Sunbay Projects Pty Ltd v Naughton
[2010] QCA 247
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- Notable Unreported Decision
- Appeal Determined (QCA)
- Sunbay Projects Pty Ltd v Naughton[2010] QCA 247
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Sunbay Projects Pty Ltd v Naughton[2010] QCA 247
Sunbay Projects Pty Ltd v Naughton[2010] QCA 247
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | SC No 10985 of 2009 |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 10 September 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 30 August 2010 |
JUDGES: | McMurdo P, Chesterman JA and Mullins J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDERS: |
|
CATCHWORDS: | INTERPRETATION – GENERAL RULES OF CONSTRUCTION OF INSTRUMENTS – CONSTRUCTION FAVOURING VALIDITY – where appellant purchaser and respondent vendor entered into a contract for the sale and purchase of a proposed lot in a development – where s 212 of the Body Corporate and Community Management Act 1997 (Qld) required the contract to provide that settlement not take place earlier than 14 days after vendor has advised purchaser that the scheme has been established – where appellant purported to terminate the contract on the ground it did not comply with s 212 – where primary judge held the contract was valid and complied with s 212 by construing the word ‘or’ in the definition of ‘Completion Date’ as meaning ‘and’ – whether primary judge erred Body Corporate and Community Management Act 1997 (Qld), s 212 Bossichix P/L v Martinek Holdings P/L [2009] QCA 154 Federal Steam Navigation Co Ltd v Department of Trade and Industry [1974] 1 WLR 505, cited Re The Licensing Ordinance (1968) 13 FLR 143, cited Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429; [1968] HCA 8, cited |
COUNSEL: | J B Sweeney for the appellant P J Roney for the respondent |
SOLICITORS: | Hickey Lawyers for the appellant Macrossan & Amiet for the respondent |
[1] McMURDO P: I agree with my colleagues that this appeal should be dismissed with costs.
[2] The construction given by Chesterman JA to "Completion Date" in s 1 of the contract between the parties, with which I agree, is also supported by the preamble to s 1:
"In this Contract, words marked in bold have the meanings given in the particulars opposite the Items in the Reference Schedule and unless the contrary intention appears have the following meaning: "
[3] It is clear when the contract is looked at as whole, as Chesterman JA explains, that "or" in the definition of "Completion Date" is not intended to have its ordinary meaning. It should be construed as "and". The primary judge's construction of the contract was plainly correct.
[4] I agree with the orders proposed by Chesterman JA.
[5] CHESTERMAN JA: The respondent is the developer of residential land at Airlie Beach. By a written contract dated 30 April 2008 the respondent as vendor and the appellant as purchaser agreed upon the sale and purchase of proposed lot 39 in the development for a price of $654,500. The survey plan, CTS 39517, which created lot 39 was registered about a year later and notice that the plan had registered was given to the appellant on 23 March 2009.
[6] Clause 7.2 of the contract provided for conveyance of the land and payment to be on “the Completion Date” which, by clause 1, was defined as follows:
“Completion Date: means not less than:
(a)14 days from the Seller giving written notice to the Buyer under clause 8; or
(b) 30 days after the Contract Date.”
[7] Clause 8 was in these terms:
“8COMPLETION DATE
8.1 The Seller must give the Buyer written notice within 28 days after the Seller becomes aware that the Plan and CMS have registered and a separate title for the Lot has been created.
8.2 … .”
“CMS” is a reference to the “Community Management Scheme” which gave effect to the subdivision by the registration of lots pursuant to the Body Corporate and Community Management Act 1997 (“the Act”). The notice given by the respondent to the appellant called for completion on 7 April 2009 which was a date more than 14 days after notice had been given to the appellant that the scheme had been registered. The appellant did not complete the contract but purported to terminate it on the ground that it did not comply with s 212(1) of the Act.
[8] That section provided:
“212Cancellation for not complying with basic requirements
(1) A contract entered into by a person (the seller) with another person (the buyer) for the sale to the buyer of a lot intended to come into existence as a lot included in a community titles scheme when the scheme is established or changed must provide that settlement must not take place earlier than 14 days after the seller gives advice to the buyer that the scheme has been established or changed.”
The section was changed by the Body Corporate and Community Management Amendment Act 2009 and the point raised in this appeal is unlikely to arise again.
[9] The respondent refused to accept the appellant’s purported cancellation of the contract and issued proceedings for specific performance. It applied for, and was successful in obtaining, summary judgment. The appellant’s point before the learned primary judge and on appeal was that the contract by clause 8 and the definition of “Completion Date” provided two alternatives for fixing the date for completion. Only the first complied with the requirements of s 212 of the Act. The consequence was that the contract did not provide that settlement:
“must not take place earlier than 14 days after the seller gives advice … that the scheme has been established … ”
and was accordingly void for illegality.
[10] The primary judge met the appellant’s objection by construing, in effect, “or” as meaning “and” in the definition of “Completion Date” so that the two elements of the definition were cumulative and not alternative. On this reading of the contract the completion date was that date fixed by not less than 14 days notice and which must be a date more than 30 days after the contract date.
[11] His Honour said:
“If that definition (of completion date) were to be construed according to its grammatical structure and the frequent sense of the word “or” as separating alternatives, the contract might be thought to accommodate the possibility that the vendor could insist on completion once 30 days had elapsed after the contract date. But the contract cannot mean that.
The vendor cannot insist on completion without giving the notice for which clause 8.1 provides.
