Walker v Clough Property Claremont Pty Ltd - [2010] WASCA 232

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: WALKER as Trustee for WALKER SUPERANNUATION FUND -v- CLOUGH PROPERTY CLAREMONT PTY LTD [2010] WASCA 232

CORAM: MARTIN CJ
NEWNES JA
MURPHY JA

HEARD: 23 JULY 2010

DELIVERED : 6 DECEMBER 2010

FILE NO/S: CACV 152 of 2009

BETWEEN: GRAHAM GEOFFREY WALKER as Trustee for WALKER SUPERANNUATION FUND
First Appellant
THELMA JEAN WALKER as Trustee for WALKER SUPERANNUATION FUND
Second Appellant
AND
CLOUGH PROPERTY CLAREMONT PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :KENNETH MARTIN J
Citation  :GRAHAM GEOFFREY WALKER and THELMA JEAN WALKER as trustees for the WALKER SUPERANNUATION FUND -v- CLOUGH PROPERTY CLAREMONT PTY LTD [2009] WASC 367
File No  :CIV 2180 of 2009

Catchwords:

Declaration claimed by purchasers of unit in a proposed subdivision that contract of sale void and unenforceable under s 13 and/or s 14 Sale of Land Act 1970 (WA) - Statutory interpretation

Legislation:

Acts Amendment (Strata Titles) Act 1985 (WA)
Interpretation Act 1984 (WA)
Interpretation Act 1987 (NSW)
Local Government Act 1919 (NSW)
Planning and Development Act 2005 (WA)
Sale of Land Act 1970 (WA), s 13, s 14
Strata Titles Act 1985 (WA)
Town Planning and Development Act 1928 (WA)
Transfer of Land Act 1893 (WA)

Result:

Appeal dismissed

Category: A

Representation:

Counsel:

First Appellant               :     Mr D H Solomon
Second Appellant          :     Mr D H Solomon
Respondent:     Mr C L Zelestis QC & Mr J A Thomson

Solicitors:

First Appellant               :     Solomon Brothers
Second Appellant          :     Solomon Brothers
Respondent:     Corrs Chambers Westgarth

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

Agaiby v Pantham Nominees Pty Ltd (1985) 55 LGRA 405
Bocardo SA v Star Energy UK Onshore Ltd [2010] Ch 100; (2009) 3 WLR 1010
Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1971] HCA 9; (1971) 124 CLR 73
Glass v Ralph [1966] WAR 91
Glentham Pty Ltd v City of Perth [1986] WAR 205
Landall Constructions and Development Co Pty Ltd v Bogaers [1980] WAR 33
Lombardo v Development Underwriting (WA) Pty Ltd [1971] WAR 188
Re Lehrer [1961] SR (NSW) 365
Reid Murray Developments (WA) Pty Ltd v Hall [1968] WAR 3
Resumed Properties Department v Sydney Municipal Council (1937) 13 LGR (NSW) 170

MARTIN CJ:

Summary

In May 2007, Graham Geoffrey Walker and Thelma Jean Walker as trustees for the Walker Superannuation Fund (the Walkers) entered into a contract with Clough Property Claremont Pty Ltd (the seller) for the purchase of a residential unit in a mixed use, multistorey development to be constructed by the seller on land bounded by Stirling Highway, Stirling Road, and St Quentin's Avenue, Claremont. The seller has proceeded to carry out the development, and there is no suggestion that the seller would be unable to deliver good title to the unit constructed in accordance with the contract and agreed plans at the time for settlement.
However, in June 2009, the Walkers decided that they did not wish to complete the contract for the purchase of the unit, and proceedings were commenced claiming a declaration that the contract was void and unenforceable by reason that the seller had contravened s 13 and/or s 14 of the Sale of Land Act 1970 (WA) (the SLA). The trial judge dismissed their claim. He considered that they should be held to their contract. The Walkers have appealed from that decision.
There is no suggestion that the seller has done anything other than perform its obligations under the contract with the Walkers, or that there is any risk that it will be unable to perform its obligation to provide the Walkers with good title to their unit at the time for settlement. Nor is there any suggestion that there has ever been any risk that the Walkers will not receive the full benefit of their rights and obligations under the contract, or that the deposit which they paid has been at any risk. For the reasons which follow, in my opinion, the law is not so unjust as to permit the Walkers to resile from the contract into which they freely entered, retrieving their deposit and depriving the seller of its rights under the contract. Their appeal should be dismissed.

The facts

The facts were not contentious. They were established by an affidavit sworn by Mr Walker. He was not cross‑examined on that affidavit.
On 9 May 2007, the Walkers in their capacity as trustees of the Walker Superannuation Fund, signed a written offer to purchase a unit described as apartment L404 in a development to be constructed at 40 St Quentin's Avenue, Claremont.
On 11 May 2007, the offer was accepted by the seller. The purchase price specified by the contract was $1,980,000, of which $198,000 was to be paid by way of deposit. Pursuant to the contract, the deposit was paid by Mr and Mrs Walker to an estate agent as stakeholder to be held in trust pending settlement of the transaction.
At the time the contract was entered into, and at all material times since then, the seller has been the registered proprietor of the land on which the development is being constructed. At the time the contract with the Walkers was entered into on 11 May 2007, the land was subject to a mortgage granted to Westpac Banking Corporation. A second mortgage over the land was granted to St Quentin's Claremont Pty Ltd in June 2007, after the contract had been entered into with the Walkers.

The terms of the contract

The contract provides that the seller is to carry out and complete the development in accordance with the plans annexed to the contract, and register a Strata Plan covering the development within 48 months of the date of the contract, unless the date for registration of the Strata Plan is extended by the seller pursuant to certain express provisions of the contract.
The contract provides that settlement is to occur upon the last of:
(a)21 business days after registration of the Strata Plan;
(b)14 business days after the issue of a separate certificate of title for the strata unit to be sold to the Walkers; and
(c)14 business days after a certificate of occupation is issued by the local authority.
A clause in the contract permits the seller to terminate the contract by notice served within 24 months of the date of contract in a variety of circumstances, including failure to obtain requisite approvals, insufficient sales of proposed strata lots, etcetera. It seems clear that this right was not exercised by the seller.
Clause 8 of the special conditions of contract provides that the property is to be sold subject to a number of Specified Encumbrances, being in the nature of easements and other interests which it is not necessary to list. The mortgage to Westpac Banking Corporation is not a Specified Encumbrance.
The contract incorporates the General Conditions for the Sale of Land (2002 Revision) published by The Law Society and the Real Estate Institute of Western Australia, subject to certain modifications and exclusions which it is unnecessary to catalogue. Clause 2 of the General Conditions provides that the seller is to sell the property free of any encumbrance except for a Specified Encumbrance. Under cl 3 of the General Conditions, at settlement the seller is obliged to tender all documents necessary to enable the buyer to become the registered proprietor of the land free of any encumbrance other than a Specified Encumbrance.
Pursuant to cl 6 of the General Conditions, the buyer is entitled to possession on settlement, unless another date for possession is specified in the contract, or the buyer is given possession prior to settlement. No other date for possession is specified in the contract, nor is there any suggestion in the contract that the buyer is to be given possession prior to settlement. Clause 6 also provides that the seller is entitled to all rent due up to the date of settlement or, if possession is given earlier, the date upon which possession is given to the buyer, although, as I have noted, there is no provision of the contract entitling the Walkers to possession prior to settlement.
The contract includes, as an annexure, the proposed Strata Plan to be registered by the seller, although there are provisions of the contract entitling the seller to vary the Strata Plan in certain specified circumstances. At the time the Walkers commenced their proceedings in June 2009, the seller had not lodged a Strata Plan relating to the strata development for registration. As I have indicated, the latest date for registration of that plan is 11 May 2011, or such later date as might be specified pursuant to the specific provisions of the contract.

