Loading...
Queensland Judgments

beta

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  •   Notable Unreported Decision

V & V Properties Pty Ltd v CSR Building Products Ltd

 

[2009] QSC 207

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

V & V Properties P/L as t’ee for the V & V Properties Unit Trust No 4 v CSR Building Products Ltd [2009] QSC 207

PARTIES:

V & V PROPERTIES PTY LIMITED (ACN 094 809 640) as trustee for the V & V PROPERTIES UNIT TRUST NO 4
(plaintiff)
v
CSR BUILDING PRODUCTS LIMITED
(ACN 008 631 356)
(defendant)
BY COUNTERCLAIM
CSR BUILDING PRODUCTS LIMITED
(ACN 008 631 356)
(plaintiff)
v
V & V PROPERTIES PTY LIMITED (ACN 094 809 640) (first defendant)
JACK VAN RIET AND EDMUND JOSEPH VARDY
(second defendants)

FILE NO:

3144 of 2009

DIVISION:

Trial Division

PROCEEDING:

Originating application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

3 August 2009

DELIVERED AT:

Brisbane

HEARING DATE:

18, 19 June 2009

JUDGE:

Dutney J

ORDER:

Declare that:

1.the plaintiff was entitled to terminate a contract entered into with the defendant on 6 May 2008 for the purchase of lots 6, 10 and 11 on SP206828 (“the contract”)

2.the contract was in fact terminated by notice in writing from the plaintiff’s solicitors to the defendant’s solicitors dated 20 March 2009

Order that:

3.the deposit paid by the plaintiff under the contract in the form of an unconditional bank guarantee be returned to the plaintiff

CATCHWORDS:

CONTRACT – GENERAL CONTRACTUAL PRINCIPLES- DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH- REPUDIATION AND- NON PERFORMANCE- ELECTION AND RECISSION-GENERALLY

Where plaintiff sent a request for an extension of the settlement date- Where plaintiff withdrew request for extension of the settlement date- Where plaintiff terminated contract due to defendants failure to satisfy clause of the contract-  Whether plaintiff ready willing an able to settle contract- Whether plaintiff entitled to recession- Whether plaintiff  in breach of its contractual obligations- Where plaintiff entitled to recession of the contract

Butt v M’Donald (1896) 7 QLJ 68

Dainford Ltd v Juana Pty Ltd [1986] 1 Qd R 396

Highmist Pty Ltd v Tricare Ltd [2005] QCA 357

McTier v Haupt [1992] 1 VR 653

Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537

Sargent v ASL Developments Ltd (1974) 131 CLR 634

Secured Income Real Estate (Australia) v St Martins Investments Ltd (1979) 144 CLR 596

Lantry v Tomule Pty Ltd [2007] NSWSC 81

COUNSEL:

S Couper QC for the plaintiff, defendant by counterclaim

D A Savage SC with S Brown for the defendant, plaintiff by counterclaim

SOLICITORS:

HWL Ebsworth for the plaintiff, defendant by counterclaim

Gadens Lawyers for the defendant, plaintiff by counterclaim

  1. This action was commenced by originating application. V & V Properties Pty Ltd as trustee of the V & V Unit Trust No 4 (“V & V”) sought a declaration that it was entitled to terminate a contract entered into on 6 May 2008 for the sale of lots 6, 10 and 11 on SP206828 (“the contract”) as a consequence of CSR Building Product Limited’s (“CSR”) failure to comply with special condition 2.9 of the contract. V & V also sought a declaration and that the right to terminate the contract had been validly exercised by a notice in writing from its solicitors dated 20 March 2009.
  1. The contract was for the purchase of three allotments in a new industrial estate being developed by CSR. The three allotments were not adjoining. Lot 6 abutted Bluestone Circuit and Bellwood Street and lots 10 and 11 abutted Monier Road and Bluestone Circuit. The relevant positions of the allotments are shown on the subdivisional plan attached as Schedule 1 to these reasons.
  1. The purchase price under the contract was $4,303,500. Pursuant to special condition 11, the deposit was paid by means of an unconditional bank guarantee equating to 5% of the purchase price.
  1. Pursuant to clause 3 of the contract, where special condition 2 applied, completion was to be 14 days after CSR notified V & V in writing that special condition 2.1 had been satisfied. Special condition 2 did apply to this contract. Special condition 2 was as follows:

 

2. Sealing and Registration of Subdivision Plan

 

2.1Where an indefeasible title for the Land does not exist at the Contract Date, Completion of this Contract is subject to and conditional on the registration of a Subdivision Plan with the Department of Natural Resources and Water and the issuing of an indefeasible title for the Land by the Sunset Date. The Vendor must use its reasonable endeavours to cause registration of the Subdivision Plan by the Sunset Date.

2.8If the Vendor or the Purchaser terminates this Contract under this Special Condition 2, the Deposit, any all interest earned on the Deposit will be promptly refunded to the Purchaser and neither party will have a claim against the other party arising out of this Contract.

2.9Completion of this Contract is subject to the Vendor causing water, electricity and sewerage services to be available to the boundary of the Land.”

  1. By letter from its solicitors dated 6 March 2009, CSR gave notice that separate certificates of title had been issued in relation to each of the lots and that the date for settlement under the contract was 20 March 2009.
  1. On 12 March 2009, V & V’s solicitors wrote to CSR’s solicitors requesting an extension of time for settlement until 30 April 2009. The letter read as follows:

 

“We refer to your facsimile of 6 March 2009 giving notice of settlement for 20 March 2009.

 

The Brisbane City Council has not permitted our client to lodge a development application for the lots as they were listed on the Environmental Management Register. To obtain finance from its lenders, our client is required to have a development approval.

 

As you have now provided notice that the lots are no longer recorded on the Environmental Management Register, our client will immediately prepare and lodge its development application. Our client anticipates that it will obtain a development approval within 6 to 8 weeks of lodgement.

 

Accordingly, our client requests an extension of the Settlement Date from 20 March 2009 to 30 April 2009, with time to remain of the essence.

 

Our client acknowledges that the Contract of Sale is not subject to our client obtaining a development approval. Our client appreciates your client’s consideration of this extension request in these particularly difficult and uncertain economic times.

 

Please obtain your client’s instructions as soon as possible.”

  1. The request for an extension was refused on 12 March 2009.
  1. On 16 March 2009, V & V’s solicitor made a further request for an extension of settlement to 30 April 2009. This request was made by telephone.
  1. By a letter of 18 March 2009, CSR’s solicitors indicated that they would be agreeable to an extension only until 27 March 2009. V & V did not respond to this counter-offer until 20 March 2009.
  1. At 1.08pm on 20 March 2009, V & V’s solicitor forwarded a letter by facsimile to CSR’s solicitors referring to special condition 2.9 of the contract and, relevantly, stating as follows:

 

“By special condition 2.9 of the Contract, our client’s obligation to complete the contract is subject to, among other things, power being available to the boundary of the land. Our client has inspected the Land today and we are instructed that power is not available to the boundary of the Land, within the meaning of special condition 2.9 of the Contract.

 

We are instructed that there is conduit laid along the boundary, but cable has not been pulled through and a pillar box has not been installed. We are further instructed that no transformer servicing the Land has yet been installed by Energex. We understand that electricity services will not be available to the boundary of the Land for approximately 6 weeks.”

  1. At 2.47pm on the same day, V & V’s solicitors sent a further facsimile withdrawing the request for an extension of the settlement date.
  1. At 3.22pm on 20 March 2009, a third facsimile was received in the following terms:

 

“We refer to our letter earlier today (copy attached). We note you have not yet provided evidence that:

 

  1. cable has been pulled through the conduit;
  1. a pillar box has been installed to supply electricity to the Properties; and
  1. a transformer servicing the Properties has been installed by Energex.

 

We await your urgent responses.”