The heading to clause 8 and the reference in the definition of ‘completion date’ to a date not less than 14 days from the clause 8.1 written notice signify that, to call for completion, the vendor must give a written notice that specifies a date for completion that meets two requirements: It must be given within 28 days after the vendor becomes aware that the relevant community title scheme is established. It must also nominate a date for completion that is not less than 14 days from the giving of that notice.
On this view, the reference in paragraph (b) of the completion date definition to ‘30 days after the contract date’ does not express an alternative. Rather, it conveys a cumulative requirement that is designed to ensure that in no circumstance will a purchaser be obliged to complete until 30 days after the contract date. It caters for such a contingency as the plan and CMS might be registered very soon after the contract is made and confers an additional measure of protection against requiring a purchaser to complete too hurriedly.
In other words, in the definition of ‘completion date’, or, in effect, means ‘and’.”
[12] The appellant submits that the judgment is affected by two errors. The first is that there was no evidence from the terms of the contract itself or the circumstances surrounding its making which might indicate that the parties were mistaken in the choice of words and that when they used “or” in the critical definition they did not intend it to have its ordinary meaning. There was, says the appellant, “no warrant to construe ‘or’ as ‘and’ and the contract did not comply with s. 212(1).” The appellant stresses that the contract is a pro-forma agreement for the sale of proposed lots in a development, and in the task of construction:
“The court is … left with the words of the document. If … plain and unambiguous the court must give effect to them even though the result may appear one sided or even unreasonable.”
[13] This general proposition may be accepted. The appellant, however, necessarily and correctly accepts that one can find many cases in which in both contracts and statutes “or” and “and” have been given interchangeable meanings, or one is read as meaning the other.
[14] The appellant refers to the judgment of Blackburn J in Re The Licensing Ordinance (1968) 13 FLR 143 in which his Honour (146-7) determined that those cases fall into two categories. In fact the cases discussed by his Honour were not those where the two words are interchanged but cases in which “and” has been read as meaning “or”. His Honour said:
“The first category is that of cases where, if ‘and’ was given its natural meaning, the result was so extraordinary … ‘an absurdity or unintelligibility’ … that in order to make sense of the provision the court was obliged to say that it must read the word ‘and’ as if it had been ‘or’. The cases in the second category were those in which there was a list of items, the items being joined by ‘and’ and the list being governed or affected by words which showed that the list was a list of alternatives.”
The case has no particular relevance to the present appeal.
[15] Of more relevance is the judgment of Lord Salmon in Federal Steam Navigation Cov Department of Trade and Industry [1974] 1 WLR 505 at 523-4. His Lordship said:
“… I do not suppose that any two words in the English language have more often been used interchangeably than ‘and’ and ‘or’. However unfortunate or incorrect this practice may be, many examples of it are to be found in all manner of documents and statutes. There are many reported cases which turn upon whether, in its particular context, the word ‘or’ is to be read conjunctively or the word ‘and’ disjunctively.
There is high authority for the view that the word ‘or’ can never mean ‘and’ although it is sometimes used by mistake when ‘and’ is intended: see Sir George Jessel MR in Morgan v Thomas and MacKinnon J in Brown & Co v T & J Harrison. On the other hand, there is also the high authority of Bankes and Atkin LJJ, on appeal in Brown & Co v T & J Harrison, that ‘or’ is quite commonly and grammatically used in a conjunctive sense. In Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd MacKinnon LJ was able pungently to restate the contrary view which he had expressed 11 years previously. The Oxford Dictionary seems to support Sir George Jessel MR and MacKinnon LJ.
I do not, however, attach any real importance as to whether the one school of thought or the other is right on this interesting grammatical point. In Brown & Co v T & J Harrison, the Court of Appeal agreed with MacKinnon J as to the effect of the relevant statutory provision. MacKinnon J reached his conclusion by holding that the word ‘or’ should be substituted for the word ‘and’. The Court of Appeal reached their conclusion by holding that the word ‘or,’ on its true construction, meant ‘and.’ The result was the same.
There is certainly no doubt that generally it is assumed that ‘or’ is intended to be used disjunctively and the word ‘and’ conjunctively. Nevertheless, it is equally well settled that if so to construe those words leads to an unintelligible or absurd result, the courts will read the word ‘or’ conjunctively and ‘and’ disjunctively, as the case may be; or, to put it another way, substitute the one word for the other. This principle has been applied time and again even in penal statutes … .” (citations omitted)
[16] The principles which govern the construction of contracts are well known and it is not necessary to repeat them. In arriving at the objective intention of the parties the court will look at the words they chose to record their bargain and the commercial object they meant to achieve by it. If it is apparent that the particular words of the contract will not achieve what one can confidently conclude was the objective intended then the words can be modified to achieve the result. All depends upon the particular words in question and the contractual context. As Lord Salmon’s judgment demonstrates there is no particular objection to reading “or” conjunctively. It remains a canon of construction that a contract should be construed so as to give it efficacy and, if possible, a construction which would destroy the bargain is to be avoided.
[17] The construction for which the respondent contended, and which the primary judge accepted, gives to the definition of completion date a compendious meaning which consists of two elements but results in the fixing of one date. It treats the completion date as being that fixed by at least 14 days written notice required by clause 8, and is not earlier than 30 days after the contract date.
[18] One can achieve that construction by:
(i)substituting ‘and’ for ‘or’;
(ii)replacing the words ‘not less than’ with the words ‘the later of’;
(iii)substituting for the word ‘or’ the phrase ‘such notice not to expire earlier than’