The Sale of Land Act

The relevant provisions of the SLA applicable at the time of entry into the contract, and at all material times since then, are:
Part III — Restrictions on sale of subdivisional land
11.     Interpretation
In this Part, unless the contrary intention appears -
lot has the same meaning as it has in the Planning and Development Act 2005 and includes an area of land in respect of which it is represented, by or on behalf of any person attempting to promote the sale of that area of land, that it will constitute a lot in a proposed subdivision;
proprietor has the same meaning as it has in section 4 of the Transfer of Land Act 1893; and
sell includes -
(a)for valuable consideration -
(i)assign an interest in;
(ii)assign the benefit of a contract relating to;
(iii)confer a right to purchase, to acquire an interest in, or to acquire the benefit of a contract relating to;
and
(b)offer, hold oneself out or advertise as being willing, or agree to sell or, for valuable consideration, to do as mentioned in paragraph (a)(i), (ii) or (iii),
and selling and sold include corresponding meanings.
[12.     Deleted by No. 40 of 1985 s. 4.]
13.     Restriction on sale of subdivisional land
(1)A person who would, but for this Act, have the right to sell 5 or more lots in a subdivision or proposed subdivision, or 2 or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985, shall not sell any of such lots unless -
(a)he is the proprietor thereof;
(b)he is selling as agent of the proprietor;
(c)he sells the lot as one of 5 or more lots sold to one person in the one transaction or as one of 2 or more lots so sold in the case of lots in a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985;
(d)he is empowered by or under an Act to execute a transfer thereof that is registrable under the Transfer of Land Act 1893; or
(e)he is presently entitled to become the proprietor of the lot.
Penalty: $750.
(2)A person shall be deemed not to be presently entitled to become the proprietor of a lot unless he is, at the date he sells the lot, entitled to be registered as proprietor of it under one or more registrable instruments or under one or more applications made under the Transfer of Land Act 1893 which have been lodged with the Western Australian Land Information Authority established by the Land Information Authority Act 2006 section 5.
(3)For the purpose of this section an instrument or an application which was at the relevant time lodged as described in subsection (2) but was defective is to be taken to give as good an entitlement to be registered as proprietor as it would give if there were no defect in the instrument or application -
(a)if the instrument has subsequently been registered or the application granted without having been returned by the Registrar of Titles or having been withdrawn from the registration process; or
(b)if the Registrar of Titles certifies in writing that he is satisfied that the defect was not of a substantial nature and that it has been remedied.
14.        Restriction on sale of mortgaged subdivisional land
(1)A person who has the right to sell 5 or more lots in a subdivision or proposed subdivision, or 2 or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985, shall not sell any of such lots that is subject to a mortgage unless the mortgage relates only to that lot and he sells the lot under a contract which provides that the consideration for the sale of the lot shall be satisfied, to the extent of any money owing under the mortgage at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the lot sold, by the purchaser assuming on and from that date the obligations of the mortgagor under the mortgage.
Penalty: $750.
(2)Subsection (1) does not apply to a person who sells the lot -
(a)as one of 5 or more lots sold to one person in the one transaction or as one of 2 or more lots so sold in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985; or
(b)under a contract which provides that -
(i)any mortgage affecting the lot sold is to be discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract; and
(ii)the deposit and all other moneys payable under the contract, other than any money payable in excess of the amount required to so discharge the mortgage, are to be paid to a certificated practitioner (within the meaning of the Legal Practice Act 2003) or to a licensee, as defined in section 2 of the Land Agents Act 1921, to be applied by him in or towards so discharging the mortgage,
but where the mortgage is not discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract and the purchaser of the lot under the contract is not in default under it, he may, by notice in writing served on the vendor of the lot under the contract at any time prior to the mortgage being discharged as to that lot, rescind the contract and thereupon may, in a court of competent jurisdiction, recover from that vendor all moneys paid by that purchaser under the contract.
(3)In subsections (1) and (2) 'mortgage' does not include any floating charge on the whole or any part of the undertaking or property of a corporation.

The issues

The issues at trial, and on appeal, are whether the seller contravened either s 13 or s 14 of the SLA, or both, and if so, what are the consequences of contravention for the enforceability of the contract. The Walkers assert that the prohibition on sale in s 13 was enlivened because the seller had a 'right to sell' two or more lots in the proposed strata subdivision. They further assert that none of the exemptions in s 13(1)(a) ‑ (e) were applicable, and particularly that s 13(1)(a) did not apply because that section requires that the vendor be the proprietor of the lot, not simply the proprietor of the underlying land on which the subdivision was to proceed. This is asserted on the basis that the words 'proprietor thereof' in s 13(1)(a) must be referable to the word 'lots' in the introductory words to s 13(1). The seller asserts that it did not have the requisite 'right to sell' because it had not obtained WAPC approval for the development and that, alternatively, it was a registered proprietor under the exception in s 13(1)(a) because the words 'proprietor thereof' should be read as referring to the proprietor of the land underlying the lot to be created.
The Walkers also assert that the prohibition on sale in s 14 was similarly enlivened because, again, the seller had the 'right to sell' two or more lots and the lot being sold was subject to a mortgage at the time of contracting. The Walkers assert that the section was contravened because the contact of sale did not contain the terms required by the section. The seller argued that the section did not apply, again, because it did not have a right to sell and, alternatively, because the section only prohibits the sale of a lot subject to a mortgage where the purchaser has a right to possession before settlement, which was not the case here.
Because the facts are not contentious and the issues purely concern statutory construction and law, little purpose would be served by analysing the reasons given by the trial judge, or the grounds of appeal which attack those reasons. Instead, I will set out the reasons why I have concluded that the seller did not contravene either s 13 or s 14 of the SLA.

Legal context

Before turning to the specific issues which arise under the SLA, it is desirable to set the legal context for those issues, dealing first with some general issues relating to land, interests in land, and the rights of proprietorship.
The conventional view of the nature of land, and of the rights conferred upon the proprietor of a freehold interest in land was pithily expressed by Windeyer J in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd [1971] HCA 9; (1971) 124 CLR 73:
At common law a freeholder is the owner not only of the surface of the land, but also of everything above it up to the sky and of everything below it to the centre of the earth (91).
More recently, it has been suggested that this general proposition, at least expressed in absolute terms, should not be regarded as a part of the common law because of its imprecision. The rights of the owner in relation to the strata below the natural surface of the land may be restricted by a general statutory provision (reserving certain rights to minerals, or the right to install subterranean pipes and tunnels, etc), just as the rights of the owner to the airspace above the land might be restricted by regulations relating to air navigation, the installation of power lines and so on (see the observations of Aikens LJ in Bocardo SA v Star Energy UK Onshore Ltd [2010] Ch 100; (2009) 3 WLR 1010 [59]). Nevertheless, the generalisation remains an appropriate starting point.
The notion of land as three dimensional has facilitated the legal acceptance of subdivisions which can be either horizontal, or vertical, or both. As Windeyer J observed in Bursill:
Therefore, at common law he [the freeholder] could dispose of a part of his holding by horizontal subdivision, just as by vertical subdivision. There were objections to this in medieval times: see Challis's Real Property 3^rd Ed (1911), p.54. But by Coke's time these had disappeared. He said: 'A man may have an inheritance in an upper chamber though the lower buildings and soil be in another, and seeing it is an inheritance corporeal it shall pass by livery' (91).
However, as Windeyer J also observed in Bursill, it does not follow that the word 'land' is to be read as covering interests above the surface of the earth in every statutory context. In Re Lehrer [1961] SR (NSW) 365, Jacobs J acknowledged that the appropriate starting point, at common law, was that:
[T]he upper floor of a building and the airspace of that floor can be severed by conveyance from the soil upon which the building rests and can be dealt with as real property in English law. The upper floor would be a tenement and a corporeal hereditament (369).
However, as Jacobs J went on to observe, that does not necessarily mean that the upper floor is, in itself, 'land' at common law. On the contrary, his Honour was of the view that because the word 'land' includes all buildings on the land, it would be inconsistent to consider an upper floor alone to constitute 'land' at common law. However, as Jacobs J acknowledged, such an upper floor can be brought within a statutory definition of land, as it was by s 21(e) of the Interpretation Act 1897 (NSW) - see Resumed Properties Department v Sydney Municipal Council (1937) 13 LGR (NSW) 170. In that case, Roper J held that a part of a building severed by horizontal subdivision was 'land' within the meaning of the New South Wales Interpretation Act, which defined land to include 'messuages, tenements, hereditaments, corporeal and incorporeal, of any tenure or description and whatever may be the estate or interest therein'.

However, in Re Lehrer, Jacobs J concluded that because the Local Government Act (NSW), with which he was concerned, contained its own definition of the word 'land', the definition contained in the Interpretation Act (NSW) did not apply, and for the purposes of the Local Government Act 1919 (NSW), while the upper floor of the building or the airspace which it occupies might be considered realty, it should not be considered 'land' as defined by that Act.
There are a number of statutory definitions of 'land' in Western Australia. Section 4 of the Transfer of Land Act 1893 (WA) (the TLA) defines the word in very similar terms to the definition in the NSW Interpretation Act considered in Resumed Properties Department and in Re Lehrer - namely, to include 'messuages, tenements and hereditaments, corporeal or incorporeal in freehold and Crown land', with the consequence that, according to those cases, the definition would be wide enough to include a portion of the land created by horizontal subdivision.
The word is also defined by s 5 of the Interpretation Act 1984 (WA) so that it 'includes buildings and other structures, land covered with water, and any estate, interest, easement, servitude or right in or over land'. Accordingly, that definition would also appear to be quite sufficiently broad to include a portion or stratum of land created by horizontal subdivision.
More pertinently to the present case, the word 'land' is defined by s 5 of the SLA to include 'land of any tenure and buildings or parts of buildings'.
Accordingly, this definition leaves no room for doubt that an interest in land created by a horizontal subdivision (for example, under the Strata Titles Act1985 (WA) (the STA)) comprising part only of a building is, of itself, 'land' for the purposes of the SLA.

