenue Sharing Agreement, (1) the defendant had a good defence on the merits, (2) the SOC was frivolous or vexatious, or (3) the SOC should be disposed of summarily. As Murphy JA said in NRW Contracting v Cliffs Asia Pacific Iron Ore Pty Ltd,[12] each of these requirements amounts to the same thing, that is, that the defendant must show that the SOC is so clearly untenable that it could not possibly succeed at a trial in the ordinary way.
[12] NRW Contracting v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASCA 107 [52].
In order to determine whether the SOC is so clearly untenable, the court must assess, on the summary judgment application, the prospects of success of the SOC if it went to trial in the ordinary way.[13] This does not mean that the plaintiff's SOC must be so clearly hopeless that no argument is required. In fact, extensive argument may be required and it may be appropriate for the court to determine complex points of law.[14]
[13] Batistatos v Roads and Traffic Authority (NSW) [46].
[14] Theseus Exploration NL v Foyster (1972) 126 CLR 507, 514 ‑ 515; Casella v Hewitt [2008] WASCA 13 [36].
In relation to the onus of proof on an application pursuant to O 16 r 1 of the RSC, in Westpac Banking Corporation v Anderson,[15] Pritchard J said:
The defendant bringing the summary judgment application bears the legal onus of establishing that there is no serious question to be tried on any cause of action raised by the plaintiff. If a defendant's affidavit establishes the basis for the summary judgment application, the plaintiff may assume an evidentiary onus to show why summary judgment should not be given. In other words, the plaintiff needs to show, on the evidence, that there exists a 'triable issue'. In doing so, the affidavit must 'condescend upon particulars' - that is, it must set out the facts which establish that it is reasonable to permit the plaintiff to pursue the action.
While the plaintiff may bear that evidentiary onus, the defendant retains the legal onus of demonstrating that there is no real question to be tried, sufficient to warrant the grant of summary judgment. (citations omitted)
[15] Westpac Banking Corporation v Anderson [2017] WASC 106 [53].

An application for summary judgment is required to be made within 21 days after the defendant has filed an appearance or if not, by leave of the court. The reason for the time limit is to ensure that applications are made at an early stage of proceedings, before substantial costs have been incurred. Where a party seeks the leave of the court to make an application outside of time, that party must satisfy the court that the delay in making the application was justified. One of the factors the court will take into account when determining whether leave ought be granted, is the prospects of success of the application. The prejudice of the delay to the other party is also a relevant factor.[16]
[16] Westpac Banking Corporation v Anderson [2017] WASC 106 [38].

Determination of the summary judgment application

The determination of the summary judgment application turns on the proper construction of the Sand Removal Agreement and the Revenue Sharing Agreement.
In order to succeed at trial the plaintiff must prove, on the balance of probabilities, that, upon a proper construction of the Revenue Sharing Agreement, the defendant is obliged to cause the removal of the specified sand from the Land. If the defendant cannot prove that the defendant is obliged to cause the removal of the sand from the Land, then any loss or damage of the plaintiff would not have been caused by the defendant.
Senior counsel for the plaintiff submitted that, as a threshold issue, a matter requiring construction of a contract is not an appropriate matter to be determined on a summary judgment application due to its complexity and the need for evidence of surrounding circumstances.
I do not agree. While I accept that it is important to have regard to the high threshold that the defendant must meet to succeed on its summary judgment application, there is no principle at law that an application for summary judgment cannot be maintained merely because it involves a question of contractual construction. Although in the NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd[17] case, the primary judge declined to grant summary judgment, a decision upheld on appeal, neither the primary judge nor the court of appeal declined to engage in the consideration of the issue of contractual construction.
[17] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [52].
I turn to consider the merits of the defendant's summary judgment application.
The crucial issue of construction is whether the Revenue Sharing Agreement obliges the defendant to cause the removal of the specified sand.
On the one hand, the plaintiff contends that, on a proper construction of the Revenue Sharing Agreement, the defendant must cause the removal of the specified sand from the Land and sell that sand to APH in accordance with the Sand Removal Agreement, or on the best commercial terms available to a third party on an arm's length basis.[18]
[18] SOC [9(f) and (g)].
