Western Australian Land Authority v Meadowcroft
[2014] WASC 333
•17 SEPTEMBER 2014
WESTERN AUSTRALIAN LAND AUTHORITY -v- MEADOWCROFT [2014] WASC 333
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 333 | |
| 17/09/2014 | |||
| Case No: | CIV:1081/2013 | 5 MARCH 2014 | |
| Coram: | EM HEENAN J | 5/03/14 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for the plaintiff Declarations as to repurchase of lot Specific performance ordered | ||
| B | |||
| PDF Version |
| Parties: | WESTERN AUSTRALIAN LAND AUTHORITY FIONA PATRICIA MEADOWCROFT STEPHEN ANDREW MEADOWCROFT REGISTRAR OF TITLES |
Catchwords: | Sale of land Sale contract requiring the construction of residence upon land within specified period Failure to comply with condition Revocation of sale Repurchase of lot by vendor Option to repurchase Validity of the exercise of the option Requirements for service Whether implied terms Relief in the nature of specific performance |
Legislation: | Conveyancing Act 1919 No 6 (NSW) Property Law Act 1969 (WA) Transfer of Land Act 1893 (WA) Western Australia Land Authority Act 1992 (WA) |
Case References: | BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266 Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2011] WASCA 109 Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520 Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 16,361 Rehins Pty Ltd v Debin Nominees Pty Ltd [No 2] [2011] WASC 168 Smurfs Child Care Centre (Ballajura) Pty Ltd v Commonwealth Bank of Australia Ltd [2013] WASC 49 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
FIONA PATRICIA MEADOWCROFT
First Defendant
STEPHEN ANDREW MEADOWCROFT
Second Defendant
REGISTRAR OF TITLES
Third Defendant
Catchwords:
Sale of land - Sale contract requiring the construction of residence upon land within specified period - Failure to comply with condition - Revocation of sale - Repurchase of lot by vendor - Option to repurchase - Validity of the exercise of the option - Requirements for service - Whether implied terms - Relief in the nature of specific performance
Legislation:
Conveyancing Act 1919 No 6 (NSW)
Property Law Act 1969 (WA)
Transfer of Land Act 1893 (WA)
Western Australia Land Authority Act 1992 (WA)
Result:
Judgment for the plaintiff
Declarations as to repurchase of lot
Specific performance ordered
Category: B
Representation:
Counsel:
Plaintiff : Mr D M Fairweather
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Solicitors:
Plaintiff : Allion Legal
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Case(s) referred to in judgment(s):
BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266
Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2011] WASCA 109
Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520
Lolly Pops (Harbourside) Pty Ltd v Werncog Pty Ltd (1998) 9 BPR 16,361
Rehins Pty Ltd v Debin Nominees Pty Ltd [No 2] [2011] WASC 168
Smurfs Child Care Centre (Ballajura) Pty Ltd v Commonwealth Bank of Australia Ltd [2013] WASC 49
1 EM HEENAN J: At the end of the trial of this action I gave judgment for the plaintiff and made orders and declarations to give effect to its claim reserving liberty to apply for the parties to file written submissions later, if so desired, as to the price to be determined for the repurchase of the land. When doing so I indicated that detailed written reasons for decision would be delivered in due course. No application has been made nor any submissions filed in relation to the price for the repurchase of the land. These reasons, therefore, deal with the issues determined at the trial.
2 Although neither of the first defendant nor the second defendant appeared in person or by counsel at this trial, each had previously been represented by a firm of solicitors who had filed a defence and counterclaim on their behalf. However the solicitors sought leave to withdraw and an order was made by a registrar on 5 July 2013 ordering that the firm of solicitors had ceased to act for the first and second defendants and that from then on their address for service should be at a nominated address in Port Hedland. Since then various communications between the solicitors for the plaintiff and the first and second defendants and between the court and the second defendant revealed that the defendants were aware of the date fixed for the trial, but did not intend to be present or represented.