The subdivision of land

Prior to the enactment of the Planning and Development Act 2005 (WA), the subdivision of land in Western Australia was controlled by the provisions of the Town Planning and Development Act 1928 (WA). Section 20 of that Act prohibited without the prior approval of the Town Planning Board, the sale or long‑term lease of land except as a 'lot or lots', or the subdivision of any lot. Under s 2 of that Act, 'lot' was defined to mean (inter alia) a portion of land depicted on a plan or diagram deposited in the Office of Titles and for which a separate certificate of title has been or can be issued, or a portion of land depicted on a subdivisional plan or diagram approved by the Board. After the decisions in Glass v Ralph [1966] WAR 91 and Reid Murray Developments (WA) Pty Ltd v Hall [1968] WAR 3, it was generally thought that a contract to sell land which was to be created as a 'lot' by approved subdivision at some time in the future was illegal and void unless the prior approval of the Board was obtained. As a consequence, the Town Planning and Development Act was amended to introduce s 20B, which provided that a contract for the sale of a 'lot' entered into without the prior approval of the Board was to be deemed not to have been entered into in contravention of s 20 of the Act if the agreement was entered into subject to the approval of the Board to the subdivision of the land being obtained, and an application for approval to the subdivision was made within three months of the date of the agreement.
Doubt was cast on the validity of the approach enunciated in Glass v Ralph and Reid Murray Developments (WA) Pty Ltd v Hall by the decision of Burt J at first instance in Development Underwriting (WA) Pty Ltd v Lombardo [1971] WAR 169, 174. There his Honour expressed the view that if the contract, properly construed, was to the effect that the land was only to be conveyed as a lot or lots created by a subdivision approved by the Board, s 20 of the Act was not infringed. On appeal, Wickham J agreed, although Hale J did not, and Jackson CJ decided the case on another ground - see Lombardo v Development Underwriting (WA) Pty Ltd [1971] WAR 188. However, the view of the scope of s 20 of the Town Planning and Development Act taken by Burt J was unanimously endorsed by the Full Court in Landall Constructions and Development Co Pty Ltd v Bogaers [1980] WAR 33. That decision effectively rendered s 20B of the Act redundant. Following the decision in Landall, there has not been any doubt that the controls placed upon the subdivision of land for the purposes of town planning do not constrain entry into contracts for the sale of portions of the land which is yet to be subdivided, provided that the contract is conditional upon the necessary approvals to the subdivision being obtained, and the creation of the 'lot' or 'lots' to be conveyed prior to their conveyance.
In Agaiby v Pantham Nominees Pty Ltd (1985) 55 LGRA 405, the purchaser under a contract for the sale of strata units located on the second floor of a building to be constructed after the contract was entered into sought to evade the contract by asserting that it contravened s 20 of the Town Planning and Development Act. The trial judge held that s 20 of the Act had no application to horizontal subdivisions, and for that reason dismissed the purchaser's claim. On appeal, Burt CJ (with whom Wallace J agreed) rejected the notion that s 20 of the Town Planning and Development Act had no application to horizontal subdivisions. In the view of Burt CJ:
[A] floor within a multistorey building is 'land' within the meaning of the Town Planning and Development Act. The subject matter of the contract when entered into can be described as future land. It did not then exist. The subject matter of the contract was not simply part of the 'lot' which was the land upon which the building was to be erected. The subject matter was clearly twelve lots. A 'lot' is of course a legal idea. It is in such a case as this something which is created by the Strata Titles Act and it cannot be created without the approval of the Town Planning Board. I can see nothing in policy which would lead me to conclude that a contract to sell such a 'lot' whether as at the date of the contract the 'lot' was then in existence or not should require the approval of the Town Planning Board and I do not think that s 20(1) of the Town Planning and Development Act requires that it be so held (407).
His Honour went on to explain that the reason for that view was because the contract, properly construed, provided that conveyance was only to take place if and when subdivisional approval, and strata title, had been granted (consistently with the views he had earlier expressed in Lombardo and with the decision in Landall). Counsel for the appellants in this case relies upon these observations for the proposition that a horizontal stratum of space in which a building is to be constructed cannot be either 'land' or a 'lot'. However, when that passage is viewed in context, it is clear that Burt CJ was merely expressing the view that the contract, properly construed, did not impose any obligation upon the vendor to convey the interests the subject of the contract until such time as the building had been constructed, the subdivision approved, and strata title granted. That much is clear from another decision delivered on the same day as the decision in Agaiby - namely, Glentham Pty Ltd v City of Perth [1986] WAR 205. In that case, which also concerned the application of s 20 of the Town Planning and Development Act to a multistorey building, after referring to the observations of Jacobs J in Re Lehrer to the effect that a portion of a multistorey building could constitute land for the purposes of the relevant Interpretation Act (NSW), Burt CJ observed:
In my opinion the definition of 'land' in the [Town Planning and Development] Act produces the same result. Floors and levels within a multistorey building are 'land' within the definition and although when the Act was passed it was not possible to obtain a separate certificate of title to such a stratum of land so that it could not then be a 'lot' as defined. It was land which, as at common law, could be disposed of by horizontal subdivision just as by vertical subdivision: see Windeyer J in Bursill Enterprises Pty Ltd v Berger Bros Trading Co Pty Ltd.

Section 11 of the SLA

I have already mentioned that the expression 'land' is defined by the SLA to include a part of a building. It is of considerable significance to the issues which require resolution in this case that s 11 of the SLA provides that, unless the contrary intention appears, in Pt III of the Act (which contains s 13 and s 14) the word 'lot'
has the same meaning as it has in the Planning and Development Act 2005 and includes an area of land in respect of which it is represented, by or on behalf of any person attempting to promote the sale of that area of land, that it will constitute a lot in a proposed subdivision.
It follows that, consistently with the common law permitting horizontal subdivision, for the purposes of s 13 and s 14 of the Act, unless a contrary intention appears, the term 'lot' is to include any area of land in respect of which it is represented that a lot will be created by a horizontal subdivision. Put more directly, it follows that, in the absence of a contrary intention, for the purposes of s 13 and s 14 the expression 'lot' is to be construed as meaning and including land upon which a building is to be constructed and thereafter horizontally subdivided pursuant to the provisions of the STA.
Section 11 of the SLA also provides that the word 'proprietor' is to have the same meaning for the purposes of Pt III of the SLA as it has in s 4 of the TLA. That section provides, relevantly, that 'proprietor' means:
(a)in relation to freehold land, the owner, whether in possession, remainder, reversion or otherwise, of land or of a lease, mortgage or charge over land;
…
whosename appears in the register as the proprietor of that freehold land …
Accordingly, put shortly, 'proprietor' in the relevant provisions of the SLA means 'registered proprietor' under the TLA. Obviously a proprietor can only be registered under the TLA in respect of a lot the subject of a Certificate of Title issued under that Act. This is also of considerable significance to the proper construction of s 13 of the SLA.
Section 11 of the SLA also defines the word 'sell' in terms which include the assignment of an interest for valuable consideration, and an offer, holding out or advertising a willingness to assign an interest for valuable consideration. Accordingly, it is clear that the word 'sell' includes not only entry into an executory contract for the sale of an interest in land to be conveyed at some time in the future, but also various acts prefatory to entry into such a contract.

Section 13 of the SLA

It is unnecessary to embark upon a detailed exegesis of the principles of statutory construction before considering the proper construction of s 13 of the SLA. Relevantly to this case, those principles require the court to ascertain the intention of the Parliament to be derived from the words used in the relevant provisions, construed in the context of the statute as a whole, preferring a construction that would promote the purpose or object underlying the statute (Interpretation Act 1984 (WA), s 18) which, in the case of remedial legislation such as the SLA, focuses attention upon the mischief which it was the intention of the Parliament to remedy. Regard may also be had to extrinsic materials (extrinsic in the sense that they are outside the words of the statute) capable of assisting in the construction of the provision, in order to confirm that the meaning of the provision is its ordinary meaning, or to determine the meaning when the provision is ambiguous or obscure, or when its ordinary meaning would lead to a result that is manifestly absurd or unreasonably (Interpretation Act, s 19).
The general effect of s 13 is to prohibit certain actions, and to render any person who is proven to have acted in contravention of those prohibitions liable to a penalty. The general framework adopted by the section is to identify the persons who fall within the scope of the prohibition, the actions that are prohibited, and the exceptions which are outside the scope of the prohibition. I will deal with each of those aspects of the structure of the section in turn.

