Tricare Australia Ltd v Highmist Pty Ltd
[1998] QCA 251
•1/09/1998
| IN THE COURT OF APPEAL | [1998] QCA 251 |
| SUPREME COURT OF QUEENSLAND |
Appeal No. 601 of 1998
Brisbane
[Tricare Aust Ltd v. Highmist P/L]
BETWEEN:
TRICARE AUSTRALIA LIMITED
(ACN 010 583 392)
(Respondent) Appellant
AND:
HIGHMIST PTY LTD
(ACN 073 507 481)
(Applicant) Respondent McPherson J.A.
Thomas J.A.
Derrington J.
Judgment delivered 1 September 1998
Judgment of the Court
APPEAL DISMISSED WITH COSTS.
CATCHWORDS: | CONTRACT - Vendor and purchaser - construction - right to terminate for non-fulfilment of condition - whether such right exclusively for purchaser - possible discharge in due course by frustration. |
| Beaton v McDivitt (1987) 13 NSWLR 162 Brisbane City Council v Group Projects Pty Ltd (1979) 145 CLR 143 Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153 | |
| Counsel: | Mr W Sofronoff QC, with him Mr D Kelly for the appellant Mr P Lyons QC for the respondent |
| Solicitors: | Bowdens for the appellant R Praeger & Associates for the respondent |
| Hearing Date: | 28 July 1998 |
IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND
Appeal No. 601 of 1998
Brisbane
| Before | McPherson J.A. Thomas J.A. Derrington J. |
[Tricare Aust Ltd v. Highmist P/L]
BETWEEN:
TRICARE AUSTRALIA LIMITED
(ACN 010 583 392)
(Respondent) Appellant
AND:
HIGHMIST PTY LTD
(ACN 073 507 481)
(Applicant) Respondent
REASONS FOR JUDGMENT - THE COURT
Judgment delivered 1 September 1998
This is an appeal against an order made in the Trial Division on a vendor and purchaser
summons. His Honour held that on the proper construction of the contract the vendor had no right
to terminate it. The vendor had claimed to be entitled to do so by reason of the non-occurrence of
certain events by a given date (27 October 1997).
It will be convenient to refer to the appellant (Tricare) as the vendor, and to the respondent
(Highmist) as the purchaser.
The contract was for the sale of vacant land in the Gold Coast area for a purchase price of
$4.2 million. Provision was made for two “deposit instalments” totalling $200,000.00, and these
were duly paid to the vendor. However the sale was of part only of a designated lot and it was
limited to the area “as is approximately shown on the attached plan”. Under s.60(2) of the Land
Titles Act the transfer of part of a lot is prohibited. It was necessary to obtain exemption from that
provision by a special application to the registrar, and it is common ground that such an exemption
was obtained.
For present purposes the two special conditions of the contract that are directly relevant are
cll.47 and 49:
“47 SUBDIVISION REGISTRATION 47.1 This contract is subject to:
(a) approval by the Local Authority and registration in the appropriate office of a plan of subdivision substantially in the form attached; and (b) the issue of an indefeasible title under the Land Title Act 1994 for the Land required to register the transfer to the Purchaser, on or before the Completion Date. 47.2 If the condition referred to in clause 47.1 has not been satisfied by the Completion Date the Purchaser may terminate this contract by notice in writing given to the Vendor. In such event all deposit and other moneys received by the Vendor or the Stakeholder on account of the purchase price (other than the First Deposit Instalment and the Second Deposit Instalment) shall be refunded to the Purchaser without deduction. 47.3 The Vendor will diligently pursue the Local Authority and relevant government offices in relation to the subdivision plans and applications lodged by it under this clause.
47.4 The plan of subdivision shall be taken to be substantially in the form attached
notwithstanding that the boundaries differ, provided that:
(a)
the boundaries do not vary from those on the attached plan by a distance of more than 20 metres at any point; and
(b)
the area of the Land to be purchased does not reduce by more than 3%.
47.5
Notwithstanding clause 47.4, the Purchaser may at its sole discretion elect to complete this contract, if the boundaries do vary from those on the attached plan by a distance of more than 20 metres at any point, or the area of the Land to be purchased does reduce by more than 3%.
47.6
If the condition is satisfied the Vendor shall give notice in writing of such satisfaction to the Purchaser promptly and in any event not later than 2 business days after the date of satisfaction.”