3 The third defendant, the Registrar of Titles, entered no appearance but indicated that he submitted to any judgment or order of the court.
The plaintiff's claim, and the defence and counterclaim
4 The plaintiff, the Western Australian Land Authority (LandCorp) was at all material times responsible for the release and timely development of land at Port Hedland for the construction by private purchasers of homes or residences upon the land. It performed this function by conducting a ballot for offers to purchase land in a newly subdivided area under contracts of sale which contain terms and conditions requiring the purchaser or purchasers to complete the construction of a home on the particular lot within 30 months of the sale. These contracts also provided that if a purchaser failed to comply with this condition (the development condition) the plaintiff, as vendor, had the option to repurchase the land at the original sale price less the costs and expenses associated with the repurchase and associated outgoings.
5 Under such a contract the plaintiff sold lot 626 in the development known as Pretty Pool Stage 4 Port Hedland for a purchase price of $324,000 under a contract of sale dated 11 September 2008. This was a contract between the plaintiff and the first defendant alone. Under this contract settlement was due to take place on 28 May 2009 and was extended by agreement to 10 June 2009. The contract of sale was further varied by deed made between the plaintiff and both defendants dated 29 May 2009, the 'Deed of Assumption' by which the second plaintiff was accepted as a joint purchaser of the land with the first plaintiff and, otherwise, subject to the same terms and conditions of the original contract of sale.
6 The land, lot 626, was formally transferred to the first and second defendants by a transfer dated 19 June 2009 and registered at the Land Titles Office. The land was mortgaged by the first and second defendants to Westpac Banking Corporation but, by a deed dated 1 July 2009 between the plaintiff, the first and second defendants and Westpac Banking Corporation, the bank acknowledged the interest of the plaintiff under the conditional contract including its option to repurchase the land in the event of non-compliance with the development condition.
7 Under the terms of the contract of sale the first and second defendants were obliged to achieve practical completion of a residence to be constructed on the land by 19 December 2011 at the latest although the plaintiff had, in certain circumstances, a discretion to extend that time.
8 The first and second defendants were repeatedly reminded by the plaintiff of the need to achieve practical completion of the residence on the subject land by 19 December 2011 and of the right of the plaintiff to exercise its option to repurchase the land if that condition were not met by the due date. Warnings of such a possible consequence were given by the plaintiff to the first and second defendants by letters dated 6 January 2011, 23 June 2011 and again, after the expiration of the period by letters of 21 May 2012 and 10 July 2012. No building or improvement on the subject land was commenced before the expiration of the 30 month development period and evidence adduced at trial demonstrated that, as recently as February 2013, the land was still a completely unimproved vacant lot. Other evidence indicated that no plans or applications for development or approval had been lodged with the local municipality.
9 Consequently, by notice dated 31 July 2012 the plaintiff gave notice to the first and second defendants in accordance with the development condition that it thereby exercised its option to repurchase the land for the 'repurchase price', then estimated to be $312,913.14 being the original sale price less estimated costs. The notice of the exercise of the option called for a settlement of the repurchase within 30 days requiring the first and second defendants to provide an unencumbered estate in fee simple of the land, but the first and second defendants had failed to execute the repurchase documents. By this action the plaintiff seeks an order in the nature of specific performance compelling them to do so or, alternatively, associated relief designed to achieve the retransfer of the land to the plaintiff in accordance with the terms of the contract in the event of the first and second defendants failing to comply.
10 Notice of the exercise by the plaintiff of the option to repurchase the land of these proceedings has been given by the plaintiff to the mortgagee, Westpac Banking Corporation, and an agreement has been reached between the plaintiff and the mortgagee to satisfy the plaintiff's costs and expenses out of the proceeds of the sale, if and when it occurs, before payment is made in satisfaction of the monies due to the bank under its mortgage.