  1. At 4.31pm on 20 March 2009, V & V’s solicitors sent a further letter by facsimile to CSR’s solicitors purporting to terminate the contract on the basis that CSR had not satisfied special condition 2.9.
  1. CSR’s solicitors responded by facsimile reserving their client’s position.
  1. Subsequently, by letter of 3 April 2009, CSR’s solicitors called for settlement of the contract on 14 April 2009. V & V did not attend settlement on that date and have maintained that the contract was validly terminated.
  1. At trial, CSR resisted the declarations sought by V & V on the basis that it had satisfied the requirements of clause 2.9 of the contract. In any event, CSR submitted that V & V was not ready, willing and able to settle on 20 March 2009 and were thus disentitled to rescind. Three grounds were relied upon for the submission that V & V was not ready, willing and able to settle. First, it was submitted that V & V lacked the capacity to pay the purchase price. Secondly, it was submitted that by failing to tender V & V was itself in breach of the contract. Thirdly, it was submitted that V & V was in breach of the contract by failing to submit transfer documents in advance of settlement.
  1. As to the last point raised, reference was made to general conditions 4 and 10 of the contract which relevantly provided as follows:

 

4. COMPLETION AND POSSESSION

The balance of the Purchase Price shall be paid on the Date for Completion in exchange for:

(b)a properly executed transfer for the Land in favour of the Purchaser capable of immediate registration (after stamping) in the appropriate office free from Encumbrances (other than those set out in Item L) and title to the Property (other than the Land) free from Encumbrances (other than those set out in Item L) but subject to the conditions of this Contract;

(c)any declaration required, by the Stamp Act 1894, to be furnished to procure the stamping of the transfer;

(d)such other instruments or declarations as are required by law to be signed by the Vendor to procure the stamping and/or registration of the transfer;

(e)except as otherwise provided in this Contract, any instrument of title for the Land required to register the transfer;

 

10.EXECUTION AND PRODUCTION OF DOCUMENTS

10.1Subject to compliance by the Purchaser with the Purchaser's obligations under or by virtue of this Contract the Vendor shall as required do all acts and execute all documents necessary for the purpose of completing the sale and ensuring that the Purchaser obtains a good and valid title to the Property but all transfer documents, any declaration required pursuant to clause 4(c), and all instruments or declarations required pursuant to clause 4(d) shall be prepared by and at the expense of the Purchaser and delivered to the Vendor within a reasonable time prior to the Date for Completion.

10.3After execution of the transfer, if so requested by the Purchaser and upon payment of the usual production fee by the Purchaser, the Vendor shall cause the transfer to be tendered to the Office of State Revenue for stamping, together with any declaration referred to in clause 4(c) and thereupon the Vendor shall be deemed to have complied with the Vendor's obligations under clause 4(c).”

  1. Ultimately the outcome of this case depends upon the proper construction of clause 2.9 of the contract. More particularly, it depends upon the meaning of the expression “causing …electricity … services to be available at the boundary of the land”, and the categorisation of the clause as a contingent condition or a promissory condition.
  1. If clause 2.9 of the contract was a contingent condition and the contingency was not satisfied, the obligation to tender settlement would not arise and, time being of the essence, V & V would be entitled to terminate it.[1]
  1. It is common ground that at no time on the date fixed for settlement by the contract was electricity circulating through the new estate. No green pillar boxes (“pillars”) had been installed proximate to lots 6, 10 and 11. Pillars are the points at which the retail consumer connects to the reticulating system where underground power is provided. Conduits were in place and a contract had been entered into with Energex pursuant to which a performance bond had been paid by CSR and a Certificate for Electricity Supply to Subdividers had been provided by Energex. This certificate guarantees that power will be made available to the sites when requested. It satisfies the condition of the development application for the provision of power.
  1. CSR’s engineer, Mr Robin Russell, deposed that in order to obtain electricity services to the development site, CSR was required to submit to Energex an RPEQ certified design by an Energex accredited consultant for electricity reticulation for the subdivision. CSR would then enter into a subdivision electricity supply agreement with Energex. CSR would lodge a performance bond with Energex to guarantee that electricity supply would be available to the lots nominated in the Subdivision Electricity Supply Agreement. CSR was then required to pay the amounts required by Energex to purchase the materials (such as cables) listed in the Subdivision Electricity Supply Agreement. CSR was finally required to install the conduits on site to carry the electrical cables supplied by Energex.
  1. Before the contractual date for settlement, CSR had lodged with Energex a bond in the amount of $95,000 to guarantee that electricity supply would be available to the lots nominated in the Agreement. It had paid a further amount of $132,962.50 to Energex as payment required under the Subdivision Electricity Supply Agreement. This included the amount required by Energex to supply the cables and materials listed in the Agreement as required by the electricity reticulation plan. CSR paid a further amount of $71,880.23 to Energex to purchase the material set out in Energex’s quote for the work. All this being in place, Mr Russell deposed that the quickest way for an owner to obtain power to a particular allotment within the subdivision would be for temporary power to be provided to the site. This would ordinarily require five working days. This is in fact what CSR did following 20 March 2009 and prior to the letter from CSR’s solicitors of 3 April 2009.
  1. CSR’s submission as to what was required to cause electricity services to be available at the boundary of the land is set out in paragraph 9 of the written submission as follows:

 

“9. The Defendant submits that by 20 March 2009 it had satisfied clause 2.9 of the conditions because it had lodged electricity plans showing the proposed electricity services to the boundary of the land the subject of the contract; it had received verification of that fact from the local authority; it had entered into an agreement with an electricity supplier to provide electricity services in accordance with reticulation plans approved by the supplier to the boundary of the land the subject of the contract (paragraph 15 of defence);and it had paid all the money and performed all the other obligations cast upon it by that agreement3. If the cl.2.9 obligation is to actually provide electricity then the Defendant submits it was well able to do that on 20 March 2009 by simply providing a generator or like device or poles to connect to active services behind the estate. No construction of cl.2.9 obliged it to provide mains electricity as per the fully completed reticulation scheme.”

  1. CSR’s submission that connecting electricity by poles to active services behind the estate can be easily answered. I accept the evidence of Mr Russell which was to the effect that to provide power in that way from lots 10 and 11, it would be necessary for the poles to run across lots 8 and 9 on the subdivision. It is obvious from the plan in schedule 1 that power lines in Bellwood Street are not on the boundary of lots 10 and 11. No such poles had been erected. It seems to me that on no view of the evidence could power which was required to be brought across other allotments not owned or contracted for by the plaintiff be regarded as available at the boundary of the land. In any event, the submission ignores the fact that the erection of such poles as at 20 March 2009 would have been in breach of the development application requiring underground power and unlawful since no agreement was in place with Energex for the drawing of power in that way.
  1. I also reject the submission that clause 2.9 would be satisfied if a portable power generator was placed on the allotment. Apart from the fact that no such generator was ever placed on the allotment, I do not consider that placing a portable generator on the land constituted causing electricity services to be available to the boundary of the land.
  1. Giving the words their ordinary meaning, causing electricity services to be available to the boundary of the land requires reticulated electricity to pass the land in such a fashion that the purchaser, without further reference to CSR, is able to connect to it and draw a domestic supply at no costs other than the normal costs of connecting to the Energex owned system.
  1. In his affidavit Mr Russell deposes to the way in which electricity is connected once the electricity supply agreement has been entered into and the various sums paid:

 