On the other hand, the defendant contends that the meaning of cl 2 of the Revenue Sharing Agreement is plain - it provides that the defendant agrees to use all reasonable endeavour to allow the extraction of the sand. The defendant says that this clause creates no obligation on the part of the defendant to remove or cause APH (or a third party) to remove the sand.
I must take an objective approach when determining the rights and obligations of parties to a contract. The meaning attributed to the terms of a commercial contract is to be determined having regard to what a reasonable business person would have understood those terms to mean.[19] In order to determine what a reasonable business person would have understood, the court must consider the language used by the parties in the contract, the circumstances in which the contract was made and the commercial purpose or objects of the contract.[20]
[19] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
[20] Electricity Generation Corporation v Woodside Energy Ltd [35].
In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[21] French CJ, Nettle and Gordon JJ said that where a term of a contract is not ambiguous or is not susceptible of more than meaning, evidence of surrounding circumstances cannot be admitted to contradict the plain meaning of the term. However, their Honours went on to say:
… sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. It may be necessary in determining the proper construction where there is a constructional choice. (citations omitted)
[21] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [49].
It is the objective meaning of the words that must be determined, not the subjective understanding of the parties. In Codelfa Construction Pty Ltd v State Rail Authority of NSW,[22] Mason J observed:
We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
[22] Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, 352.
When considering the commercial purpose or objects of the contract, it is necessary to have regard to the genesis, background and context of the transaction and the market in which the parties are operating. These matters are relevant irrespective of whether a term in the contract is ambiguous or capable of more than one meaning.[23]
[23] Huntingdale Village Pty Ltd (Receivers & Managers Appointed) v Corrs Chambers Westgarth [2018] WASCA 90 [39].
The court should approach the task of construction on the basis that the parties had the intention to enter into an agreement that made commercial sense. The construction adopted by the court must therefore, be aligned with the commercial purpose of the contract.[24]
[24] Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [2017] HCA 12; (2017) 261 CLR 544 cited with approval in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80 [296].
The Revenue Sharing Agreement relevantly provides:[25]
[25] Timms Affidavit; annexure JPT‑4, pages 21 ‑ 22.
(1)By cl 1, the defendant will 'share 50% of the income derived from the sand removal ($2.00 per Tonne excluding GST) as contemplated in' the Sand Removal Agreement, subject to:
(a)the plaintiff procuring all the required council and other such approvals as required to ensure the lawful extraction and removal of sand within 13 months from the date of this agreement;[26]
[26] Revenue Sharing Agreement cl 1a.
(b)the plaintiff 'pays all costs associated with procuring such approvals';[27] and
(c)the plaintiff assigns to the defendant, 'all rights and obligations' under the Sand Extraction Agreement.[28]
(2)By cl 2, the defendant 'agrees to use all reasonable endeavours to allow the extraction of all sand within the shortest time possible'.[29]
(3)By cl 5, the agreement ceases at the earlier of:
(a)'The completion of the sand removal as contemplated';[30] or
(b)'5 years from the settlement date of the property'.[31]
(4)By cl 6, the plaintiff and defendant 'will act in good faith and use all reasonable endeavours to cooperate throughout the lifetime of this agreement'.[32]
[27] Revenue Sharing Agreement cl 1b.
[28] Revenue Sharing Agreement cl 1c.
[29] Revenue Sharing Agreement cl 2.
[30] Revenue Sharing Agreement cl 5a.
[31] Revenue Sharing Agreement cl 5b.
[32] Revenue Sharing Agreement cl 6.
The starting point to determine the proper construction of the Revenue Sharing Agreement, is to look at the language used in the relevant clause.
Clause 2 is the operative provision of the Revenue Sharing Agreement. This is the clause which the plaintiff contends, on its proper construction, means that the defendant would cause the removal of the specified sand from the Land.