“49 COMPLETION 49.1
The date for completion under this contract is the date falling 18 calendar months after the date of this contract or at the option of the Purchaser, the date being 5 days after registration of the plan of subdivision in accordance with clause 47.
49.2
Despite clause 49.1, the Purchaser may at its sole discretion elect to complete this contract prior to the date falling 18 calendar months after the date of this contract, but after the date of satisfaction of the condition contained in clause 47.1. Should the Purchaser wish to complete this contract during that time, the Purchaser shall give the Vendor 5 business days prior notice in writing, which notice shall specify the date upon which the Purchaser requires completion to be effected.”
The contract was dated 27 April 1996, and it follows that the first of the alternative dates
mentioned in cl.49.1 for completion was 27 October 1997. Obviously the contract was incapable
of completion unless and until the achievement of registration of the contemplated plan of subdivision.
Nonetheless there were express and immediate subsidiary duties created such as the vendor’s
obligation diligently to pursue the obtaining of the necessary subdivision. By clause 26 time was
made of the essence.
The main contentions on behalf of the respective parties are these. The vendor submits that the contract was immediately terminable by either party when the condition (registration of the plan of subdivision) was not fulfilled by 27 October 1997, or at the option of the Purchaser five days later
than that date; and that the “Completion Date” in cl.47.1 was 27 October 1997, or an earlier date
at the option of the purchaser if the condition had been satisfied earlier. The contention on behalf
of the purchaser is that in the event that the vendor fails (as it did) to obtain the necessary registration
by 27 October 1997, the date for completion might, at the option of the purchaser, be later than
that date; that the contract might be left on foot after that date; and that in such an event it would
ultimately be discharged either when the condition was fulfilled and performance was required, or
because it could be demonstrated that the condition was impossible to fulfil.
Neither party promised that the condition mentioned in cl.47.1 would be fulfilled, although
the vendor was obliged to diligently pursue its fulfilment. The reference in cl.47.1 to “the Completion
Date” must be to the time or times provided for completion under cl.49. Nowhere else in the
contract was provision made for a date for completion. It is immediately obvious that the date for
completion as defined in cl.49.1 has two distinct alternatives, one, 27 October 1997, or two, “at
the option of the purchaser...5 days after registration of the plan of subdivision in accordance with
clause 47”. Nothing suggests that this latter option is confined to a time within the limit of the first
alternative. Indeed cl.49.2 goes on to say that the purchaser may elect to complete prior to the
expiry of the initial eighteen month period. That would hardly have been necessary if, under cl.49.1,
the purchaser was already confined to a date within the initial eighteen months; and conversely, the
first option in cl.49.1 would hardly have been necessary if under cl.49.2 the purchaser could call for
completion at any time within the initial eighteen months. Counsel for the vendor sought to avoid this
difficulty by submitting that the second alternative in cl.49.1 simply gives to the purchaser an option
of a further five days immediately after 27 October. This rather strained construction was said to be supported by the reference in cl.49.1 to “registration..in accordance with clause 47" but cl.47
merely requires satisfaction of the condition on or before the completion date, which may shift
according to the events that happen. It seems to us that the second alternative completion date in
cl.49.1 has been included expressly to cover the event that the purchaser opts against termination
under cl.47.2, and keeps the contract alive beyond the initial eighteen months.
The following submission departs somewhat from what was submitted to the Judge below,
but it is now relied on by the vendor. Shortly stated, it is that completion must occur on 27 October
1997, or at the option of the purchaser five days after registration, whenever that happens, but no
later than five days after 27 October 1997. The submission proceeds that unless the contract is
construed as giving the vendor a right to terminate for failure of the condition in cl.47, which he
submits must be satisfied no later than five days after 27 October 1997, then if the purchaser decides
to insist upon performance, his client would be in breach. The submission contains some confusing
elements. In the first place the purchaser cannot insist upon performance until such time as the plan
is actually registered. Until that time, all the purchaser can do is to elect to keep the contract alive
for performance. In the second place, an election by the purchaser to keep the contract alive for
performance after 27 October 1997 would in no way put the vendor in breach. There is simply no
obligation to convey unless and until the necessary plan has been registered. The vendor’s
submission in this respect must be rejected. In our view it was intended that this contract could
remain on foot after the first mentioned completion date. It is true that the primary intended date for
completion is the date eighteen months after the date of contract, and that would seem to be the
completion date referred to by cl.47.2 which gives to the purchaser (but not the vendor) the option
to terminate the contract if the condition has not been satisfied by that date. The natural and sensible construction of that clause is that it confers such a right on the purchaser and not the vendor, that is
to say it is solely for the benefit of the purchaser. But the purchaser is not obliged to use that power.