The persons to whom the section applies

The introductory words of s 13(1) apply the prohibition to:
A person who would, but for this Act, have the right to sell five or more lots in a subdivision or proposed subdivision, or two or more lots in the case of a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985.
The prohibition is thus limited to persons who have undertaken, or propose to undertake subdivisions of a certain size - being five or more lots in the case of a broadacre subdivision, or two or more lots in the case of a strata title subdivision. It is reasonable to infer, from this restriction upon the scope of the prohibition, that the essential purpose of the provision is consumer protection, to be provided by imposing a prohibition only in respect of subdivisions of a certain size, thus excluding purchasers in smaller subdivisions from the scope of the protection provided by the section. It is reasonable to infer that the rationale for this delineation was the imbalance in commercial sophistication and negotiating power as between seller and purchaser, and the greater the extent of possible adverse consequences, where larger subdivisions take place.
Because the intention of the Parliament was to impose the prohibition only upon those who have undertaken, or who are undertaking or proposing to undertake subdivisions of a certain size, it was necessary to define those persons by reference to the relevant subdivision. That is the role performed by the words 'have the right to sell'. Those words provide the operative link between the persons whose actions are prohibited, and the delineation of the size of the subdivision that gives rise to the prohibition. Presumably, the draftsman focused upon 'the right to sell' because the action prohibited by the section is the act of selling (as defined by s 11), but the general effect of the words is to identify persons who would, but for the prohibition, have the capacity to sell, or offer to sell lots in a completed subdivision, or proposed lots in a proposed subdivision.
By its notice of contention, the seller asserts that the words 'right to sell' should be construed as limiting the operation of the section to only those cases in which the subdivider has statutory authority to sell because, in the case of broadacre land, the relevant planning authority has approved the creation of the lots to be sold by approving a plan of subdivision which has been registered at the office of Land Titles, or in the case of a strata title subdivision, by the registration of a strata plan under the provisions of the STA.
There are at least three reasons why this contention must be rejected. First, it is contrary to the natural and ordinary meaning of s 13(1) of the SLA. That section specifically imposes the prohibition upon persons having the right to sell lots in a 'proposed subdivision'. But on the construction for which the seller contends, there can never be a right to sell a lot in a 'proposed subdivision', because there is no statutory authority to convey a lot, or an interest in a lot, as such, until the lot has been created by the approval and registration of a plan of subdivision, or the registration of a strata plan. Accordingly, the construction for which the respondent contends is contrary to the natural and ordinary meaning of the provision.
Second, as I have already noted, the expression 'sell' is defined to include both executory contracts for the assignment of an interest, and certain acts prefatory to the entry into such contracts. In 1970, when s 13 was first enacted, s 20B of the Town Planning and Development Act expressly authorised entry into contracts for the sale of land as lots prior to the approval of the proposed subdivision on certain terms. Further, by 1985, when s 13 was substantially amended, as a result of the decision in Landall, it was known that s 20 of the Town Planning and Development Act did not prohibit entry into executory contracts for the sale of lots in proposed subdivisions, provided that the contract, and the obligation to convey, was conditional upon the creation of the lot by the approval of the subdivision. Accordingly, at all material times, prospective subdividers of land could be appropriately described as having 'the right to sell' lots in a prospective subdivision, in the sense of having the right to enter into executory contracts for the sale of lots to be created by the subsequent approval of the subdivision or the registration of the strata plan, because there was no statutory impediment upon the right to enter into such contracts. Viewed in the context of s 20 of the Town Planning and Development Act, which was in force when s 13 was enacted and substantially amended, the expression 'right to sell', in its natural and ordinary meaning, is apt to describe a subdivider who is selling, or offering to sell, a lot as such, in the sense that the contractual obligation to convey title is conditional upon the creation of the lot by the approval and registration of the subdivision or the registration of the strata plan.
Third, as I have mentioned, the evident purpose of the section is consumer protection. The express words used in the section itself, referring to a 'proposed subdivision' reinforced by the expanded definition of 'lot' in s 11, manifest an intention to protect consumers entering into contracts for the acquisition of lots in a subdivision which has not been completed, in the sense of approved by the relevant authorities, at the time the contract is entered into. The construction for which the seller contends would significantly restrict the scope of the protection provided by the section, by placing the prohibition only upon subdividers whose subdivisions had been approved by the relevant authorities. Purchasers entering into contracts for the acquisition of lots in subdivisions which have not been approved by the relevant authorities are at no less risk than those entering into contracts for the acquisition of lots in subdivisions which have been approved. There is no reason to suppose that the legislature would have intended to discriminate against consumers in the former category, by limiting the prohibition to subdivisions falling within the latter category. The construction for which the seller contends would not advance the evident purpose of the legislation and would significantly inhibit the efficacy of the remedy which the Parliament has provided for the mischief which it apprehended. It should not therefore be preferred (Interpretation Act, s 18).

The actions prohibited by s 13 of the SLA

The actions prohibited by s 13 of the SLA are actions falling within the expression 'sell any of such lots'. Because of s 11, the word 'sell' has the broader meaning to which I have already referred. Further, it is clear that the expression 'any of such lots' must mean, and include, lots which may not have been created by the approval of a plan of subdivision or the registration of a strata plan, at the time the act of 'selling' is committed, but which it is proposed to create by securing the approval of a plan of subdivision or the registration of a strata plan.
That is clear for two reasons. First, as I have already mentioned, s 13 expressly extends the prohibition to persons who have the right to sell lots in a 'proposed subdivision'. If the lots the subject of the relevant act of 'selling' have been legally created by the approval and registration of a plan of subdivision or the registration of a strata plan, the subdivision could not properly be described as 'proposed'. Accordingly, restricting the construction of the term 'lot' in the expression 'sell any of such lots' to 'lots legally created at the time of sale' would not be consistent with the natural and ordinary meaning of s 13.

Second, s 11 expressly extends the meaning of the word 'lot' to include an area of land in respect of which it is represented that it will constitute a lot in a proposed subdivision. That definition is entirely consistent with the language used and the intention evident in s 13 of the SLA, which is to extend the prohibition to developers of land which has not yet been subdivided.
In summary therefore, the actions that are prohibited by s 13 of the SLA, are the actions falling within the expanded definition of 'sell' provided by s 11, in respect of any 'lots' which either have been, or are proposed to be created.

The exceptions to the prohibition imposed by s 13 of the SLA

Five categories of person are excluded from the prohibition created by the introductory words of s 13. They fall into two readily identifiable classes, namely:
(a)sellers selling to a single buyer acquiring a substantial interest in the subdivided land; and
(b)sellers with the capacity to deliver title to the purchaser.
The first category is found in par (c) of s 13(1) which excludes from the operation of the section a person who:
… sells the lot as one of five or more lots sold to one person in the one transaction, or as one of two or more lots so sold in the case of lots in a subdivision or proposed subdivision effected or continued under the Strata Titles Act 1985.
This exclusion reinforces the inference that the purpose of the section is consumer protection. This is because its general effect is to exclude the prohibition in cases where the purchaser might be expected to have a degree of commercial sophistication and/or significant bargaining power due to the magnitude of the purchase.
The second general category includes those identified in pars (a), (b), (d) and (e) of s 13(1), namely, a person who:
(a)is the proprietor thereof;
(b)is selling as an agent of the proprietor;
…
(d)is empowered by or under an Act to execute a transfer thereof that is registrable under the Transfer of Land Act 1893; or
(e)is presently entitled to become the proprietor of the lot.
The unifying characteristic of all these categories of persons excluded from the prohibition created by the section is that they have the capacity to deliver good title to the purchaser, subject, of course, in the case of lots that are yet to be created, to the creation of the lot. The latter proviso is so obvious that it goes without saying, because a contract for the sale of land other than as a lot at the time of conveyance is, and at all relevant times has always been, unlawful because of the prohibition created by s 20 of the Town Planning and Development Act, and its current equivalent, s 136 of the Planning and Development Act.
It is a significant feature of all four paragraphs of exclusion falling within this category that there must be either a proprietor (meaning a proprietor registered under the TLA), or a person entitled to become such a proprietor, or a person empowered to execute a transfer registrable under the TLA. The proper construction of those paragraphs of exclusion is, of course, significantly influenced by the proper construction of the scope of the prohibition. As I have noted, the prohibition expressly extends to persons having the 'right to sell' (in the sense I have described above) 'lots' (in the sense I have described), in a 'proposed subdivision'. In the case of a sale of lots in a proposed subdivision - that is, in respect of lots not created at the time the relevant act of 'selling' is committed, but which are to be created thereafter by the approval and registration of a plan of subdivision or the registration of a strata plan, there can be no registered proprietor of the lot which is yet to be created, or person presently entitled to become a registered proprietor of the lots yet to be created, or any person empowered to execute a transfer of such a lot that is registrable under the TLA, because there is no certificate of title relating to a lot prior to its creation. Accordingly, if, as the Walkers contend, these categories of exclusion are to be construed by reference to the registered proprietorship of the 'lot' to be created, or to the capacity to execute a registrable transfer of lots created after the subdivision has been effected by approval and registration, they can never apply to exclude the sale of lots in a proposed subdivision from the prohibition imposed by the section. This would mean that the only sales of lots that had not been created by approval and registration of the subdivision at the time of 'sale' that could be lawfully effected without infringing the section, would be sales to one purchaser of five or more lots in a broadacre subdivision, or two or more lots in a strata title subdivision.
There are at least three reasons why this proposition must be rejected.
First, s 11 expressly defines the word 'lot' to include an area of land that will constitute a lot in a proposed subdivision. Having regard to the observations I have already made in relation to the nature of land, and the relevant statutory definitions of land, the definition is quite wide enough to extend to the land from which the subdivided land will be excised after subdivision, whether subdivided vertically in the case of broadacre subdivision, or horizontally after the construction of a building in the case of strata title subdivision. Accordingly, the natural and ordinary meaning of the words used in the section compels the conclusion that the word 'proprietor', where used in the categories of exclusion to which I have referred, extends to and includes the registered proprietor of the land from which the lots in a proposed subdivision will be created, following the approval and registration of the subdivision.
Because this is the natural and ordinary meaning of the words used in s 11 and s 13 of the SLA, the Walkers were driven to submit that the definition of 'lot' in s 11 should not be applied in s 13 because a 'contrary intention appears'. Leaving to one side the unlikelihood of a drafting technique that would provide the definition of a term in one section, and then impliedly, but not expressly, eschew that definition in the very next section (s 12 of the SLA has been repealed), I am quite unable to discern any contrary intention from s 13 of the SLA. There is simply nothing in the language or effect of the section, construed using the definition provided by s 11, which would suggest that the definition should not be applied. To the contrary, this conclusion is substantiated by the two further reasons why the Walkers' construction of s 13 must be rejected.
Second, the Walkers' construction would not advance in any way the evident purpose or object of the section. As I have mentioned, the evident purpose of the section is consumer protection. From the categories of exclusion to which I have referred, it can be inferred that the purpose of the section is to protect prospective purchasers from the risk of the inability of a seller who is a subdivider to provide good title to the subdivided lot, at least where there is likely to be an imbalance between the bargaining power and/or commercial sophistication of the buyer and seller. That risk will not arise if the seller is the registered proprietor, or entitled to become the registered proprietor, or is empowered to execute a registrable transfer of the land from which the subdivided lot is to be created. Accordingly, construing the section so as to extend the prohibition to those who are the registered proprietor of the land from which the subdivided lot or lots is to be created, or who have the entitlement to become such a proprietor, or to execute a registrable transfer of that land, would extend the scope of the acts prohibited by the section well beyond its evident purpose, and well beyond the mischief which it is designed to remedy.
On behalf of the Walkers it was submitted that it should be concluded that the section was also intended to protect purchasers from the risk of sellers being unable to provide good title to the lot to be created in a proposed subdivision because they fail to obtain the requisite approval and registration of that subdivision. However, there is nothing in the language of the section that would support that proposition. To the contrary, the section applies to subdivisions and proposed subdivisions alike, and does not discriminate between the two on the basis that purchasers of land in proposed subdivisions are at some greater risk. Accordingly, it is to be inferred that the risk to which the section is directed is a risk arising from the seller's lack of title, not the risks associated with subdivision. That conclusion is strengthened by the observation that, at all material times since the enactment of the SLA, it has been unlawful to sell land other than on the basis that it is to be conveyed as a lot, with the result that any contract for the sale of land that is not conditional upon the creation of the lot to be sold is void and unenforceable. Accordingly, the protection provided to purchasers of lots in a proposed subdivision against the risk that the subdivision will not be effected was provided by s 20 of the Town Planning and Development Act, and is now provided by s 136 of the Planning and Development Act, not the SLA.
The third reason why the construction advanced by the Walkers must be rejected is that it would produce an unreasonable consequence, in that it would effectively prohibit all contracts for the sale of lots in proposed subdivisions unless and until the subdivision had been effected by approval and registration, or was small in scale (in the case of broadacre subdivision, less than five lots, and in the case of strata title subdivision, a single lot), or was a sale of five or more lots to a single purchaser in the case of broadacre subdivision, or two or more lots to a single purchaser in the case of strata title subdivision. This would effectively prohibit almost all pre-sales of lots in proposed subdivisions. However, such pre-sales have been recognised as being lawful since at least the enactment of s 20B of the Town Planning and Development Act, and more widely, following the decision in Landall in 1980. Further, s 13 itself was amended by the Acts Amendment (Strata Titles) Act 1985 (WA), which was consequential upon the enactment of the STA. The effect of the amendment to s 13 was to bring strata title subdivision within its scope. Significantly, the STA expressly provides for the sale of lots in proposed strata schemes, and contains express provision for the protection of purchasers in such circumstances (see STA, s 70). The construction of s 13 for which the Walkers contend would give those provisions of the STA little or no practical application and would effectively prohibit the pre-sale of any units in any significant strata title development. An intention to create a drastic consequence of that kind should not be imputed to the legislature unless compelled by clear and unequivocal language. There is no such language in s 13 of the SLA.