  1. In order to obtain actual supply of electricity into a lot, a purchaser from CSR would need to install a main switchboard to connect the consumer's mains cables to the reticulation system. This is always the responsibility of the ultimate owner. The Metro West Development presently is comprised of vacant land so there is no immediate need for electricity to any lot.
  1. The fastest way for an owner to obtain power to a site would be for temporary power to be provided to the site. Usually, it would take about 5 working days for the temporary power to be provided in the following way.
  1. The owner arranges for the installation of a temporary building service, comprising a galvanised pole with a temporary switchboard mounted on it. The owner then engages an electrical contractor to install consumer's mains cable from the switchboard to Energex' s green pillar.
  1. The owner must also apply to the electricity retailer of its choice to enter into a contract to supply power. The electricity retailer then submits a form known as a B2B Form to Energex, which advises Energex that someone wants to buy electricity at the site.
  1. Separately, the electrical contractor who installs the temporary switchboard at the site submits a form known as a Form 2 to Energex, advising Energex that the contractor wants to connect to electricity at the site.
  1. Pursuant to page 80 of the Queensland Electricity Industry Code, from the time that Energex receives a valid service order request (i.e. the B2B Form from the electricity retailer) and "all relevant documentation" (i.e. the Form 2 from the electrician), Energex is required to connect supply within five working days. Energex connects supply by sending an Energex employee out to the site to install a fuse to liven the site up.”
  1. The pillars to which the lot owner connects are owned by Energex and thus not part of the domestic connection which is owned by the retail consumer.
  1. Paragraph 21 of Mr Russell’s affidavit appears to be infected with what was a common thread through CSR’s arguments. That was that since V & V could not actually start building on any lot on 20 March 2009, all that was required was to be able to obtain power within a relatively short timeframe from somewhere. Provided Energex could install cables and have electricity available at the boundary within some short but undefined time it had met its contractual obligations.
  1. It is not clear to me from his affidavit whether Mr Russell is saying that nothing further was required by CSR as at 20 march 2009. If that is what he intended to say, then it is inconsistent with the general conditions of the Subdivision Electricity Supply Agreement which CSR entered into. The material terms of that agreement are as follows:

 

“2.  ENERGEX shall -

  • ENERGEX may elect to complete the electricity supply to the estate and deduct the cost of such work from the bond;
  • satisfy itself that there has been compliance with the following –
     
  • correct installation of conduits
  • return of surplus cable and materials if supplied by ENERGEX
  • have the right to make supply available at the developer's costs if an application for permanent supply has been received and / or dwelling construction has commenced and in ENERGEX's opinion the electrical reticulation construction and / or the Certificate of Completion are not being expedited in a satisfactory manner. This may require ENERGEX drawing on the developer's bond.

3. The Developer shall –  

  • provide an irrevocable bond equal to the detailed or provisional ENERGEX estimate of all works associated with the estate. …
  • not promise or represent that electricity supply to the subdivision is available unless there is a current Certificate for Electricity Supply;
  • nominate an approved consultant to undertake the design and nominate an approved contractor to undertake the construction of the reticulation of the estate;
  • be responsible at their expense for all works required to reticulate the subdivision to the standard required by the local authority and by ENERGEX as specified in the standard design manuals using appropriately qualified staff as required by the Electricity Act and the Professional Engineers Act using material listed on ENERGEX'S Approved Material List. Any plant and material supplied by ENERGEX to remain the property of ENERGEX throughout;
  • provide and install at their cost all civil works, pit construction, conduits, conduit plugs, draw wires, E-markers, tape markers, sand, gravel and concrete and retaining walls for transformer sites required for supply to underground estates;
  • provide conduits and draw wires for future installation of public lighting to ENERGEX's design in an underground subdivision, at no cost to ENERGEX, if the local authority does not request the initial installation of streetlights;
  • return excess cable and cable drums supplied by ENERGEX in good condition, to ENERGEX within fifteen (15) working days of being issued and return all unused material (including items of scrap) immediately after completion of construction. Late return of excess cable and drums will incur a penalty of $100 plus an additional $50 for every additional 5 working days late. The Certificate of Acceptance will not be issued until all unused material is returned to ENERGEX. This only refers to material originally supplied by ENERGEX;” (my emphasis)
  1. It seems to me to be clear from the conditions of the Subdivision Electricity Supply Agreement that the primary obligation to provide the wires and pillars rests on CSR and not Energex. If CSR defaults in its obligations pursuant to the Subdivision Electricity Supply Agreement, Energex is entitled to perform the work itself and reimburse itself from the performance bond. But when neither CSR nor Enegex has drawn any wire through the conduit, much less constructed the necessary transformers and pillars to have useable mains electricity on the estate, it cannot be said that CSR has caused electricity to be available at the boundary of the land. As at 20 March 2009 there was no electricity on the subdivision at all. Further, there could not be electricity for at least some days and then only temporary power.
  1. To the extent that the meaning of clause 2.9 of the contract is in doubt, assistance may be gained from the negotiations leading up to the execution of the contract in its present form.
  1. As previously drafted, the clause read as follows:

 

“To the extent that water, electricity and sewerage services are required pursuant to the Existing Approval to be available to the Land before Completion, Completion of this Contract is subject to the Vendor causing those services to be available to the Land to that extent.”

