Goldtaper Pty Ltd v Berela Ltd
[2001] QCA 564
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Appeal Determined (QCA)
- Goldtaper Pty Ltd v Berela Ltd[2001] QCA 564
- Add to List
Goldtaper Pty Ltd v Berela Ltd[2001] QCA 564
Goldtaper Pty Ltd v Berela Ltd[2001] QCA 564
SUPREME COURT OF QUEENSLAND
CITATION: | Goldtaper P/L & Ors v Berela Ltd [2001] QCA 564 |
PARTIES: | GOLDTAPER PTY LTD (ACN 010 588 815) (subject to a Deed of Company Arrangement) (first plaintiff/first respondent) HARACLIFF PTY LTD (ACN 010 820 809) (second plaintiff/second respondent) KEMBROOK PTY LTD (ACN 010 839 933) (third plaintiff/third respondent) v BERELA LIMITED (ACN 010 671 315) (defendant/appellant) |
FILE NO/S: | Appeal No 3540 of 2001 SC No 10989 of 1998 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 14 December 2001 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 11 October 2001 |
JUDGES: | Davies and Thomas JJA and Cullinane J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: | Appeal dismissed with costs |
CATCHWORDS: | CONTRACT - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - TERMS ESSENTIAL TO ENABLE PERFORMANCE - where contract for sale of land to builder developer - external road works required for proposed development - negotiations for sale of land conducted in context that contribution to external road works may be imposed by council on a per lot basis - where special conditions in contract acknowledging that relaxation of previously proposed amount for road contribution may be sought and providing for that event - where clause premised only upon vendors' success in negotiation relaxation - where purchaser in fact negotiated the relaxation - where competing constructions placed upon clause intended to avoid occurrence of windfall profit to purchaser - where factual context accordingly relevant to proper construction of the clause - where application by purchaser for relaxation prevented vendors from performing part of the contract - whether implied term that relaxation be obtained within a fixed time - whether breach of fundamental implied term that neither party will do anything to prevent the other from performing the contract CONTRACT - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS - where factual context relevant to proper construction of contract CONTRACT - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - OTHER MATTERS - breach of fundamental implied term Codelfa Constructions Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, referred to Marshall v Colonial Bank of Australia (1904) 1 CLR 632, referred to Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 569, applied |
COUNSEL: | P D McMurdo QC for appellant J Bell QC, with J D McKenna for respondents |
SOLICITORS: | Corrs Chambers Westgarth for appellant Hopgood Ganim Lawyers for respondents |
DAVIES JA:
- The questions in issue
- This is an appeal from a judgment in the Trial Division of this Court for damages for breach of a contract for sale of land. The appellant, the unsuccessful defendant, was the purchaser of the land and the respondents, the successful plaintiffs, were the vendors. The damages were for breach of the fundamental term implied in all contracts that neither party will do anything to prevent the other from performing the contract;[1] or, as it is more commonly put in positive terms, that each will do all that is reasonably necessary to secure performance of the contract.[2]
- The principal questions at trial and before this Court involved the construction of special condition 4 and, in particular, 4.05 of the contract. In this Court there were three such questions. The first and main one was what is meant by "relaxation of the Road Contribution as evidenced by the terms and conditions of the Council's subdivisional approval for the Land" in that subclause. The second is whether, for the respondents to benefit from any such relaxation, it must have been negotiated by them. And the third is whether the time by which it must be achieved is limited by some specific event or by a requirement of reasonableness.
- At the trial the respondents had argued that, if the correct construction was not as they contended it was, the contract should be rectified to accord with that construction. They also contended that in this Court. It is appropriate to defer consideration of that question until the questions of construction have been decided.
- It is necessary first to say something about the context, the factual background known to the parties, in which the questions of construction arose.[3]
- The factual context
- The respondents were the owners of a large parcel of land, about 104 hectares, at Coomera. It was bordered on the north by the Coomera River and on the south by the Oxenford - Southport Road, more often described as the Hope Island Road. This latter description was because it was, at the time this contract was made, the only access road to Hope Island.
