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  • Unreported Judgment

Lake Mangana Pty Ltd v Arrabri Developments Pty Ltd

 

[2005] QSC 398

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

MUIR J

No BS3501 of 2004

LAKE MANGANA PTY LTD (ACN 010 786 473)

Plaintiff

and

 

ARRABRI DEVELOPMENTS PTY LTD (ACN 065 897 494)

Defendant

BRISBANE

DATE 09/12/2005

JUDGMENT

HIS HONOUR: There are two applications before me. One is an application for summary judgment in which the plaintiff seeks specific performance against the defendant of a contract of sale of land dated 22 July 2003 entered into between them.

The land is described in the contract as “Lot 8 SP116135”. Its area is stated in the reference schedule to be nine acres. The land in question is a parcel of land on the Warrego Highway at Withcott and is presently shown in subdivisional plan SP116135. The defendant vendor at the time of the contract was the proprietor of Lot 8 and of adjoining lots 1 to 7 inclusive.

HIS HONOUR: Lot 9 has been dedicated as public use land. Easement A in favour of the local authority has an area of a little over one hectare and is within Lot 8 on its eastern side bordering Lots 9 and 1 on the other.

What the parties had in mind at the time of contract was that the area of Easement A should be excised from Lot 8 and added to Lot 1. In order to achieve that objective it was necessary for the defendant as the proprietor of Lot 1 to consent to and execute a fresh grant of easement in favour of the local authority.

I should mention that the total area of Lot 8 is 3.606 hectares.

HIS HONOUR: That area is approximately 9 hectares. A special condition of the contract provides:

“Sale is conditional upon easement being transferred to Lot 1.”

The effect of that clause is the subject of a cross-application brought by the defendant, and I will come to it shortly.

The due date for settlement under the contract was 21 September 2003. At that date the local authority had not given unconditional approval of any application to subdivide or reconstitute Lots 8 and 1 so as to excise the area of the easement from the former and add it to the latter. Consequently, if it was a requirement of the contract that the easement area be excised from Lot 8 prior to settlement, the vendor defendant was unable to perform its obligations.

The plaintiff did not tender on that date but the parties treated the contract as remaining on foot. The evidence supports the conclusion that the defendant decided at some stage in September not to proceed with the transaction. It appears that it actively took steps to ensure that the necessary approval was not obtained and failed to take any steps towards executing the grant of easement to which I have referred.

It purported to terminate the contract by letter dated 24 October 2003 from its solicitors on the basis that the special condition had not been fulfilled and that “a reasonable time has now elapsed”.

Of course it is incumbent on both parties to a contract, as has been long established by authorities such as Secured Income Real Estate, Butts v. O'Dwyer and others, to do all things reasonably necessary to give the other party the benefit of the contract.

From what I have said, it appears that the defendant was in breach of that duty. It was therefore not in a position to terminate.

HIS HONOUR: The plaintiff swears that the plaintiff has at all times been ready, willing and able to complete its obligations under the contract and, subject to the matters raised in the cross-application, there would seem to me to be only one impediment to the grant of summary judgment. That is the claim by the defendant based on section 52 of the Trade Practices Act 1974 alleging a misrepresentation partly by silence by the plaintiff.

The gist of the claim is that the defendant made it known to the real estate agent acting in the transaction that the land would not be sold for the purposes of construction on it of a caravan park. It is contended that the agent at the time was not the agent of the vendor but was the agent of the purchaser.

Furthermore it is asserted that the representation came to the direct knowledge of the plaintiff and that, although intending to purchase the property with a view to its use as a caravan park, this was not communicated to the defendant.

The plaintiff swears of an intention to acquire the land for the purpose of constructing a motel on it and to having made application to the local authority in that regard.

There is, however, documentary evidence which suggests that an application by the plaintiff before the council concerned the development of the site as a caravan park.

Mr Myers, who appears for the plaintiff, submits that section 52 can have no application because anything that was said and done was not “in trade or commerce”. He refers to a number of authorities which establish the proposition that sales and purchases of land with or without buildings in many circumstances are not caught by section 52 if the land is not being acquired or perhaps sold as trading stock of a business.

I consider that section 52 may well not apply to this transaction but it seems to me there is a triable issue in that regard for the reasons I articulated in argument.

Mr Carrigan, who appears for the defendant, advanced another reason, and that is the nature of the plaintiff. It is a trustee of a superannuation fund. Plainly it is acquiring the subject land for investment purposes and as Mr Carrigan points out details of its business activities are unknown.