Equally it may elect not to terminate and may keep the contract on foot, as for example by giving
the vendor extra time to use its best endeavours to achieve the necessary registration.
A major submission on behalf of the vendor is that the contract should not be construed so
that it can remain on foot indefinitely at the option of the purchaser. But the construction contended
for by the purchaser does not produce such a result. If the plan has not been registered by 27
October 1997, there is no obligation to convey at that time. Time would simply cease to be of the
essence in relation to the date for completion. No time has been fixed as that by which the
registration of the plan must take place, and the natural implication is that in the event that the prima
facie completion date passes before registration, completion should take place within a reasonable
time (Beaton v McDivitt (1987) 13 NSWLR 162, 176). Clause 47.2 gives the exclusive right to
the purchaser to determine the contract by reason of non-satisfaction of the condition in cl.47.1
(Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153, 158).
Attempts to obtain the necessary approval and registration might well drag on beyond the
primary nominated date, but there is nothing unreasonable in the purchaser having the right to keep
its rights alive beyond that date. That seems to be the consequence of the contract as it is drawn.
Sooner or later it would seem that events must happen in one way or another which will result either
in a sufficiently conforming plan of subdivision being granted or in revealing that a sufficiently
conforming plan of subdivision is impossible to obtain. A conclusion to the latter effect will involve
a question of fact. Once the vendor is in a position to establish it, the contract will come to an end
because fulfilment of the condition will be shown to be impossible (Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Brisbane City Council v Group Projects
Pty Ltd (1979) 145 CLR 143; Beaton v McDivitt, supra, at 162, 177, 184-185). It is possible
to explain the ultimate discharge of the contract by such means in a number of ways. One of these,
frustration, has just been mentioned. Another is by the implication of a reasonable time for
completion if the contract is kept on foot by the purchaser; or by implying a reasonable time for the
subsistence of the due diligence obligation on the part of the vendor. It is unnecessary however to
characterise the preferred analysis. On any view there is no permanent right conferred upon the
purchaser to tie up the land. It should be noted that the learned Judge below limited the declaration
to one that the respondent presently has no right to terminate the contract. In short, proof of further
rights remains open to the parties on facts yet to occur.
Another submission for the vendor was that cl.47.1 should be construed as one solely for
the benefit of the vendor. The clause does not say so. Standing alone, such a clause would be read
as expressing a condition, the non-fulfilment of which would prima facie give rights to either party
to terminate. That prima facie result is however expressly negatived by cl.47.2 which gives such a
right to the purchaser only. The vendor’s submission in relation to cl.47.1 seems based upon the
need to erect some argument which would enable it to submit that the right given to the purchaser
under cl.47.2 should then be construed as a mere afterthought, along the lines “but the purchaser
may terminate also”. Such constructions of these clauses are convoluted and should be rejected.
Finally, some regard may be paid to the provisions concerning payment of the deposits. The
effect of cll.41, 45.1 and 52 is that these substantial deposits were non-refundable, and were to be
kept by the vendor whether or not the contract was completed. The only exception to this was in
the event that the non-completion of the contract was due to default or breach by the vendor. In that event the deposit was refundable. This suggests a good commercial reason why the parties would
leave it to the purchaser to determine that the contract might remain in force notwithstanding that the
condition had not been fulfilled by the primary completion date. The condition might be close to
fulfilment by that date, or remain unfulfilled for some minor reason such as delay in the issue of title.
It is not unreasonable to think that the contract might permit a reasonable further time to elapse
beyond the initial eighteen months in which to achieve the necessary registration of the plan before
the purchaser would be obliged to surrender this $200,000.00 for no return.
The above discussion of various arguments that were submitted may give the impression that
the contract is more complicated than it really is. In our view the second of the alternative
completion dates mentioned in cl.49.1 obviously includes contemplation of completion if the
purchaser opts under cl.47.2 to keep the contract alive for completion beyond the first mentioned
completion date in cl.49.1. Once that connection is made the operation of the contract is easily
understood, and the difficulties raised by counsel for the vendor disappear.
In our view, reading cll.47.1, 47.2 and 49.1 together, the proper construction of the contract
leads to the conclusion that in the event that an appropriate plan is not registered by 27 October
1997, the contract remains on foot subject to an option in favour of the purchaser to terminate.
The appeal should be dismissed with costs.
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