According to the Oxford English Dictionary, 'allow' means 'to permit or give consent or freedom to a person to do something; to give permission or opportunity' whereas, 'cause' means 'to be the cause of; to effect, bring about, produce, induce, make'.
On its plain meaning, 'allow' means the opposite of 'cause', the former is passive and the latter is active. To 'allow' something is to respond to an action taken by another, whether to 'cause' something is to initiate the action. There is nothing ambiguous or uncertain about the meaning of the word allow. Clause 2, on its plain meaning, does not require the defendant to remove the sand or to compel APH, or any other third party, to remove the specified sand. The use of the term 'reasonable endeavours' adjacent to the word allow does not transform the word 'allow' into an active word as was submitted by senior counsel for the plaintiff.
In my view, the use of the words 'reasonable endeavours' merely prevents the defendant from taken any unreasonable action that would prevent or delay the removal of sand from the Land - this construction is consistent with cl 6 of the Revenue Sharing Agreement which states that the parties will act in good faith and use all reasonable endeavours to cooperate.
The next task in determining the proper construction is to look at the Revenue Sharing Agreement as a whole, and the context in which cl 2 appears. There is nothing in the Revenue Sharing Agreement as a whole that is inconsistent with the plain meaning of cl 2. However, the terms of the Sand Removal Agreement are incorporated into the Revenue Sharing Agreement and so it is necessary to consider the Sand Removal Agreement in order to determine the proper construction of the Revenue Sharing Agreement.
The Sand Removal Agreement relevantly provides:[33]
(1)by cl B, the plaintiff 'shall obtain a Development Approval by the City of Busselton and Clearing Permit CPS 8863.1 for [APH] to extract sand from the Land in accordance with the conditions set out in the Development Approval (hereinafter "the Approval")';[34]
(2)by cl D, the plaintiff 'has agreed with the [APH] to allow [APH] exclusively to remove sand from the area identified on the plan set out in the Second Schedule hereto (hereinafter "the Plan") and otherwise upon the terms and conditions of this Agreement';[35]
(3)by cl 1, the terms and conditions of the Sand Removal Agreement include the recitals;
(4)by cl 2, the plaintiff 'agrees that [APH] shall have the exclusive right to remove sand from the Land in accordance with the approval and from the area outlined in on the Plan from the date of execution of this Agreement until the expiration of the Approval OR 300,000 Loose Cubic Metres (LCM) of sand have been extracted, OR any extended date as hereinafter described'; and
(5)by cl 3, APH shall pay to the plaintiff 'an amount of $4.00 per tonne plus GST in respect to the sand removed from the Land and otherwise in accordance with the terms of this Agreement'.
[33] Timms Affidavit; annexure JPT‑5, pages 23 ‑ 31.
[34] Sand Removal Agreement cl B.
[35] Sand Removal Agreement cl D.
The plaintiff submits that it is arguable that the terms of the Sand Removal Agreement, properly construed, are the source of the defendant's obligation to 'cause' the removal of the specified sand. The plaintiff says that the defendant has been assigned, by the Revenue Sharing Agreement, the obligation to enforce APH's obligation to remove the specified sand from the Land. The defendant does not accept that that the plaintiff's rights and obligations under the Sand Removal Agreement were ever assigned. However, for present purposes I have taken the plaintiff's case at its highest and assumed that they were.
The plaintiff does not point to any specific clause of the Sand Removal Agreement requiring APH to remove the specified sand from the Land. That is because there is no clause that expressly does so.
Clause 2 of the Sand Removal Agreement is expressed in terms of APH having an exclusive 'right' to remove sand from the Land. No clause in the Sand Removal Agreement is expressed in terms that APH 'shall' or 'must' or even 'may' remove sand. There is no date specified in the Sand Removal Agreement by which APH is to remove the sand.
In my view, it is not arguable that a proper construction of the terms of the Sand Removal Agreement creates an obligation for APH to remove the specified sand - rather, the Sand Removal Agreement merely gives APH an exclusive right, with no corresponding obligation, to remove the specified sand and if it elects to do so then the conditions upon which that will occur.