The extrinsic materials

For the reasons I have given, the proper construction of s 13 of the SLA is evident from the natural and ordinary meaning of the words which have been used in that section, and in s 11 of the SLA and from the purpose evinced by those words. The section is neither ambiguous nor obscure, nor does its ordinary meaning lead to a result that is manifestly absurd or unreasonable. Accordingly, while s 19 of the Interpretation Act enables consideration to be given to materials to confirm that the meaning of a statute is its ordinary meaning, it might be thought unnecessary to do so in this case. However, before the trial judge, and on appeal, much argument was directed to the extrinsic materials tendered as an aid to construction of the section. Out of deference to that argument, I will shortly record my views in relation to those materials.
In 1969, in its first report, 'Protection to Defaulting Purchasers', the Law Reform Committee of Western Australia referred to legislation in Victoria which was calculated to protect purchasers of subdivided land who had entered into contracts with vendors who were themselves purchasers of the land under an uncompleted contract with a vendor: see 1969 Report [24]. As the Committee pointed out, the relevant Victorian legislation prohibited the sale of land unless the seller was registered, or immediately entitled to be registered as the proprietor.
Following the publication of that report, the Minister for Justice requested further advice from the Committee in respect of appropriate legislation to be enacted to protect purchasers against those risks. In 1970, in the report, 'Relief for Purchasers Under Land Sales', the Committee reported in the following terms:
5.The Committee therefore recommends that legislation be enacted requiring the vendor of subdivisional land comprising five or more portions (whether Lots or parts proposed to be made Lots) to be the registered proprietor of that land before he sells or offers for sale any portion or enters into any contract to sell any portion. This recommendation is prompted by certain provisions in the New South Wales and Victorian legislation. If adopted, the problems created by the practice of selling land subject to a chain of dependent terms contracts would not arise.
6.The Committee considers that its recommendation will help protect the ultimate purchaser by removing from the field the more irresponsible speculators who cannot normally finance the purchase and transfer of land into their own names. Draft provisions to give effect to the recommendations are attached and could be included as a further Part in the draft Bill forwarded with the main report. It is stressed that the draft, as with other draft Bills emanating from this Committee, should be regarded as no more than a statement which may be adopted as instructions to the Parliamentary Draftsman.
7.Because the Committee does not think that subdivisional development should be inhibited more than is absolutely necessary, the Committee is not prepared to recommend any further restrictions. However, a requirement that the vendor of subdivisional land must be the registered proprietor of the land may not be sufficient to protect the ultimate purchaser in all situations. The vendor may have heavily mortgaged the land before sale, and the purchaser could be placed in an unfortunate position if the vendor failed to live up to his mortgage commitments.
8.If the government wishes to take the further step of protecting the ultimate purchaser from the claims of a registered vendor's mortgagee, the Committee suggests the enactment of a provision along the lines of section 6(1), (3) and (4) of the Victorian Sale of Land Act 1962. This section provides that if land is sold subject to mortgage, either the mortgage must relate only to that land and the purchaser should be able at a certain stage to bypass the vendor and pay off the mortgage himself, or the purchase money must be paid to a third person to be held in trust by him to be applied towards the discharge of the mortgage. The Committee suggests that, in line with its recommendation above, any such restriction should apply only to land subdivided into five or more lots.
The draft legislation referred to in that report included relevantly, provisions to the following effect:
9B(1)No person shall sell a lot in an area of land which he has subdivided into five or more lots unless he is the proprietor of that lot
(2)…
(3)No person shall sell a portion of land which he represents to the purchaser thereof will constitute a lot in an area of five or more lots unless he is the proprietor of that area of land.
I digress to observe that these provisions, pithily expressed, generally correspond with the construction which I would give to s 13 of the SLA.
Later in 1970, the Sale of Land Bill was introduced. In the Second Reading Speech, the responsible minister made the following observations (Western Australian Parliamentary Debates, Legislative Council, 3 November 1970, 1742):
Clause 13 prohibits the sale of land unless the vendor is the registered proprietor of that land under the Transfer of Land Act. This restriction is limited in its operation to the development of subdivisions comprising five or more lots.
The aim is to impose restrictions only in the area where known abuses have occurred. This has happened where the ultimate purchaser is the last in a chain of transactions. In the event of default in any one of the contracts between the registered proprietor and the ultimate purchaser, losses may be sustained by people unable to protect their transactions. The restriction will not prevent the owner of a lot or even a small group of lots from selling even though he has not got title. It will, however, exercise some control over the type of speculator who has caused some public concern recently.
The minister also confirmed that the Bill was intended to implement the recommendations of the Law Reform Committee to which I have referred.
In the course of debate, the Hon I G Medcalf made the following observations in respect of cl 13 of the Bill, as it then was (Western Australian Parliamentary Debates, Legislative Council, 5 November 1970, 1887):
Basically this comes back to a case of a person being required to be a registered proprietor before he can sell - that is, if he has more than five lots and proposes to sell one, he must be the registered proprietor under the Transfer of Land Act.
This means he must have his name on the title; and this excludes the person who is buying the land himself under contract of sale. As the minister has already indicated, this has been done for the very good reason of preventing people from selling under a chain, or a series, of contracts when they do not in fact have title. I am in favour of this principle and I am not opposing it.
I do wish, however, to draw attention to one set of circumstances which perhaps, requires some special consideration. I refer to the case of a person who is buying under a contract and who has the right to call for a transfer - having paid part of the purchase price he has the right to call for the transfer of part of the land he is buying.
He does not in fact own the land in the sense that he has his name on the title. He is not the registered proprietor but, nevertheless, there are many contracts which provide that on payment of a certain amount of the purchase price a transfer of summary lots will be executed. This, of course, is binding and the purchaser under that contract can if he wishes call for a transfer which will give him the registered title.
Such a person under this Bill is unable to sell because he is not the registered proprietor. I know I am simplifying the other provisions but I do not think they are material to what I am saying. He cannot sell unless he is the registered proprietor, although he is entitled to call for a transfer, having paid the purchase money and being so entitled under a contract.
At this time, cl 13 of the Bill made no provision excluding from its operation a person who was entitled to become the proprietor of the relevant land at the time of the relevant sale. As a result of the observations made by the Hon I G Medcalf, the Bill was amended to include the provision which is now s 13(1)(e).
I digress to observe that the portions of the Parliamentary Debates to which I have referred confirm the view I had formed from the ordinary meaning of the statute, to the effect that the mischief to which s 13 is directed is the risk to a purchaser entering into a contract for the acquisition of a subdivided lot with a seller who is not the registered proprietor of either the lot or the land from which the lot is to be created. That mischief is remedied by the construction which I would give to s 13 of the SLA, consistently with its ordinary meaning.