11 None of the facts so far related is disputed or challenged by the first and second defendants in the defence which they filed by their solicitors. Rather, by their defence the first and second defendants plead that the contract of sale does not specify a time within which the option to repurchase must be exercised and that there is, accordingly, an implied term in that contract that the option be exercised within a reasonable time.
12 Further, the first and second defendants do not admit the allegations in the statement of claim that notice of the exercise of the option to repurchase the land was given and further plead that if any such notice were given it was ineffective in that it did not comply with certain alleged conditions in the contract requiring service by security post. They further plead that the option to repurchase by the plaintiff was not validly exercised and further, was not validly served because any service which may have been effected occurred after the expiration of a reasonable time for the exercise of the option.
13 They plead that the time when the plaintiff claims the option to repurchase was exercised was unreasonable was because it is alleged to have occurred some seven and a half months after the date when it first became exercisable and during that time the first and second defendants continued to pay significant mortgage repayments and incurred time, expense and trouble in negotiating with a designated builder for proposed building plans for a house to be constructed on the land. They further plead that the plaintiff may unfairly profit from the delay in exercising its option due to an appreciation in the value of the land and, further, because the plaintiff has had the benefit of enjoying the purchase price for the land originally paid by the first and second defendants from the time when the option first became exercisable and that this has been at the expense of the defendants. They have counterclaimed for a declaration that the time for exercising the option had expired.
14 By its reply and defence to counterclaim the plaintiff refers to terms of the contract of sale which provide that the power to exercise the option to repurchase the land is said to be without prejudice to all other rights or remedies available to the plaintiff and shall not be prejudiced or in any way limited by any delay on the part of the plaintiff in exercising the option; that any right created under the contract including the right to exercise the option to repurchase the land by the plaintiff could not be waived except in writing signed by the party granting the waiver and further, that any failure or delay by the plaintiff to enforce any of its rights or to exercise any option or discretion in accordance with the contract would not constitute a waiver of any provisions of the contract or prejudice the plaintiff exercising such rights or the exercise of any such option or discretion.
15 Further the plaintiff pleads, with detailed particulars, that valid and effective notice of the option to repurchase was given to the first and second defendants in accordance with the terms of the contract by letter dated 24 July 2012, by the notice of exercise of the option dated 31 July 2012, by a letter dated 30 July 2012 addressed to the first and second defendants at their address shown in the contract and by two subsequent letters dated 4 September 2012 and 16 November 2012 respectively.
16 The plaintiff also pleads an express term in the contract of sale that the first and second defendants should not be entitled to claim any compensation for any inconvenience or damage caused by the plaintiff provided that in exercising its rights, powers or remedies under the contract the plaintiff act in good faith. No plea of lack of good faith was at any stage made by either of the first or second defendants.
17 Consequently, on the pleadings, the only issues of fact which the plaintiff had an obligation to prove were the due service of the notice exercising the option and to refute the allegation that the option to repurchase had not been exercised within a reasonable period (an obligation said to arise from the term to be implied in the contract) and that it was consequently invalid.
Findings
18 Under the Western Australia Land Authority Act 1992 (WA) its long title and s 3 and s 16, the functions of the plaintiff include the provision and development of industrial, commercial and residential land, infrastructure facilities and services to meet the social and economic needs of this State whilst taking account environmental outcomes. In exercising those functions the plaintiff takes measures to ensure that land which it is releasing for development is developed within a reasonable time and that the purchasers comply with obligations to that effect accepted by them when purchasing land.
19 The land which is the subject of this contract is referred to in the contract as lot 626 Pretty Pool Stage 4. It is also known by its residential address as 78 Styles Road, Port Hedland. The system of ballot used by the plaintiff for this and other lots in the same development was an open ballot because there was more demand for lots than were available at the time. A preference in the ballot was given to bidders who lived or carried on business in Port Hedland.