- Originally the respondents intended to develop the whole of that land themselves in two stages. Stage 1 was to be an area of approximately 14 hectares in the south-western corner of the land, its southern boundary abutting on to the Hope Island Road. It was relatively high land, and consequently flood free, which it was proposed would be developed by way of group title. The remainder of the land, Stage 2, was in a flood plain and it was proposed that it would be developed as a canal development. However due to financial difficulties the respondents resolved to sell Stage 1 to a builder developer such as the appellant and the contract which gave effect to that sale is the contract in question.
- At the time of negotiations between the appellant and the respondents for the sale of Stage 1 it was proposed that access to Stage 1 would be directly from the Hope Island Road on its southern boundary. But it was known to the parties that, if that road continued to remain the main road to Hope Island, it would need to be upgraded and that such access would not be permitted on a permanent basis. In that event a roundabout would need to be constructed on that road to the east of Stage 2 and access to Stage 1 obtained from that roundabout through Stage 2. That access would require external road works, substantially the roundabout, to which the developer or developers of the whole of the respondents' land would be required to contribute a sum in excess of $2M. The respondents had proposed to the council that this be by way of a payment of $2,000 per lot for each of the lots in Stage 1, to be held in a fund pending sale of each lot, the balance to be paid on the development of Stage 2, and this proposal had been accepted by the council.
- It was also known to the parties at the time these negotiations were conducted that the Main Roads Department had a plan for an alternative route to Hope Island which, if it came to fruition, would not require the external road works to which I have referred but would permit the access from Stage 1 directly onto the Hope Island Road to remain as a permanent access. However it was uncertain whether that alternative route would be constructed or, if it would, when that would occur.
- Negotiations between the parties for the sale of Stage 1 were therefore conducted in a context in which, in the immediately foreseeable future, the council would require a contribution of $2,000 per lot for each lot in Stage 1 but, if the plan for the alternative route proceeded, that, or all of that, would not be required.
- The contract
- When one comes to the terms of the contract the nomenclature Stage 1 and Stage 2 assumes a different meaning. The subdivision of what was formerly Stage 1 is described as the purchaser's subdivision or the "Development Subdivision" which divided that land into two parcels described as Stage 1 and Stage 2.
- The contract is made conditional, as a condition subsequent, upon council approval of each of two subdivisions, the first to divide off land to be retained by the vendors, the other the purchaser's subdivision. The contractual provisions dealing with the first of these are irrelevant for present purposes. The clause which makes the contract conditional, as a condition subsequent, upon the purchaser, the appellant, obtaining by 12 September 1994 approval of the purchaser's proposed subdivision is special condition 2 of the contract. It is unnecessary to set out any part of that clause.
- The clause in contention, special condition 4, provides:
"4.01 The Purchaser acknowledges that the Purchaser is aware that the Council may, as part of the Approval Conditions, (for the Purchaser's subdivision as referred to in special condition 2) impose a requirement of a contribution to external road works on a per lot basis, hereinafter called 'Road Contribution'.
4.02 Notwithstanding the provisions of special condition 2 hereof, the Purchaser agrees that the Purchaser will take no objection to such a requirement.
4.03 It is further agreed that should such requirement on the part of the Council exceed the sum of $2,000.00 per lot (relating to the number of lots in the Purchaser's form of proposed Development) then the amount of such excess over Two Thousand Dollars ($2,000.00) per lot shall at completion be deducted from the monies otherwise payable by the Purchaser at completion.
4.04 The Purchaser agrees that notwithstanding that the application made to the Council pursuant to special condition 2 hereof shall be the Purchaser's application, the Vendor may and shall be afforded by the Purchaser the opportunity to make submissions to the Council supporting the relaxation in whole or in part of the Road Contribution. If required the Purchaser shall provide to the Council written consent and authorisation for such submission or submissions by the Vendor relating to the Road Contribution.