I somewhat regretfully have concluded that there is a triable issue. I say regretfully because I strongly doubt that there is any real substance in the defendant's claims. One has to be sceptical of assertions that the land would never have been sold for use as a caravan park and perhaps more importantly that the defendant was misled in any way. No covenants, of course, were included in the contract and none were sought. Nor, might it be said, did the defendant make inquiries or seek any assurances of the plaintiff. The result is likely to be simply an escalation of costs and prolongation of the matter.

However, I have found the existence of a triable issue and accordingly I order that the application for summary judgment be dismissed.

I turn now to the cross-application in which it is claimed that the contract is void pursuant to section 8(2) of the Land Sales Act 1984 as being a sale of a proposed allotment in respect of which there is no unconditional local government approval of the subject subdivision application.

Whether that contention is right or wrong depends on the construction of the Act and the construction of the contract. Assuming that the contract is one which meets the description in section 8(1), it seems to me that the decision in Francis v MPD Property Development Pty Ltd, QCA 343, produces the result that the defendant is unable to rely on section 8(2).

In paragraphs 23 to 25 inclusive of his reasons, McPherson JA (with whom Williams JA agreed) concluded that the application of section 8(2) had to be determined in the light of the objects of the Act which relevantly were the protection of the interest of consumers in relation to property development. He drew particular support from section 29 which conferred only on purchasers rights to recover monies paid under such contracts and spoke only of avoidance of contracts by purchasers.

In referring to the second reading speech his Honour noted that there was no suggestion in it that the or a purpose of the Act was to provide protection “for those who, like the sellers here sold their land to developers with a view to its subdivision and resale.” He concluded in paragraph 25 by expressing that the Land Sales Act was not designed or needed to protect the interests of persons like the sellers, in that case.

It does not seem to me that the subject contract is distinguishable in any relevant way from those under consideration in Francis. Indeed apart from the techniques employed to achieve the end result it is very similar. It, as was the case in Francis, involved a sale in which it was always the intention that part of the land be excised and either retained by or transferred back to the vendor without the purchaser obtaining an interest in it.

Mr Myers put forward another argument along the lines that the contract should be construed in such a way as to avoid illegality if at all reasonably possible. A construction which would achieve this objective is that the area of the easement be held upon trust for the vendor by the purchaser and so, as I apprehend the argument, the facts would be even closer to those in Francis. In the view that I have formed it is unnecessary for me to express any view about whether there is any merit in that argument.

For the reasons I have given I dismiss the defendant's application.

HIS HONOUR: I will amend the reasons to note that 18th of September is the settlement date.

HIS HONOUR: There is a distinction between the costs on the defendant's application and the costs on the plaintiff's application. The former raised a question of law which was resolved essentially on undisputed facts. Costs in relation to that can be readily determined.

In relation though to the plaintiff's application, matters are not quite as straight forward. It might turn out that the basis upon which the defendant succeeded in resisting summary judgment was entirely lacking in merit so I have already expressed some views about that. It therefore would not be appropriate in this case to award costs against the plaintiff on the summary judgment application.

I order that the plaintiff's costs of and incidental to the defendant's application be the plaintiff's costs in the cause.

I order that the parties' costs of and incidental to the plaintiff's application be the parties' costs in the cause.

HIS HONOUR: I order that the trial of these proceedings be on affidavit and that no further evidence-in-chief be given without leave; that any further affidavits to be relied on by the plaintiff be filed and served within 14 days.

HIS HONOUR: Any further affidavits to be relied on by the defendant on the trial of the action be filed and served within 21 days of service on the defendant's solicitors of the plaintiff's affidavits.

HIS HONOUR: All right, 20th of January.

HIS HONOUR: That the solicitors for the parties advise my Associate in writing on or before Monday, 23 January 2006 as to whether there are any matters outstanding prior to trial of the action and, if so, what.

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Editorial Notes

  • Published Case Name:

    Lake Mangana Pty Ltd v Arrabri Developments Pty Ltd

  • Shortened Case Name:

    Lake Mangana Pty Ltd v Arrabri Developments Pty Ltd

  • MNC:

    [2005] QSC 398

  • Court:

    QSC

  • Judge(s):

    Muir J

  • Date:

    09 Dec 2005

Litigation History

No Litigation History

Appeal Status

No Status