20 The terms of the contract between the plaintiff and, initially, the first defendant included an acknowledgement that the purchaser had read and understood the plaintiff's particulars and conditions for the purchase of land by ballot and LandCorp's standard residential conditions (with the development requirements) and agreed to be bound by all those terms and that the conditions were necessary and desirable to enhance and create the subdivision of which the land formed part (exhibit 1, page 4). As earlier mentioned, one of the terms of these conditions (the development condition) required the successful bidder to cause practical completion of the construction of the residential dwelling on the land to be effected within a period of 30 months (that is two and a half years) from the date of settlement of the purchase.
21 The first defendant's offer to purchase was accepted by the plaintiff on 11 September 2008 (exhibit 1, page 6).
22 The LandCorp standard residential conditions (with development requirements) were incorporated into the contract of sale (exhibit 3). The development condition is set out in cl 15 and condition 17 provides that if the development condition is not satisfied the plaintiff has the option to repurchase the land at the original purchase price less its costs. It is in the following terms:
17OPTION TO REPURCHASE
17.1 If at any time after Settlement the Buyer:
(a) fails to complete the Development in accordance with Condition 15; or
(b) otherwise fails to observe or perform any Buyer's Covenant
(any of which is called 'the Default')
then LandCorp shall in case of the Default or having become aware of the Default as the case may be have the option to be exercised upon giving the Buyer written notice thereof to repurchase the Land for an unencumbered estate in fee simple for the Repurchase Price.
17.2 The Repurchase Price shall be calculated as follows:
The purchase price of the Land under this Contract
Less LandCorp's solicitor's or settlement agent's costs and disbursements incurred upon the repurchase of the Land by LandCorp (including all stamp duty payable in respect of the repurchase) and
Less All costs incurred in respect of the sale of the Land pursuant to this Contract including all real estate agent's fees and other sales costs.
17.3 In the event that LandCorp exercises the option to repurchase hereunder the Buyer shall at the request of LandCorp prior to the date of Settlement remove all buildings and other improvements constructed upon the Land and make good the Land to the reasonable satisfaction of LandCorp at its cost. In the event that the Buyer fails to so remove such buildings and other improvements then LandCorp may remove such buildings and improvements and deduct the cost of removing such buildings or improvements and making good such removal from the Repurchase Price or if the costs of such removal and making good are greater than the Repurchase Price then the differential shall be a debt owing by the Buyer to LandCorp payable on demand.
17.4 Settlement of the repurchase shall be on the date being within thirty (30) days after the date of the exercise of the option to repurchase ('the Date of Settlement').
17.5 The Buyer acknowledges and agrees that LandCorp may lodge an absolute caveat over the title to the Land in respect of the option granted to LandCorp pursuant to this Condition and the Buyer shall not take any action to remove such caveat. The Option hereby granted shall continue notwithstanding any transfer or other dealing with the Land.
17.6 Upon the exercise of the option to repurchase:
(a) LandCorp shall prepare and the Buyer shall execute forthwith a registrable transfer of the Land to LandCorp;
(b) the Repurchase Price shall be paid to the Buyer and the transfer registered and possession given and taken on the Date of Settlement;
(c) outgoings shall be adjusted as a the Date of Settlement; and
(d) the Buyer shall sell the Land to LandCorp free of all liens charges mortgages caveats or other encumbrances whatsoever over the Land and shall cause he withdrawal or removal of any such encumbrance. LandCorp may pay the Repurchase Price or any part thereof to any encumbrances as may be necessary to allow the withdrawal or removal of any such encumbrance.
17.7 Notwithstanding anything herein mentioned the right of LandCorp to repurchase the Land in accordance with this Condition 17 is without prejudice to all other rights or remedies available to LandCorp and shall not be prejudiced by or in any way limited by any delay on the part of LandCorp in exercising the option to repurchase and notwithstanding that LandCorp may have been aware of any breach of any of the Buyer's Covenants.