As I have already mentioned, s 13 of the SLA was amended by the Acts Amendment (Strata Titles) Act 1985 (WA) when the STA was enacted in 1985. The effect of the amendments to s 13 was to bring the subdivision of land by way of strata plan within its scope. The Second Reading Speech for the Acts Amendment (Strata Titles) Bill was given by the Hon I G Medcalf (Western Australian Parliamentary Debates, Legislative Council, 2 April 1985 1628 ‑ 29). He confirmed that the Bill was complementary to the Strata Titles Bill, and contained changes which would be consequential upon the passage of that Bill. In relation to the amendments to the SLA, he observed:
The change which takes effect in the Sale of Land Act really is a very important change because it brings strata titles within the scope of the Sale of Land Act, which is an act which protects the purchasers of subdivisional land where land is subject to a mortgage, and has certain specific provisions which enable purchasers to pay out mortgagees.
The previous Sale of Land Act excluded strata title purchasers who therefore did not have the benefit of the various sections of the Sale of Land Act designed for the protection of purchasers. This Bill now reverses the previous policy. Strata title purchasers will now be included in the Sale of Land Act.
The effect of the inclusion is firstly that a person in future will not be entitled to sell two or more lots in a subdivision under the Strata Titles Act unless he is the owner or the agent of the owner of the strata title, or unless he sells the unit as one of two or more lots in a strata title subdivision, or he is presently entitled to become the owner. In other words, it will generally protect the purchaser where he is dealing with someone who is not the owner.
The other major effect of the inclusion by this Bill of strata titles in the Sale of Land Act is that the person cannot sell mortgaged land unless the contract provides that the consideration for the sale shall be satisfied to the extent of the mortgage debt by the purchaser, assuming the mortgage debt. That means that the purchaser can pay the balance of the purchase price by paying the person to whom the mortgage money is owed; that is the mortgagee. This is a very significant step and one which will overcome quite a few problems.
However, that last provision does not apply, so the Sale of Land Act says, if the deposit and purchase money is paid to a solicitor or agent. It does provide now to strata title owners quite a measure of protection which they did not have before.
There is a further provision in the Strata Titles Bill itself, a provision to which I referred when discussing that Bill, which provides additional protection if the units are pre-sold in a strata title subdivision. In those cases the deposit and purchase money must be paid to a solicitor or real estate agent. This is an advantageous change which is long overdue.
I will defer for the moment any observations on those portions of the Second Reading Speech which refer to s 14 of the SLA. So far as s 13 is concerned, the Second Reading Speech reinforces the conclusion which I had already drawn relating to the relationship between s 13 of the SLA, and the provisions of the STA, and in particular, reinforces the proposition that the Parliament cannot have intended that s 13 of the SLA would be construed so as to effectively prohibit almost all pre‑sales of units in strata title subdivisions, given that it enacted legislation, in the form of the STA, which makes express provision for such pre‑sales.
In summary therefore, the extrinsic materials to which reference has been made in argument both at trial and on appeal strongly reinforce the conclusions which I have drawn as to the proper construction of s 13 of the SLA drawn from the ordinary meaning of the language used.
The seller was the registered proprietor of the land from which the lot to be conveyed to the Walkers will be created following registration of the strata plan at the time the seller and the Walkers entered into their contract. Accordingly, the seller was relevantly 'the proprietor' of the lot for the purposes of s 13(1)(a), and outside the scope of the prohibition created by s 13. Those grounds of appeal in which the Walkers assert otherwise must be rejected.

The proper construction of s 14 of the SLA

Section 14 of the SLA has the same basic framework as s 13, in that it imposes a prohibition by reference to a defined class of persons, who are prohibited from committing a defined class of acts, unless the acts fall within certain specified exceptions. As with s 13, I will consider each aspect of that framework in turn.

The persons to whom the prohibition applies

The persons falling within the scope of the prohibition imposed by s 14 are defined in substantially identical terms to those used in s 13 (save that in s 14 the words 'who would, but for this Act, have the right to sell …' are replaced by 'who have the right to sell' - a difference which is not material). The observations I have made with respect to the ambit of that class in my consideration of s 13 apply with equal force to s 14, as do my reasons for rejecting the seller's notice of contention, which would confine the operation of the section to those who have statutory authority to convey title to a lot at the time of 'sale', because the subdivision has been effected and the lots created.

The Acts prohibited by s 14 of the SLA

The terminology used to define the acts prohibited by s 14 is identical to that used by s 13, save for the addition of the reference to the relevant lot being 'subject to a mortgage'. The observations I have already made in respect of the proper construction of the prohibition upon 'selling any of such lots' in the context of s 13 are equally applicable to s 14. The proper meaning to be given to the requirement that the lot be subject to a mortgage is enhanced by a consideration of the exceptions to the prohibition created by the section.