  1. As at 20 March 2009, all those things necessary to obtain the Certificate for Electricity Supply to Subdividers had been done and the condition of the Existing Approval was thereby satisfied. However, this draft clause was rejected by V & V which, fearful of delays in having the electricity actually connected after settlement, insisted on a clause which required electricity to be actually available at settlement. After raising this issue with CSR, V & V received the following response from its solicitors by email on 29 February 2008:

 

“Our client’s response is as follows:

Clause 2.9 – Our client agrees to amend so that at completion water, electricity and sewer services must be available to the boundary of the land.”

  1. Electricity was not, by any elastic use of the English language, available on 20 March 2009. Power was connected to lots 6, 10 and 11 on a temporary basis on 27 March 2009. This required approval from Energex to an amended electricity plan to avoid the need to construct transformers solely for the purpose of having the power at the boundaries of the three lots. Despite being only a temporary connection, the time frame is consistent with Mr Russell’s evidence of at least 5 days being necessary.
  1. In accordance with my reading of the Subdivision Electricity Supply Agreement, this temporary power was installed by CSR’s contractor rather than by Energex.[2]
  1. What had been achieved in relation to electricity by 20 March 2009 was no more than the minimum amount necessary to satisfy the earlier draft of the condition which V & V had expressly rejected as unacceptable.
  1. It follows from this conclusion that as at 20 March 2009 condition 2.9 of the contract had not been satisfied and could not have been satisfied on that day.
  1. Whether V & V can rely on that failure to comply with clause 2.9 to rescind the contract in circumstances where V & V did not tender on the day fixed for settlement depends on the proper categorisation of the condition.
  1. Senior Counsel for CSR relied on the decision of the Full Court in Dainford Ltd v Juana Pty Ltd.[3] That case concerned a contract for the purchase of a unit in a high rise building on the Gold Coast. The relevant clause was clause 5, which provided:

 

“5(a)The vendor will ensure that prior to settlement the By-laws of the Body Corporate brought into existence upon the registration of the Plan will grant to the proprietor for the time being of the said unit the exclusive use for car parking of that part of the common property outlined in red on the sketch plan marked ‘B’ annexed hereto.

(b)The vendor may elect to include the car space as part of the said unit in the Plan. If the vendor so elects then the terms of paragraph (a) of this clause shall not apply and the By-laws to be adopted on registration of the Plan shall be varied accordingly.”

  1. In Dainford v Juana, the purchaser repudiated the contract on 24 December. On 31 December the building units plan registered. Settlement was due on 1 February.
  1. The principle CSR sought to draw from the case was that performance of the condition was only required to be demonstrated at settlement. Where, as here, the purchaser failed to attend at settlement, it was unnecessary for the vendor to demonstrate an ability to perform.
  1. I do not consider Juana is applicable here. It was a case in which a clear intimation had been given on 24 December that the purchaser would not be attending settlement. At that date, it was still possible for the vendor to have complied with the condition by 1 February. The repudiation by the purchaser, however, absolved the vendor from the need to do so.
  1. In my view, the evidence of Mr Fuhrmann does not alter this position.
  1. Mr Fuhrmann was an employee of Vanriet Pty Ltd which was a company owned by one of the directors of V & V. Mr Fuhrmann was employed to manage development applications and to assist with finance applications for V & V. Despite describing himself as development manager, he appears to have not had any actual authority to bind V & V and was not an officer of that company.
  1. On 16 March 2009, Mr Fuhrmann sent an e-mail to Mr Bates. Mr Bates was a real estate agent handling the estate of which lots 6, 10 and 11 formed part.
  1. The e-mail read as follows:

“We have formally requested an extension of the settlement date of this sale contract to items that I have previously discussed with you.  I have tried to contact each of you over the past week to discuss, since we have now sent the letter to CSR’s lawyers I thought it pressing enough to formally make you aware of the matter.  We have asked to extend the sale date to the end of April to allow us to obtain a DA on the allotments as it is a pre-requisite to obtain our finance and be able to settle.