23 The second defendant, Stephen Andrew Meadowcroft, became a party to the original contract of sale under the Deed of Assumption of 29 May 2009 (exhibit 6). This deed required the second defendant, and the first defendant, to comply with all the terms of the original contract of sale, but presumably to ensure that there was no misunderstanding in this regard, it included a specific clause requiring the additional purchaser, the second defendant, to comply with the development condition. This is:
2.2 For the avoidance of doubt the Additional Buyer and the Original Buyer acknowledge and agree that if the Additional Buyer and the Original Buyer fail to achieve Practical Completion within thirty (30) months of the Settlement Date, then LandCorp shall be entitled to repurchase the Property for the sum of $324,000 less LandCorp's costs (including all stamp duty payable in respect of the repurchase) in accordance with the Contract.
24 The date for practical completion for the construction of the residential dwelling on the land remained the 19 December 2011.
25 The first and second defendants were reminded of their obligation to achieve practical completion under the terms of the contract by several communications from the plaintiff. The first was a letter of 2 July 2009 (exhibit 10), the second a letter of 6 January 2011 (exhibit 11), and the third 23 June 2011 (exhibit 12). There was no response by the defendants to any of those three letters before November 2011 but on 7 November 2011 the second defendant telephoned LandCorp (exhibit 33) to say that he had just had plans drawn up but they were not yet at the Shire and that he and his wife would request an extension of time to meet the development condition. At that point there were only about six weeks left before the time for compliance with the development condition was to expire.
26 On 21 May 2012 the plaintiff wrote to the first and second defendants pointing out that under the terms of the contract the latest date for practical completion was 19 December 2011 which had passed and that the second defendant had telephoned the plaintiff in early November indicating that he would request an extension of time to build but that the plaintiff had not received any such request. This letter gave the first and second defendants an opportunity to seek an extension of time and requested supporting evidence to be supplied for that request by 5 June 2012. It warned that if the plaintiff did not hear from the first and second defendants by that date it would contemplate exercising its option to repurchase the land.
27 Again there was no response to this approach from the plaintiff. On 10 July 2012 an officer of the plaintiff telephoned the first defendant and left a message saying that LandCorp could not offer them any further time to build and that it was assessing the land for repurchase. Also on that date the plaintiff again wrote to the first and second defendants to confirm that it was undergoing its assessment process and it was likely that it would exercise its option to repurchase the land.
28 On 24 July 2012 the plaintiff wrote to the first and second defendants again and informed them that it had approved the repurchase of the land and decided to exercise its option to repurchase the land and had instructed solicitors to prepare a notice of exercise of option. Receipt of that letter is admitted in the defence of the first and second defendants.
29 Two days later on 26 July 2012 the second defendant contacted LandCorp and spoke to an officer of the plaintiff by telephone on 30 July 2012. He asked how serious the plaintiff was about repurchasing the land and enquired if there was any chance that he and his wife could keep the land and develop it. The plaintiff's officer informed him that he was not optimistic but that if he could provide any evidence of hardship and reasons why they had not developed the land she could approach the plaintiff's general manager about that request. Again, no communication nor any submissions were received by the plaintiff from the first and second defendants following the telephone discussion of 30 July 2012 or at any later time. Consequently on 31 July 2012 the plaintiff wrote to the first and second defendants notifying them that it was proceeding with the repurchase of the property (exhibit 18). This correspondence included the notice of exercise of option dated 31 July 2012 (exhibit 19) and a transfer of land document and mortgage discharge authority for the first and second defendants to complete. Receipt of those documents was not admitted by the first and second defendants in their defence.
30 Further attempts were made by the plaintiff to contact the first and second defendants and to ask them to sign and return the various repurchase documents before this action was commenced. This was done by telephone messages on 10 and 18 October 2012 and by letters dated 4 September 2012 (exhibit 21) and 16 November 2012 (exhibit 27) which were sent by registered post and which were collected by the second defendant on 11 September 2012 and 20 November 2012 respectively (exhibits 23 and 28).