The exceptions to the prohibition created by s 14

The exceptions to the prohibition created by s 14 are found both in subs (1) and subs (2). By subs (1), the prohibition does not apply if:
… the mortgage relates only to that lot and he sells the lot under a contract which provides that the consideration for the sale of the lot shall be satisfied, to the extent of any money owing under the mortgage at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the lots sold, by the purchaser assuming on and from that date the obligations of the mortgagor under the mortgage.
Subsection (2) creates two categories of exception. The first mirrors the exception to the operation of s 13 found in par 13(1)(c) - namely, sales of more than five lots in a broadacre subdivision to a single purchaser, or two or more lots to a single purchaser in a strata title subdivision. The observations I have made with respect to that category of exclusion in the context of s 13 are equally applicable to s 14.
The second category of exclusion created by subs 14(2) is in respect of sales under a contract and provides that:
(i)any mortgage affecting the lot sold is to be discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract; and
(ii)the deposit and all other moneys payable under the contract, other than any money payable in excess of the amount required to so discharge the mortgage, are to be paid to a certificated practitioner (within the meaning of the Legal Practice Act 2003) or to a licensee, as defined in section 2 of the Land Agents Act 1921, to be applied by him in or towards so discharging the mortgage
but where the mortgage is not discharged as to that lot before the purchaser becomes, or upon the purchaser becoming, entitled to possession or to receipt of the rents and profits under the contract and the purchaser of the lot under the contract is not in default under it, he may, by notice in writing served on the vendor of the lot under the contract at any time prior to the mortgage being discharged as to that lot, rescind the contract and thereupon may, in a court of competent jurisdiction, recover from that vendor all moneys paid by that purchaser under the contract.
Section 7 of the SLA is also relevant to the proper construction of s 14. It provides:
7(1)Where it is proposed to sell land under a terms contract, the proposed vendor of the land shall, before the proposed purchaser of the land executes the contract, give notice in writing to him of any mortgage, encumbrance, lien, or charge on the land, and of any judgment, order or memorial that is entered in the Register within the meaning of the Transfer of Land Act 1983 or that is otherwise registered against the land.
Penalty:$750.
(2)In subsection (1):
'charge' does not include rates or taxes charged on the land and
'notice in writing' includes a statement that is clearly contained in the contract.
That section only applies to 'terms contracts'. That expression is defined by s 5 of the SLA to mean:
… an executory contract for the sale and purchase of land under which the purchaser is:
(a)obliged to make two or more payments to the vendor (over and above any deposit) before he is entitled to a conveyance or transfer of the land; or
(b)entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land,
and for the purpose of this interpretation deposit includes any part of the purchase price which the contract specifies as being a deposit and provides is to be paid, whether by one or more payments, within 28 days of the execution of the contract.
It must be conceded that the provisions of s 14 which exclude the operation of the prohibition are significantly more opaque than the corresponding provisions of s 13. Like s 13, the purpose of s 14 is plainly that of consumer protection, however, in contrast, its language does not make immediately clear what precise risk to the purchaser the section is calculated to mitigate. Plainly, the risk is one arising from the existence of a mortgage over the land, but the exact nature of the risk apprehended by the legislature is not pellucidly clear. It seems most unlikely that it would be a risk arising from the mere fact that land is subject to a mortgage at the time an executory contract for its sale is entered into. Contracts of that kind are entered into many times each day, on the basis that the vendor has the obligation to transfer title free of encumbrance at the time of settlement, and therefore to discharge the mortgage prior to the conveyance of title. The purchaser is usually protected until settlement by terms which require the deposit to be held by a stakeholder. The standard nature and commonality of contracts with provisions of that kind is reflected in the terms of the general conditions of contract incorporated by reference into the contract between the Walkers and the seller. The purchasers of units in strata title subdivisions are also protected by the provisions of the STA which require their deposit to be paid to a solicitor or real estate agent and held on trust for the purchaser until the strata plan is registered (STA s 70).
Accordingly, there would not appear to be any magnification of risk to the purchaser arising merely from the fact that land which has been subdivided, or is to be subdivided, is subject to a mortgage at the time a contract is made for the sale of one of the subdivided lots.
A purchaser may be at greater risk under a terms contract for the acquisition of land which is subject to a mortgage. That is because under at least one limb of the definition of that term in the SLA, part‑payment of the purchase price, above and beyond the deposit, is made to the seller prior to the seller's obligation to convey title free of encumbrance. In such a case, if the seller is unable to make good title when the time arises for settlement, because of an inability to discharge an encumbrance, such as a mortgage over the land, the purchaser is at risk of being unable to recover the part payments of purchase price if the seller defaults and is insolvent. That risk is specifically addressed by s 7 of the SLA, which requires notice to be given to the purchaser where land subject to a mortgage is sold under a terms contract. However, neither that section, nor any other provision of the SLA prohibit the sale of mortgaged land under a terms contract and, as I have already mentioned, the fact that the land is subdivisional land would not, of itself, appear to magnify the risk to the purchaser which arises when mortgaged land is acquired under a terms contract.
For these reasons, the mischief to which s 14 is directed cannot be identified from general considerations applicable to the general run of transactions commonly undertaken. Rather, the particular mischief is to be found within the specific language of the section.
It is a singular feature of s 14 of the SLA that no reference is made in the section to the date upon which the purchaser becomes entitled to conveyance of title to the relevant 'lot'. Leaving to one side the exception relating to the sale of five or more lots in a broadacre subdivision, or two or more lots in a strata subdivision to a single purchaser, all the other exceptions provided in the section focus upon the date at which the purchaser is entitled to possession or receipt of the rents and profits of the lots sold.
The exception provided by s 14(1) clearly presumes that the lot will be subject to a mortgage at the time the purchaser is entitled to possession or receipt of the rents and profits, because it only applies if the contract provides that the purchaser is entitled to satisfy the consideration for the sale of the lot by the assumption of the obligations of the mortgagor under the mortgage. However, the subsection makes no reference to a circumstance in which the contract provides that the seller may satisfy the obligation to convey title by conveying a title subject to the encumbrance of a mortgage, and, of course, such contracts would be extremely rare. Further, in such a rare case, it could be assumed that the purchase price would reflect that the land was to be conveyed subject to encumbrance, so that it would be inappropriate to provide that the purchase price be satisfied by the assumption of the obligations under the mortgage, as that would involve the purchaser 'double dipping'. It follows that the circumstance contemplated by the legislature when it enacted this exception must have been that in which the contract provides that the purchaser is entitled to possession or to the receipt of profits prior to the conveyance of title by the seller, because at the time of conveyance of title, the lot will not be subject to mortgage in all but the rare cases to which I have referred, and for which the section makes no provision.
The exception provided in s 14(2)(b) also focuses upon the time at which the purchaser becomes entitled to possession or receipt of the rents and profits, and makes express provision for the circumstance in which that occurs when the mortgage over the lot has not been discharged. Like s 14(1), this subsection makes no reference to the rare circumstance in which a contract might provide that the seller can satisfy its obligation to convey title by conveying a title subject to mortgage. As with s 14(1), it follows from the terminology used that the legislature must have had in contemplation, at the time it enacted s 14(2)(b), a circumstance in which a purchaser becomes entitled to possession or receipt of the rents of profits under a contract prior to the seller being obliged to convey title.
Put another way, in the usual circumstance in which the purchaser is only entitled to possession and/or receipt of rents or profits upon settlement - namely, upon payment of the purchase price in full, in return for the transfer of unencumbered title, the circumstances contemplated by the exemptions enacted in s 14(1) and s 14(2) cannot arise because the mortgage will have been discharged prior to the purchaser entering into possession or receipt of profits. Nor is the purchaser at any particular risk, unless the contract is a terms contract, because, in the usual course, the purchaser's deposit will be held by a stakeholder prior to settlement, and returned to the purchaser if the seller is unable to provide unencumbered title.
A consideration of the risks faced by purchasers under terms contracts led the trial judge to conclude that s 14 should be construed as only applying to contracts falling within the definition of a 'terms contract' within the SLA. Some support for that conclusion is provided by the extrinsic materials to which I have referred, which show that the Law Reform Committee in 1970 suggested that if the government wished to take the further step of protecting a purchaser from the claims of a vendor's mortgagee, provisions along the lines of s 6(1), (3) and (4) of the Sale of Land Act 1962 (Vic) should be enacted. At the relevant time those provisions were as follows:
6(1)When land is subject to a mortgage the mortgagor shall not sell the land under a terms contract unless the mortgage relates only to that land and the contract provides that the consideration for the sale of the land shall be satisfied, to the extent of any mortgage money owing at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the land sold, by the purchaser assuming as from that date the obligations of the mortgagor under the mortgage.
(2)…
(3)Any terms contract entered into in contravention of any of the provisions of this section shall be voidable by the purchaser at any time before the completion of the contract and the vendor shall be guilty of an offence against this act and liable to a penalty of not more than 200 pounds.
(4)The provisions of this section shall not apply to the sale of land under a terms contract where the contract provides that:
(a)any mortgage affecting the land sold is to be discharged as to that land before the purchaser becomes or upon the purchaser becoming entitled to possession or to the receipt of rents and profits under the contract; and
(b)the deposit and all other moneys payable under the contract (other than any money payable in excess of the amount required to so discharge the mortgage) are to be paid to a duly qualified legal practitioner or a person who is a licensed estate agent to be applied by him in or towards so discharging the mortgage:-
but where the mortgage is not discharged as to that land within 90 days of making the contract and the purchaser is not in default under the contract the contract shall be voidable by the purchaser at any time before the mortgage is so discharged and the purchaser shall be entitled to recover all monies paid under the contract.
Some of the language used in s 14 of the SLA has clearly been taken from the provisions identified by the Law Reform Committee in its report. However, the provisions limiting the operation of the prohibition to the sale of land under a terms contract were not adopted by the Parliament of Western Australia. No reference to the expression 'terms contract' is to be found within s 14 of the SLA even though that term is defined in s 5. Instead, the terminology used in s 14 of the SLA focuses exclusively upon the entitlement of the purchaser to possession or receipt of the rents and profits, which for the reasons I have given, should be construed as applying only when that occurs prior to the conveyance of title. The circumstance in which the purchaser is entitled to possession prior to the conveyance of title is one of the circumstances falling within the definition of 'terms contract' under the SLA, but the receipt of profits prior to the conveyance of title is not, and there are other circumstances within the definition of 'terms contract' which receive no mention in the language of s 14. For example, any contract in which the purchaser is obliged to make two or more payments to the vendor over and above any deposit is a 'terms contract' as defined by the SLA, irrespective of the time at which the purchaser is entitled to take possession or receive rents and profits, but it does not fall within the language of s 14.

In those circumstances, it is impossible to conclude that the legislature intended that s 14 would only apply to sales under 'terms contracts', because the language of s 14 is inescapably inconsistent with that conclusion. However, the language of s 14 is entirely consistent with the proposition that the legislature only intended this section to operate in a circumstance in which a purchaser was entitled to possession or the receipt of rents and profits prior to becoming entitled to a conveyance of the lot. For the reasons I have given, the exceptions (other than the exception relating to a purchaser of multiple lots) can only apply in such a circumstance.
In the usual circumstance in which the purchaser is only entitled to possession and/or receipt of profits after settlement at which payment in full is made in return for the transfer of unencumbered title, the purchaser is at no material risk from the land being subject to mortgage at the time of sale, irrespective of whether the subject of the purchase is a lot in a subdivision. However, if a purchaser is entitled to go into possession or receive rents and profits prior to receiving unencumbered title, the risk to the purchaser may well be increased because, for example, the purchaser may have become entitled to possession by paying a substantial part of the purchase price, or might incur expenditure improving the land prior to transfer of title and at a time when it is subject to mortgage. It is a reasonable inference from the language of the section that such a circumstance of increased risk was the mischief which the legislature was intending to remedy.
Construing the section as applying to the usual circumstance in which the purchaser is not entitled to possession or receipt of rents and profits until settlement, at which payment is made in full in return for the conveyance of unencumbered title, as the Walkers contend, would extend the operation of the section well beyond its evident purpose, and expose sellers to possible penalty and loss of their rights under the contract even when purchasers were not at any material risk. Such a construction of s 14 would not advance its evident purpose, and would produce consequences that are manifestly unreasonable. It should be rejected, and the grounds of appeal in which the Walkers advance that construction dismissed. In accordance with the notice of contention filed by the seller, it should be held that s 14 of the SLA only applies to 'sales' (as defined by s 11) whereby the purchaser acquires a right to possession or the receipt of rents and profits prior to the conveyance of title.
Under the contract between the Walkers and the seller, the Walkers are not entitled to possession or the receipt of rents and profits prior to the conveyance of title. Accordingly, the seller did not contravene s 14 of the SLA.

The consequences of contravention

Because I have concluded that the seller did not contravene either s 13 or s 14 of the SLA, it is unnecessary to determine issues relating to the consequences which contravention would have had upon the enforceability of the contract between the Walkers and the seller.
The Walkers contend that the proper construction of the SLA is that contravention of either section renders any contract formed in contravention of the section void and unenforceable from the time it was made. The difficulty with that proposition is that it would extend the consequence of contravention beyond the evident purpose of the legislation, which is to provide protection to purchasers. It would, on the face of it, seem contrary to the evident purpose of the legislation to construe its terms in a way which enables a seller to rely upon his or her contravention of the Act to avoid the obligations imposed by a contract entered into in contravention of the Act and deny the purchaser the benefit of the contract. This consequence would be avoided if the Act were construed so that a contract entered into in contravention of either s 13 or s 14, is voidable at the option of the purchaser. However, as the seller pointed out in argument, it may be that the SLA should be construed so that there is some limitation upon the capacity of the seller to avoid the contract - either temporal (such as within a reasonable time of becoming aware of the contravention), or by reference to the seller's remedy of the default (by acquiring registered title, or discharging the relevant mortgage, as the case may be). It should be noted that s 10 of the SLA makes specific provision for the consequences of contravention of s 7 or s 8, in terms which require a purchaser to commence proceedings for rescission of the contract within one year of becoming aware of the contravention, and which give a discretion to 'the court having regard to the equities of the case'.
These are difficult issues. Because I have concluded that the seller was not in contravention of the Act at any time, the facts of this case do

not give rise to the nice issues that might arise if a seller was in contravention of the Act at the time of entering into a contract, but remedied the circumstance giving rise to that contravention prior to the purchaser purporting to rescind or give notice of avoidance. Resolution of issues such as that should await a case where the facts necessitate such a determination, and argument is appropriately directed to the issues involved.