4.05 In the event that the Vendor is successful in negotiating with the Council concerning a relaxation of the Road Contribution as evidenced by the terms and conditions of the Council's subdivisional approval for the Land, either in whole or in part, then the amount of the aggregate value of such relaxation shall be a sum payable by the Purchaser to the Vendor. Such amount payable by the Purchaser to the Vendor shall not exceed Two Thousand Dollars ($2,000.00) per lot and where such relaxation is only partial shall be on a per lot basis, the sum obtained by subtracting from the sum of Two Thousand Dollars ($2,000.00), the amount of contribution required to be paid per lot.
4.06 The total sum to be paid by the Purchaser to the Vendor as a consequence of such relaxation (if applicable) shall be the amount of saving per lot multiplied by the number of lots in the Purchaser's proposed Development.
4.07 In the event and whilst the Purchaser shall retain the Land and proceed with the Development, the said sum payable pursuant to this special condition by the Purchaser to the Vendor, shall be paid progressively and the amount of saving on a per lot basis shall be paid at the time of completion by the Purchaser of any sale of any lot in the Development, whether as vacant land or as a house and land package. In the event that at any time the Purchaser shall sell all or part of the Development not as retailer of lots either vacant or improved, but otherwise in a larger parcel incorporating a number of lots or all of the lots, as the case may be, then the sum payable to the Vendor pursuant to this special condition shall be paid at the time of completion of such sale and the amount payable shall be the saving on a per lot basis multiplied by the number of lots sold at the time.
4.08 The Vendor and the Purchaser acknowledge, as is set out in special condition 2 hereof, that subdivisional approval for the Development will be applied for in two (2) stages, namely Stage 1 and Stage 2. It is acknowledged that it is anticipated that the issue of Road Contribution shall be dealt with in the Approval Conditions for Stage 1. It is agreed however that for the purposes of this special condition 4 the Approval Conditions for Stages 1 and 2 shall be read together and any conditions relating to the issue of Road Contribution shall be aggregated for the purposes of giving effect to the earlier sub-condition of this special condition 4."
- Special condition 4 seen in that context
- In the light of the factual context, known to both parties, in which the contract was made, special condition 4 can be seen to be based on an assumption that the appellant would be obliged to pay, as a condition of development of the land which it thereby purchased, $2,000 per lot; and to provide for adjustment of the consideration in the event that it might be either more or less than that. The reason why it might be less (special condition 4.05) is apparent from the factual context just discussed. The reason why it might be more (special condition 4.03) was that, although the council had accepted an earlier proposal from the respondents that it be $2,000 per lot, the possibility remained that for this new but materially identical subdivisional proposal by the appellant, the council might require, as a condition of approval, a larger contribution.
- Special condition 4.03 reflects the parties concern to avoid the possible windfall to the respondents if, contrary to what appeared from the objective evidence at the time of negotiations, the council required a road contribution from the appellant of more than $2,000 per lot. Special condition 4.04, on the other hand, reflects a recognition by the parties that only the vendors, the respondents, would have a genuine interest in a reduction of the road contribution below $2,000 per lot. And special condition 4.05 can be seen as the means by which the parties intended to avoid the occurrence of a windfall profit to the appellant in the event that that contribution were reduced. But it is plain from the number of competing constructions which have been put upon that clause, that it did not clearly do so. Hence the relevance to its proper construction of the factual context known to the parties.[4] I agree with the learned trial judge that, looked at in that context, it can and should be construed in a way which achieves that evident purpose.
- It is unsurprising that, in premising the operation of special condition 4.05 on the event that the vendors were successful in negotiating a relaxation of the road contribution, the parties did not contemplate the possibility that, during the time in which it was open to the respondents to negotiate such relaxation, the appellant might seek that for itself. That is because it was common ground that the appellant would have no interest in such a relaxation because it would obtain no financial benefit from it.
- The subsequent events
- The contract which, as I have said, was made on 6 June 1994, was completed on 16 December 1994. Neither before that date nor at any time prior to 19 December 1997 did the respondents seek a relaxation of the condition, which was imposed by the council in its approval of the development subdivision on 7 and 27 October 1994,[5] requiring a road contribution of $2,000 per lot. Because of the opinion which I have reached I do not think it necessary to explore the reasons for this but it seems that, at least in the earlier part of this period, the respondents did not think that any such relaxation was likely.