31 The position of the first and second defendants by their pleading is that they admit that they have not executed any of the repurchase documents but contend that they have no obligation to do so because of the alleged invalidity of the exercise by the plaintiff of the repurchase option.
Validity of notice of exercise of option
32 The plea by the first and second defendants on this issue is that if the plaintiff did give them the notice of the exercise of the option (which they do not admit) then that notice was ineffective in failing to comply with the requirements of condition 19.1(c)(ii). The relevant condition 19 of the contract is as follows:
19. Notice
19.1 Any notice given or required to be given under this Contract:-
(a) must be in writing addressed to LandCorp or the Buyer (as the case may be), to LandCorp's or the Buyer's address shown in the Contract (or to any other address specified by the Buyer to LandCorp or LandCorp to the Buyer by notice) ... ;
(b) must be signed by the sender or an officer of, or under the common seal of the sendor by the sendee's lawyer, conveyancer or other authorised representative (as the case may be);
(c) is to be regarded as being given by the sender and received by the addressee:-
(i) ...
(ii) if by post (which posting must be by pre-paid security post), three business days from and including the date of posting to the addressee;
34 In this case there is no issue which turns upon the identification of the precise date on which the notice of the exercise of the option was given or received. Rather the issue is whether or not the exercise of the option was given in accordance with condition 17.1 at all and not when the notice was given.
35 In this regard the plaintiff also relies upon s 135(1A) of the Property Law Act 1969 (WA) which provides that:
A notice required or authorised by this Act to be served on any person or any notice served on any person under any instrument or agreement that relates to property may be served on that person -
(a) by delivering the notice to him personally;
(b) by leaving it for him at his usual or last known place of abode, or if he is in business as a principal, at his usual or last known place of business;
(c) by posting it to him as a letter addressed to him at his usual or last known place of abode, or if he is in business as a principal, at his usual or last known place of business.
36 The decision in Lolly Pops (Harbourside) v Werncog is to the effect that the equivalent provision in s 170 of the Conveyancing Act 1919 No 6 (NSW) applies to the exercise of an option. There is nothing in the contract between the plaintiff and the first and second defendants which shows any contrary arrangement for the service of notices and consequently there is no reason to exclude the operation of s 135 of the Property Law Act. That section also provides by s 135(1B):
A notice posted as provided in subsection (1A) shall be deemed to have been served, unless the contrary is shown, at the time when by the ordinary course of post the notice would be delivered.
37 I accept the plaintiff's submission that in this case the reference to a person's 'usual or last known place of abode' in s 135 includes the address for the first and second defendants specified by them as buyers under this contract. The correspondence already mentioned, including the notice of exercise of the option, was posted to the first and second defendants at the address shown in the contract, namely PO Box 466, Port Hedland, WA 6721. The two letters of 4 September 2012 and 16 November 2012, already mentioned, which were sent by registered post to that address were collected by the second defendant in person.
38 In these circumstances, and in the absence of any evidence to the contrary by the first and second defendants, I am satisfied that the notice of the exercise of the option to repurchase was in fact served upon the first and second defendants and that they also received each of the other letters addressed to them by the plaintiff or its solicitors which have previously been mentioned.
39 The next issue raised by the defence of the first and second defendants is that service by the plaintiff of the notice of the exercise of the option to repurchase was ineffective because it was served after the expiration of a reasonable period of time within which to exercise that option. There is no express provision in the contract specifying the time within which a notice for the exercise of that option must be exercised and accordingly the defendants' plea relies on the existence of a term to that effect arising by implication from the contract. The plaintiff denies the existence of any such implied term by its reply and submits that the onus of establishing both the implied term and any lack of compliance with it rests upon the first and second defendants.