It follows that it is not arguable, on a proper construction of the whole of the Revenue Sharing Agreement, that the defendant is obliged to cause the removal of the sand in circumstances where APH has no obligation to remove the sand. When read in the context of the whole of the Revenue Sharing Agreement and the Sand Removal Agreement, cl 2 of the Revenue Sharing Agreement is not ambiguous or capable of an alternate construction other than the one contended for by the defendant.
The plaintiff contends that evidence of surrounding circumstances and commercial purpose of the agreement is required to properly construe the agreements. This includes evidence as to development approvals and the position of parties, including APH, conditions of development approvals and alleged willingness or otherwise of APH to perform its contractual obligations.
The plaintiff submits that those surrounding circumstances and commercial purpose include the following:
(1)the Revenue Sharing Agreement was entered into in connection with the sale of land to the defendant by Mr Threadgold;
(2)prior to the sale of the land the plaintiff had entered into the Sand Removal Agreement with APH;
(3)the commercial interconnection between the transactions;
(4)the factual matrix that existed in respect to the transactions including relevantly the state of applications for development approval to extract the sand;
(5)the interconnectedness of the matter is in so far as consideration was concerned;
(6)each agreement bears indicia of not having been drafted by a legal practitioner; and
(7)on their face each agreement is imprecise and incomplete.[36]
[36] Plaintiff's outline of submissions filed 7 August 2023 [31] and [37].
The defendant contends that the court, after having regard to the surrounding circumstances and the commercial purpose of the agreements, has a choice between alternate constructions. The defendant contends that the commercial purpose that the defendant and the plaintiff understood was that the plaintiff was to be rewarded for the work that it had done in relation facilitating the removal of sand from the Land.
The plaintiff submits that the defendant would need to satisfy the court that the plaintiff's pleas as to construction are not even arguable, in circumstances where consideration passes from the defendant to the plaintiff by way of compensation for work done by the plaintiff prior to sale of land;[37] and, as a matter of commercial good sense, the plaintiff would not have entered into a contract that created merely a right and not an obligation to remove the sand.[38]
[37] Plaintiff's outline of submissions filed 7 August 2023 [39(a)].
[38] Plaintiff's outline of submissions filed 7 August 2023 [39(b)].
As I have outlined, the defendant ultimately bears the onus of demonstrating that there is no real question to be tried sufficient to warrant the granting of summary judgment. If the defendant does satisfy the court of this, the plaintiff has an evidentiary onus of demonstrating that summary judgment should not be given because a triable issue exists.
Given I am satisfied, based on the terms of the agreements themselves, that the construction of the Revenue Sharing Agreement contended for by the plaintiff, that is that the defendant was obliged to cause the removal of the specified sand from the Land, is not arguable, the plaintiff has an evidentiary onus to show that there is a triable issue.
The plaintiff has not adduced any evidence that support its alternate construction of the Revenue Sharing Agreement. To the contrary, the following evidence of surrounding circumstances only goes to reinforce the construction of the Revenue Sharing Agreement contended for by the defendant:
(1)at the time that the plaintiff and APH entered into the Sand Removal Agreement, the plaintiff had not obtained the required approval for removal of the sand. This meant that it was possible that any conditions imposed on the removal of the sand by the City of Busselton or DWER may have made removal of the sand uncommercial or impossible and it would not have made any commercial sense for the parties to have entered into an agreement which obliged APH to remove the sand; and
(2)APH did not exercise its right to remove the specified sand because it did not consider that removal of the sand was commercially viable due to the conditions of planning approval imposed by the City of Busselton.[39]
[39] Timm's Affidavit; annexure JPT‑6, pages 32 ‑ 48.
Finally, any evidence as to whether APH was in fact correct in its assessment that the removal of sand was uncommercial (that is the evidence sought to be adduced by the Second Purdy Affidavit) is not relevant to the surrounding circumstances or the commercial purpose of the agreement.