- However on 14 October 1997 the appellant's solicitors wrote to the council seeking a relaxation of that condition and on 19 December 1997, in response to that application, that condition was deleted and, in lieu thereof, a road contribution of $200 was imposed. In consequence, the appellant was relieved from paying $1,800 of the $2,000 contribution in respect of those lots which it had not yet sold and was reimbursed as to $1,800 per lot in respect of those lots which it had already sold. The appellant did not pay to the respondents a sum representing the amount of saving per lot multiplied by the number of lots in the appellant's subdivision or any part thereof.
- It was the application of 14 October 1997, and the relief and reimbursement which it caused, which, her Honour held, prevented the respondents from performing that part of the contract contemplated by special condition 4.04 which would have resulted in the benefit to them contemplated by special condition 4.05. She accordingly awarded damages in the sum which was the total of $1,800 per lot for all of the lots in the appellant's subdivision in respect of which the appellant was relieved from payment of that sum or was reimbursed in respect of each of the lots already sold. It seems that this amount was agreed by the parties as the appropriate amount of damages as was also the sum awarded by her Honour for interest.
- The competing arguments and their resolution
- Both before her Honour and in this Court the main argument with respect to the construction of special condition 4.05 was whether the phrase "as evidenced by the terms and conditions of the Council's subdivisional approval for the Land, either in whole or in part," qualified "Road Contribution" as the respondents contended and as her Honour held, or the vendors' success in negotiating with the council concerning a relaxation of the road contribution as the appellant contended. However it seems to me that the appellant's contention is based on a false assumption. That assumption is that, for successful negotiation concerning a relaxation of the road contribution to be evidenced by the terms and conditions of the council's subdivisional approval, that negotiation must have occurred before the initial approval by the council of the appellant's proposed subdivision. Based on that assumption the appellant contended, in both courts, that special condition 4.05 could have no application to a negotiated relaxation of the road contribution after that approval was obtained and, even less so, after completion of the contract.
- As already mentioned, by its resolution of 19 December 1997 the council, in terms, deleted the condition requiring a contribution of $2,000 per lot and, in lieu thereof, substituted a new condition requiring payment of $200 per lot and, at the same time, resolved to reimburse the appellant to the extent of $1,800 per lot for each of those lots in respect of which the appellant had paid $2,000 pursuant to the conditions of the first approval and special condition 4.07. In my opinion that resolution was a relaxation of the road contribution as evidenced by the terms and conditions of the council's subdivisional approval of the land within the meaning of special condition 4.05. It both relaxed the road contribution requirement previously imposed and was itself an amended conditional subdivisional approval of the land. Such a construction of special condition 4.05 accords both with the sense of the words and with what appears to be the evident purpose of the clause: to ensure that, in the event that a road contribution is not required, the benefit thereof should go to the respondents rather than to the appellant.
- That construction of special condition 4.05 would also not require, as a condition of the vendors' entitlement to the value of any relaxation of the road contribution, that it be the result of negotiation by the vendors. As already mentioned, the operation of special condition 4.05 was premised on the vendors' success in negotiating a relaxation of the road contribution only because the parties did not contemplate, because it was of no interest to the purchaser, that the purchaser would so negotiate. Their intention plainly was that any benefit of such relaxation should go to the vendors.
- In this Court the appellant contended that, even accepting the construction adopted by the learned primary judge, or that which I have accepted, there would still be a necessary implication in special conditions 4.04 and 4.05 that the vendors would seek such relaxation within a reasonable time and that, putting it in terms of the evidentiary onus in which the appellant put it, the respondents had not proved that that reasonable time had not expired by 19 December 1997. There was some argument before this Court as to whether this point had been properly raised before the learned primary judge but, because I think it must fail in any event, I do not think it necessary to resolve that argument.
- In the first place, because special condition 4.07 envisaged that no road contribution was payable by the appellant until sale by the appellant of the whole or part of the land, and then only in respect of that part of the land sold, and because special conditions 4.04 and 4.05, on their proper construction, in my opinion envisaged that a submission supporting relaxation of the road contribution might be made after the initial conditional approval was granted by the council, there is no reason to think that the time by which any such relaxation is obtained should be limited other than by, at the earliest in respect of each lot sold, the date of sale thereof.