We are committed to settle these allotments with CSR however we will not be able to settle on the dates in the current contract, your correspondence would be appreciated”

  1. This e-mail was not in terms a repudiation of the contract. It indicates only that if V&V was required to settle on 20 March 2009 it might not be able to. In fact, it could with difficulty have found the necessary money on that day. In any event, by 16 March, it was too late for CSR to provide power to the boundaries of the lots by 20 March. It was already the case that CSR could not have compelled settlement on that date.
  1. In any event, there is no evidence that CSR was informed of the contents of the e-mail before 20 March 2009.
  1. Most significantly, however, the evidence does not establish that V & V ever held out Mr Fuhrmann as having authority to bind it in relation to the contract. His e-maiols make it clear that he was employed by Vanriet Pty Ltd and not V & V. In the absence of any holding out by V & V, V & V could not be bound by any purported repudiation of the contract by Mr Fuhrmann for which he did not have actual authority.
  1. I am satisfied that clause 2.9 of the contract is a contingent condition. In McTier v Haupt,[4] Brooking J described such conditions in the following way:

 

“To make a sale of land ‘subject to’ the occurrence of some event has long been a usual means of expressing a condition. This is so well known to lawyers that illustrations from the numerous reported decisions are unnecessary. The language used in GC 1.2 is the language of condition, not of promise. That provision does not say ‘shall’ or ‘will’ or ‘must’, either with the active or with the passive voice. … The event defined – delivery of the property and chattels to the purchaser on the settlement date in their present state of repair – is one which the vendor will not necessarily be able to bring about. … Of course a party may bind himself by contract to do something which may lie outside his power, but the fact that the suggested promise is of this kind is material and considering whether the words using the language of condition are intended to import a promise.”

  1. In Perri v Coolangatta Investments Pty Ltd,[5] Brennan J, with whom Stephen J agreed, said:

 

“In the confusion of the promissory and contingent effects of the stipulation lie the seeds of difficulty in this case. The risk of confusion is great, because completion of a sale is the usual consequence of taking reasonable steps to that end. But there is a real distinction between the completion of a sale and the steps taken to achieve it, and the observance of the distinction goes far towards avoiding the difficulty. This is not a case where the purchasers promise that a condition precedent to the obligation to complete will be fulfilled. Where such a promise is made, whether by vendor or purchaser, specific performance may be decreed against the promisor without waiting for fulfilment of the condition… But where the occurrence of an event upon which the obligations to complete are contingent is not promised, the mere non-occurrence of the event is no breach of contract, and the court will not decree completion of the contract absolutely. In such a case, a decree must be limited to the performance of any promise affecting the occurrence of the contingency, and further performance decreed only subject to the contingency…

If the event does not occur because of the default of a party, however, the innocent party ordinarily has an option of avoiding the contract …”