In summary, the plaintiff's case depends upon the word 'allow' in cl 2 of the Revenue Sharing Agreement being construed to mean 'cause' and the word 'right' in cl 2 of the Sand Removal Agreement to mean 'obligation'. Such a construction would have the effect of altering the plain meaning of the words and would not be consistent with the terms of each of agreements read as whole. I am not considering what the plaintiff meant to say, but rather what objective meaning is to be attributed to those words.
On the plain and unambiguous construction of the Revenue Sharing Agreement and the Sand Removal Agreement, there was never an obligation upon either APH or the defendant to remove, or to cause the removal of, the specified sand.
The construction of the Revenue Sharing Agreement and the Sand Removal Agreement contended for by the plaintiff in the SOC is not arguable. The plaintiff's case is so clearly untenable that it could not possibly succeed at trial.

Leave to apply for summary judgment

In order to consider the question of whether the defendant requires leave to make the summary judgment application and, if so whether leave ought be granted, it is necessary to set out the procedural history of the proceedings.
On 27 January 2023, the plaintiff commenced these proceedings by writ of summons in the District Court of Western Australia.
On 17 February 2023, the defendant filed a memorandum of appearance in the District Court.
On 15 March 2023, the plaintiff filed a chamber summons pursuant to s 77 of the District Court of Western Australia Act 1969 (WA) seeking to remit the proceedings to the Supreme Court of Western Australia.
On 29 March 2023, the plaintiff filed the SOC.
On 11 April 2023, Judge Troy made orders that the matter be remitted to the Supreme Court of Western Australia.
On 20 April 2023, the action was entered on the Supreme Court portal.
On 9 May 2023, the defendant filed the chamber summons for summary judgment.
On 25 May 2023, Master Sanderson made procedural orders regarding the filling of affidavits and submissions and listing the application for a special appointment.
On 17 August 2023, the special appointment was heard. I reserved my decision.

The plaintiff contends that the defendant's delay in filing its chamber summons for summary judgment is fatal to the application.
The defendant submits that leave is not required pursuant to O 16 r 1 of the RSC in circumstances where the matter has been remitted to the Supreme Court and the application was made within 21 days of the matter being entered on to the Supreme Court portal, that being the day upon which time begins to run for bringing the summary judgment application. The basis for this submission was that the defendant's memorandum of appearance only became a filed document for the purposes of the Supreme Court proceedings when the action was entered onto the Supreme Court portal.
While I have some reservations about accepting that submission, it is ultimately not a matter which I need to decide. That is because, assuming leave is required, I consider it appropriate that leave ought to be granted. That is for the following reasons:
(1)the plaintiff's case is so clearly untenable that it could not possibly succeed at trial and therefore, the summary judgment application has merit;
(2)in February 2023, the defendant's solicitors and the plaintiff's solicitors conferred in relation to a foreshadowed application by the defendant for summary judgment, or alternatively to strike out the statement of claim;[40]
(3)given the plaintiff filed an application to remit the action to the Supreme Court on 15 March 2023, which was listed for hearing on 11 April 2023, it was reasonable for the defendant to wait until the outcome of that application before making an application for summary judgment;
(4)the plaintiff filed the SOC on 29 March 2023;
(5)given that the matter was transferred to the Supreme Court on 11 April 2023, there is not a lengthy delay on the part of the defendant in making the application for summary judgment; and
(6)there is no prejudice to the plaintiff.
[40] Kalmund Affidavit [4]
I am satisfied that the defendant has discharged its onus of justifying the delay in making the application and that leave ought to be granted to the defendant to make the application for summary judgment out of time.

Orders

I make the following orders:
(1)The plaintiff's application by letter dated 28 November 2023 to adduce further evidence be dismissed.
(2)The defendant has leave to bring the application for summary judgment by chamber summons filed 9 May 2023 out of time.
(3)Pursuant to Order 16 rule 1(1) of the RSC, there be judgment for the defendant.
The parties should confer and attempt to agree orders. If agreement cannot be reached, parties are to file competing minutes of proposed orders within seven (7) days of these reasons being published.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LR
Associate to Acting Master McDonald
31 MAY 2024