Implied terms
40 In its submissions in response to the plea of the existence of an implied term the plaintiff points to the distinction between implied terms of a generic kind implied by law and implied terms of a specific kind implied by fact as explained in Byrne & Frew v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410, 447 - 448 and D & M (Australia) Pty Ltd v Crouch Developments Pty Ltd [2011] WASCA 109 [26] - [29]. In the latter case Murphy JA refers at [29] to the well known passage in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266, 283 to identify the five conditions, which might overlap, which must exist before an implied term of the specific kind will be regarded as arising in the particular contract: see also Smurfs Child Care Centre (Ballajura) Pty Ltd v Commonwealth Bank of Australia Ltd [2013] WASC 49 [65] (Allanson J).
41 Following this approach to the determination of the existence or otherwise of an implied term the plaintiff submits that the conditions for the implication of a term contended for by the first and second defendants are not satisfied in this particular case because the proposed implied term, that is, to exercise the option to repurchase the land within a reasonable time, is:
(a) not necessary to give business efficacy to the contract because the contract is effective without it and the repurchase mechanism in the contract, as far as possible, places purchasers in the same position in which they would have been had they never purchased the land (subject to them meeting the costs of the repurchase);
(b) not so obvious that it goes without saying because the court should not presume that the parties would have agreed upon that term had they turned their minds to it;
(c) not capable of clear expression; as neither the defence nor any other circumstance gives any suggestion of content to the term 'a reasonable time' in this particular situation; and
(d) inconsistent with the express terms of the contract.
42 As for the alleged inconsistency of the pleaded implied term the plaintiff points to the following factors. First that by condition 15.1 the contract contemplates that the time for achieving practical completion of the required residential dwelling may be extended as approved in writing by the plaintiff. Second, as the history of this case shows, numerous opportunities were given to the first and second defendants to seek an extension of time to comply with the development condition and an implied term of the nature pleaded, unless qualified in some unspecified way, would restrict or limit the opportunity of the plaintiff to grant such extensions. Thirdly, there are express terms in the contract (conditions 17.7 and 35.6) which respectively specify that the plaintiff shall not be prejudiced by or in any way limited by any delay on its part in exercising the option to repurchase; and that the failure by the plaintiff at any time to enforce any of its rights or to exercise any option in accordance with the contract will not be constituted as a waiver of the contract or prejudice the plaintiff exercising such rights or the exercise of any such option.
43 I am satisfied, at the very least, that the implied term contended for by the first and second defendants, is directly inconsistent to the express terms in this contract, particularly conditions 17.7 and 35.6, and therefore cannot or should not be implied.
44 In any event there is no basis for any finding that the exercise of this option to repurchase was outside any reasonable period within which that option could be exercised by the plaintiff in this case.
Relief sought
45 By its written and oral submissions the plaintiff seeks specific performance 'in the narrow sense' as that term has been described by Buss JA in Lighting By Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASCA 23; (2008) 35 WAR 520, 545 [97]. The remedy sought by the plaintiff, in the first place, is an order by the court requiring the first and second defendants to execute the documents necessary to allow completion of the repurchase (the repurchase documents) including a registrable transfer of the land. They rely on the principles applicable to the grant of the decree of specific performance described by Murray J in Rehins Pty Ltd v Debin Nominees Pty Ltd [No 2] [2011] WASC 168 [212] - [216]. The plaintiff submits that in the present case damages would not be an adequate remedy having regard to the plaintiff's statutory functions; that the decree of specific performance sought in this case would not require continuing supervision by the court or any lengthy ongoing association between the plaintiff and the first and second defendants following settlement of the repurchase and, finally, that there is nothing to suggest that the plaintiff is not ready, willing and able to perform its obligations under the contract, that is by accepting the transfer of land and tendering the repurchase price as required by contract to the first and second defendants.
46 If the first and second defendants fail to comply with any such order then the plaintiff seeks further orders enabling the third defendant, the Registrar of Titles, to act so as to transfer the land from the first and second defendants to the plaintiff upon satisfaction of the plaintiff's obligations under the contract in those circumstances.