  1. If clause 2.9 was to be treated as a promissory condition, performance of the promise must be demonstrated at settlement or the vendor would be in breach. On the other hand, if the condition is a contingent condition, completion of the contract could not be required until such time as it was satisfied. The obligation to make electricity available was imposed on CSR. Having failed to do so, the obligation on V & V to tender the purchase price never arose. Where completion of the contract is made subject to the existence of a particular state of affairs, the purchaser cannot be compelled to tender when that state of affairs does not exist. Where time is essential and the required state of affairs does not exist on the nominated date, the contract would be voidable at the option of V & V.
  1. The position would be different if the purchaser was itself in default of the contract at the time it purported to rescind. However, that is not this case. The purchaser could not be in default for failing to tender if the time for tendering had not yet arrived.[6]
  1. On this analysis, it is probably irrelevant whether V & V could have tendered if the electricity supply was in place. Nonetheless, I am satisfied that on the evidence of Mr Vardy[7] and Mr Van Riet[8] V & V could have provided the settlement money if required on two hours’ notice.[9]
  1. Liquid funds sufficient to meet the settlement obligation were available. It is of no concern to this court whether the use of those funds might have breached other contractual arrangements or put V & V in default of the terms of its loan facilities.
  1. An argument was advanced that the general obligation imposed on all contracting parties to co-operate[10] was breached by the failure to warn CSR in advance of the electricity problem. I disagree. The provision of electricity was a matter over which CSR had sole control. The general obligation to co-operate arises where a party is required to act in some way to assist the other party with fulfilment of a condition. That is not this case.
  1. The final argument concerned the non provision of transfer documents before the date of completion. Since the day of completion never arrived by reason of the non fulfilment of clause 2.9 by the nominated ate, the time for delivery of transfer documents did not arrive. In any event, transfer documents were available and signed on 20 March 2009. These had been prepared by CSR’s solicitors in anticipation of settlement.[11]
  1. Having elected to produce the documents itself, it seems to me that CSR has waived the requirement for such documents to be produced by V & V under clause 10 of the contract. If failing to deliver transfer documents before the day of settlement constituted a breach of the contract the right to rescind for the breach had already arisen by 20 March 2009. By insisting upon settlement that day, CSR’s conduct is inconsistent with the continuation of that right.[12] By having signed transfer documents available on 20 March 2009, I am satisfied that CSR have made clear that it did not require those documents to be prepared by V & V.
  1. This court is not concerned with whether V & V was looking for an opportunity to avoid its contractual obligations in the period leading up to the nominated settlement date. I am satisfied that V & V could have settled on the due date and was not otherwise in breach of contract. When the condition on which the obligation to complete failed to be satisfied V & V was entitled to rescind the contract.
  1. In the circumstances, I am satisfied that V & V was entitled to rescind the contract on 20 March 2009 and did so.
  1. Accordingly,
  1. I declare that the plaintiff was entitled to terminate a contract entered into with the defendant on 6 May 2008 for the purchase of lots 6, 10 and 11 on SP206828 (“the contract”).
  1. I further declare that the contract was in fact terminated by notice in writing from the plaintiff’s solicitors to the defendant’s solicitors dated 20 March 2009.
  1. I order that the deposit paid by the plaintiff under the contract in the form of an unconditional bank guarantee be returned to the plaintiff.


Schedule 1

Judgment-Image

Footnotes

[1] Highmist Pty Ltd v Tricare Ltd [2005] QCA 357.

[2] Transcript 1-90.20 to .30

[3] [1986] 1 Qd R 396.

[4] [1992] 1 VR 653 at 658.

[5] (1982) 149 CLR 537 at 566.

[6] Lantry v Tomule Pty Ltd [2007] NSWSC 81 at [78] (per White J).

[7] Affidavit paras 83-87.

[8] Affidavit paras 96-101.

[9] Transcript 1-67.28

[10] Secured Income Real Estate (Australia) v St Martins Investments Ltd (1979) 144 CLR 596; Butt v M’Donald (1896) 7  QLJ 68 at 70-1.

[11] Affidavit of Mr Spiro, para 20-21.

[12] Sargent v ASL Developments Ltd (1974) 131 CLR 634.

Close

Editorial Notes

  • Published Case Name:

    V & V Properties P/L as t'ee for the V & V Properties Unit Trust No 4 v CSR Building Products Ltd

  • Shortened Case Name:

    V & V Properties Pty Ltd v CSR Building Products Ltd

  • MNC:

    [2009] QSC 207

  • Court:

    QSC

  • Judge(s):

    Dutney J

  • Date:

    03 Aug 2009

  • White Star Case:

    Yes

Litigation History

No Litigation History

Appeal Status

No Status