Accordingly, I would propose to defer expressing any concluded view as to the consequences of contravention of either s 13 or s 14 of the SLA until a case arises which requires such a determination.

Conclusion

For these reasons, the appeal should be dismissed, and the decision of the trial judge affirmed, in respect of the issue concerning contravention of s 14 of the SLA, for the reason given in the seller's notice of contention which is specific to that issue.
NEWNES JA: I agree with Martin CJ.
MURPHY JA: I agree with Martin CJ.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: WALKER as Trustee for WALKER SUPERANNUATION FUND -v- CLOUGH PROPERTY CLAREMONT PTY LTD [2010] WASCA 232 (S)

CORAM: MARTIN CJ
NEWNES JA
MURPHY JA

HEARD: ON THE PAPERS

DELIVERED : 6 DECEMBER 2010

SUPPLEMENTARY
DECISION :28 MARCH 2011

FILE NO/S: CACV 152 of 2009

BETWEEN: GRAHAM GEOFFREY WALKER as Trustee for WALKER SUPERANNUATION FUND
First Appellant
THELMA JEAN WALKER as Trustee for WALKER SUPERANNUATION FUND
Second Appellant
AND
CLOUGH PROPERTY CLAREMONT PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :KENNETH MARTIN J
Citation  :GRAHAM GEOFFREY WALKER and THELMA JEAN WALKER as trustees for the WALKER SUPERANNUATION FUND -v- CLOUGH PROPERTY CLAREMONT PTY LTD [2009] WASC 367
File No  :CIV 2180 of 2009

Catchwords:

Costs - Application by appellants under O 66 r 1(3) of the Rules of the Supreme Court to pay only a portion of respondent's costs of appeal - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 66 r 1
Sale of Land Act 1970 (WA)
Town Planning and Development Act 1928 (WA)

Result:

Appellants to pay respondent's costs of the appeal

Category: B

Representation:

Counsel:

First Appellant               :     No appearance
Second Appellant          :     No appearance
Respondent:     No appearance

Solicitors:

First Appellant               :     Solomon Brothers
Second Appellant          :     Solomon Brothers
Respondent:     Corrs Chambers Westgarth

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

Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)
Commissioner of Australian Federal Police v Razzi (1991) 30 FCR 64
Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261
Nikolaou Papasavas Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394
Phillips Fox (a firm) v Westgold Resources NL [2000] WASCA 85
Walker as Trustee for Walker Superannuation Fund v Clough Properties Claremont Pty Ltd [2010] WASCA 232

JUDGMENT OF THE COURT:

Introduction

On 6 December 2010 this court unanimously dismissed an appeal by Graham Geoffrey Walker and Thelma Jean Walker as trustees for the Walker Superannuation Fund (the Walkers) against a decision dismissing their claim that a contract to purchase a residential unit in Claremont from Clough Property Claremont Pty Ltd (the Seller) was void for contravention of s 13 and/or s 14 of the Sale of Land Act 1970 (WA) (the SLA) (Walker as Trustee for Walker Superannuation Fund v Clough Properties Claremont Pty Ltd [2010] WASCA 232). On dismissing their appeal the court directed that the parties file and serve competing submissions and minutes of proposed orders regarding the costs of the appeal. It was also ordered that this matter be dealt with on the papers, without the need for a further oral hearing. These are the reasons for the orders that will be made with respect to the costs of the appeal.
Instead of the usual order that costs follow the event, the Walkers seek an order that they pay 70% of the Seller's costs of the appeal. Before dealing with the two grounds argued in support of that order, it is convenient to set out briefly some basic propositions regarding the legal context in which the submissions are made.

Law regarding costs

It is trite that although the court has an unfettered discretion regarding costs, generally costs will follow the event: Rules of the Supreme Court 1971 (WA), O 66 r 1(1). As a result, it is incumbent on an unsuccessful party to satisfy the court of good reasons for a departure from this course: Nikolaou Papasavas Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394, 407 ‑ 408. A court may be persuaded to make orders that only a percentage of costs be recovered in circumstances where, notwithstanding that a party has been ultimately successful, that party has been unsuccessful in respect of certain discrete issues in the proceedings: Phillips Fox (a firm) v Westgold Resources NL [2000] WASCA 85 [28] (Owen J); Rules of the Supreme Court O 66 r 1(3). In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S) the Court of Appeal stated that:
[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7].
It is clear from these authorities that the power to deprive a successful appellant of part of his or her costs is not to be exercised upon a microscopic examination of the fate of each and every legal contention or argument advanced during the appeal, but only arises for consideration in cases where the appellant has failed in relation to a significant component of his or her case on appeal.

The contentions of the parties

The Walkers first rely upon the fact that the Seller advanced, in its notice of contention, an argument to the effect that the reference to 'a person' in s 13 and s 14 of the SLA should be construed as a reference to a person having statutory authority to sell. This argument was dismissed by the Court of Appeal. The Walkers contend that this argument raised substantial issues regarding the history of s 20(1) of the Town Planning and Development Act 1928 (WA), and decisions interpreting that section, and that these issues gave rise to a significant and discernible portion of the costs of presenting the appeal.
The Seller resists this submission on the basis that the contention would not have been raised had an appeal not been instituted, that it was not a matter resolved by the trial judge, and that the ground was arguable.
The Walkers' submissions on this issue should not be accepted.
The issue at the heart of these proceedings was the proper construction of s 13 and s 14 of the SLA. In that sense, the argument put by the Seller regarding a possible construction of those sections, was not truly a discrete and severable issue from that put by the appellants. On the construction issue, viewed more broadly, the Walkers failed. In any case, if this ground can be characterised a discrete and severable issue, the Seller should nevertheless not be disentitled from having its costs as the issue did not add to the costs of the appeal in a significant and readily discernible way. The legislative history, and the proper construction of s 13 and s 14 of the SLA were put in issue generally by the Walkers' claim and their appeal, and the contention of the Seller which failed did not have a significant impact upon the length of the argument or submissions.
The ability to award only a proportion of costs to a partially successful party is one method by which courts can properly encourage parties to carefully consider and refine the matters that they put in issue in litigation: Commissioner of Australian Federal Police v Razzi (1991) 30 FCR 64. However, this consideration must be balanced against the risk that justice may not be served if parties are dissuaded from properly raising arguable submissions due to the spectre of adverse costs implications if unsuccessful: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261.
The submission raised was arguable and therefore properly raised in response to the appeal instituted by the appellants. It did not add to the costs of the appeal in a significant and readily discernible way. There is therefore no reason why the costs recovered by the Seller should be reduced to reflect its lack of success on this particular aspect of the argument advanced on appeal.
Secondly, it is said by the Walkers that the course of reasoning adopted by the learned trial judge in relation to the ambit of s 14 of the SLA was that contended for by the Seller at trial and that, although the Seller was ultimately successful on appeal, the Court of Appeal rejected the trial judge's reasoning on that issue. Specifically, it is said that the Seller submitted at trial, and the trial judge accepted, that s 14 of the SLA should be construed as only applying to the sale of lots under 'terms contracts'. The expression 'terms contract' is defined in s 5 of the SLA as being:
[A]n executory contract for the sale and purchase of land under which the purchaser is -
(a)obliged to make two or more payments to the vendor…before he is entitled to conveyance or transfer of the land; or
(b)entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land…'
The Seller submits that the reasons given by the trial judge differed materially from the submissions put by the Seller. Specifically, it is said that the Seller's submission at trial was not that s 14 of the SLA should be construed as applying only to the sale of lots by 'terms contracts'. Rather, it is said that the submission put by the Seller was that s 14 applies only where the purchaser goes into possession or becomes entitled to occupation whilst a mortgage continues to exist over that lot.
The Seller also submits that the trial judge did not hold that s 14 should be construed as applying to all 'terms contracts'. This is said to be because his Honour maintained a distinction between the two limbs of the definition outlined above and held that the section applied only to the second of those limbs.
Finally, the Seller submits that the argument in the notice of contention was advanced as a matter of caution to ensure that the argument advanced below remained before the Court of Appeal.
The Walkers' argument on this point should be rejected.
The Seller's submissions at trial were put on the basis that the prohibition in s 14 was 'concerned with a situation prior to the transfer of title to the land to the purchaser, where the purchaser has gone into possession or has a right of occupation (and consequently has an entitlement to rents and profits)': par 39 of the defendant's Outline of Submissions dated 2 October 2009. The same argument was put on appeal: page 43 White Appeal Book.
The Sellers' submissions did discuss the notion of a 'terms contract' and observed that, to some extent, the construction argued for was consistent with the second limb of the definition. However, it is clear that the Seller did not submit that the prohibition in s 14 should only apply to any contract falling within either limb of the definition of terms contracts above.
By contrast, the Court of Appeal held that the trial judge had concluded that s 14 of the SLA should only apply to 'terms contracts' as defined by the SLA: Walker v Clough Property Claremont [94]. The Seller did not contend on appeal that the decision of the trial judge should be upheld for the reason his Honour gave, but reiterated the construction of s 14 which it had pressed at first instance. The construction adopted by the trial judge cannot therefore be attributed to the Seller, and provides no basis for adjusting the usual order as to costs.

Conclusion and Orders

The appellant has failed to provide good reasons why the court should exercise its discretion to discount the costs which should otherwise be recoverable by the Seller. As a result, the orders of the court will be that the appellants pay the Seller's costs of the appeal, including any reserved costs, to be taxed if not agreed.