47 I am satisfied that the plaintiff is entitled to a decree of specific performance tailored to meet the particular circumstances in a fashion set out more fully in the following parts of these reasons. This follows from my conclusion that the notice of exercise of the option to repurchase the land was validly given by the plaintiff to the first and second defendants and it also follows from this conclusion that their counterclaim must be dismissed.
48 The mechanism for the repurchase of the land by the plaintiff is set out in condition 17.2 of the contract, the material provisions of which are set our earlier in these reasons. As for the first and second defendants' plea that they have suffered prejudice by continuing to pay the mortgage instalments over the period before the plaintiff exercised the option to repurchase it must be said that those payments, as with all mortgage repayments, have gone to discharge, pro rata, the first and second defendants' obligations to its bank which could only have been avoided if the first and second defendants had sold the land or otherwise discharged the mortgage in full. To the extent that the mortgage payments reduced the capital outstanding under the mortgage then the benefit of those payments will enure to the first and second defendants when the land is repurchased and the purchase price, less costs, is paid to them.
49 For these reasons I consider that the plaintiff is entitled to the relief sought which in the circumstances should be:
1. a declaration that the first and second defendants breached:
(a) conditions 17.6(a), 31.1 and 35.7 of the contract entered into by the plaintiff and the first defendant on or about 11 September 2008 (Contract); and
(b) cl 5.7 of the Deed of Assumption entered into by the plaintiff, the first defendant and the second defendant on or about 29 May 2009 (Deed).
2. A declaration and orders that the first and second defendants are obliged to execute the following documents (Repurchase Documents) forthwith in accordance with conditions 17.6(a), 31.1 and 35.7 of the Contract and cl 5.7 of the Deed:
(a) a registrable transfer of Lot 626 on Deposited Plan 61231 being the whole of the land in Certificate of Title vol 2716, folio 313 and known as 78 Styles Road, Port Hedland, Western Australia (Land) by the first and second defendants to the plaintiff; and
(b) a duly completed discharge authority by the first and second defendants to Westpac Banking Corporation.
3. A decree that the Contract and the Deed be specifically performed to effect the repurchase of the Land by the plaintiff from the first and second defendants in accordance with conditions 17.2, 17.4 and 17.6 of the Contract within 30 days from the date of service of this decree on either or both the first defendant or second defendant (Settlement Date).
4. An order that if the first and second defendants do not comply with the terms of proposed orders 2 and 3 by the Settlement Date, then:
(a) the plaintiff may pay and apply the repurchase price (as defined in condition 17.2 of the Contract) in accordance with the conditions 17.6(b), (c) and (d) of the Contract;
(b) within 14 days of compliance with proposed order 4(a), the plaintiff file an affidavit deposing to such compliance and serve such affidavit on the third defendant;
(c) within 14 days of compliance with proposed order 4(b), the third defendant:
(i) cancel the Certificate of Title in respect of the Land and any entry or memorandum in the register maintained for the purposes of the Transfer of Land Act 1893 (WA) relating to the first and second defendants' interest in the Land; and
(ii) substitute such Certificate of Title or entry to convey the transfer an unencumbered interest in fee simple of the Land from the first and second defendants to the plaintiff.
5. The first and second defendants' counterclaim be dismissed.
6. The first and second defendants pay the plaintiff's costs of and incidental to the action and the counterclaim, including reserved costs, to be taxed.
7. The first and second defendants have 14 days from the date of this order within which to make submissions whether the costs of the action and counterclaim as taxed or agreed should be deducted from the repurchase price. Failing any such application, then after 14 days, the plaintiff may deduct such costs from the repurchase price.
8. In the event that the first or second defendants file submissions in relation to the repurchase price within the next 14 days, the plaintiff will have 10 days to file and serve answering written submissions. The first and second defendants will then have 7 days within which to file any written submissions in reply. At the expiration of that period, the issue will be resolved on the papers without appearances unless any party shows good reason in the course of those written submissions for an oral hearing.
9. There be liberty to apply on 7 days' notice.
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