- Secondly, given that the purpose of those clauses was to ensure that, as between the parties to this contract, if a relaxation was obtained any consequential financial benefit should accrue to the respondents, I can see no reason to imply a term that any relaxation pursuant to special condition 4.05 must be obtained within any time which must be fixed, whether on the basis of reasonableness or otherwise. Any such financial benefit, as between those parties, could only relevantly accrue to the respondents if it came directly to the respondents or to the appellant from whom the respondents could require reimbursement; so that the respondents, by delaying in seeking to negotiate with the council for a relaxation, took the risk that, if there was a relaxation and consequent financial benefit, the latter might accrue to neither the appellant nor the respondents.
- It follows from this resolution of the competing arguments that, by itself applying on 14 October 1997 to the council for relaxation of the road contribution and by accepting for itself the monetary benefit of that relaxation, the appellant prevented the respondents from negotiating successfully for that relaxation and obtaining the monetary benefit thereof. I would therefore agree with the learned primary judge that the appellant was thereby in breach of the fundamental implied term referred to earlier.
- Damages
- Before the learned trial judge no distinction was sought to be made for the purpose of the amount of damages to which the respondents were entitled, between savings which would accrue in respect of road contribution for those lots not yet sold and reimbursement of road contribution in respect of those lots already sold. On the contrary, as mentioned earlier, the parties agreed on the amount of damages. It was only in this Court, for the first time and, it seems, in consequence of questioning from the Court, that the appellant sought to argue that some such distinction ought to be made between the amount saved by non payment and the amount reimbursed. It was submitted that special condition 4 contemplated the vendors' right to payment only in respect of the former. However the better view of the matter is, as I have already indicated, that special condition 4 entitled the respondents, as against the appellant, to the benefit of any relaxation in road contribution; and consequently if it accrued to the appellant in either way the respondents were entitled to it.
- Order
- Appeal dismissed with costs.
- THOMAS JA: I agree with the reasons of Davies JA. I will add only two observations.
- It was submitted for the appellant during the appeal that a term should be implied that the respondent vendor would seek relaxation of the road contribution within a reasonable time and that the respondents did not prove that reasonable time had not expired by 19 December 1997. No such point was pleaded by the appellant, and in the circumstances such a point would need to have been specially pleaded, or clearly raised. During the trial there was some cross-examination on the question why application was not sooner made, but it by no means obviously raised this point. At the end of the trial, counsel for the appellant, in submissions in reply, raised such an argument for the first time. In the event her Honour dealt cursorily with the point and found that even if such a term were implied, a reasonable time had not passed. It seems to me that this point was not litigated, and it cannot be said that the parties deliberately chose some different basis for determination of their rights and liabilities than the pleadings that were before the court.[6] Neither do I think that the matter can properly be raised on appeal.[7] Had it been raised, it was a matter upon which the respondent could, and it was here submitted, would, have called evidence.
- It is unnecessary to deal with the alternative claim for rectification. I am prepared to say however that if cl 4.05 were to be construed in the manner contended for by the appellant, the extensive findings of fact made by the learned trial judge would justify a decree of rectification that would require the contract to be read as if “vendor” in the first line of that clause were replaced by “either party”. Further, were it necessary to do so, rectification should also be decreed to make it clear that the vendor was to be entitled to the benefit whenever it was obtained. However, I do not think that such a remedy is necessary on the proper construction of the contract.
- I agree with the orders proposed by Davies JA.
- CULLINANE J: I agree with the reasons of Davies JA in this matter and the orders proposed.
Footnotes
[1] Marshall v Colonial Bank of Australia (1904) 1 CLR 632 at 647.
[2] Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 569 at 607.
[3] See, for example, Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348 - 352.
[4] See fn 3.
[5] One such approval was for Stage 1, the other for Stage 2.
[6] Banque Commerciale S.A, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 286-287.
[7] Water Board v Moustakas (1994) 180 CLR 491