DISTRICT COURT | Plt No 116 of 1996 |
CIVIL JURISDICTION
JUDGE O'BRIEN
I J McDONALD & SONS (ROCKHAMPTON) PTY LTD | Plaintiff |
and
TOWNSVILLE PROPERTY INVESTMENTS PTY LTD | Respondent |
TOWNSVILLE
DATE 03/08/96
JUDGMENT
HIS HONOUR: This is an application for summary judgment, the relevant history of which might be summarised as follows:
Pursuant to an agreement for sale dated 23 September 1994, the plaintiff/applicant, as vendor, agreed to sell to the defendant/respondent property known as the Town Plaza Shopping Centre in Charters Towers.
By virtue of clause 19 of the agreement, the sale was made subject to a number of leases, details of which are set forth in a schedule to the agreement.
One such lease executed in favour of Woolworths made provision for the payment of a yearly percentage rental in addition to a base rental. This percentage rental or turnover rental was payable by the lessee, “not later than one month after the end of each financial year”.
Completion of the agreement for sale occurred on 23 December 1994, and delivery and possession of the shopping centre was effected on that day.
The purchase price paid by the defendant upon completion included adjusted monthly rental, but did not include any adjustment of turnover rental which had not then become payable under the terms of the Woolworths' lease.
On 30 September 1995, Woolworths, in accordance with the requirements of the lease, paid rental to the defendant in the sum of $112,579.39, and the plaintiff, by plaint filed on 14 June 1995 claims an entitlement to a proportion of that rental payable in respect of the financial year ended 30/6/95.
The agreement for sale contains no express provision for the apportionment of rentals received from tenants. Clause 8.1 does provide for the apportionment of outgoings of a periodic nature, but nowhere does the agreement make express provision for the apportionment of turnover rental received from tenants such as Woolworths.
Counsel for the applicant however, has argued that the matter is governed by the application of section 232 of the Property Law Act 1974 which provides for the apportionment of all rents in the absence of any express stipulation to the contrary.
On the other hand, counsel for the respondent has argued that, on a proper construction of the sale agreement and the relevant provisions of the Property Law Act, there should be no apportionment. In any event, the argument proceeds, the contract should be rectified to reflect the true intention of the parties that the settlement of 23 December 1994 should be in full and final settlement of all amounts outstanding, including turnover rental.
The first aspect of the respondent's argument involves in particular clause 19.6 of the sale agreement which provides in its relevant part as follows:
“The vendor hereby assigns to the purchaser the benefit of all guarantees held by the vendor in respect of the leases, particulars of which are set out in schedule 2 hereto, together with the benefit of all covenants on the part of the lessee in favour of the vendor or any predecessor in title contained in the said leases, whether or not the same touch and concern or run with the said land, and the vendor will execute at the purchaser's expense a formal Deed of Assignment of all of the vendor's rights thereunder if required by the purchaser”.
It is argued for the respondent that the effect of this provision is twofold. Firstly, it has the effect of assigning to the purchaser the benefit of the covenant to pay turnover rental preserved to the vendor by section 232(3) of the Property Law Act, and secondly, it serves to exclude the operation of section 232 by so assigning to the purchaser the benefit of the turnover rent covenant.
So far as this second matter is concerned, section 233(2) makes it plain that the Statute has no application to any case, “in which it is expressly stipulated that apportionment shall not take place”.
In Tyrrel v. Clark (1854) 2 Drewry 86, 61 ER 651, Kindersley V-C considered similar language in the Apportionment Act of 1834 to require something more than inference - “it means that there must be in express terms that which amounts to a stipulation that no apportionment shall take place”.
The authorities however, also recognise that, “express stipulation” is not confined to a clause or provision which expressly states that apportionment legislation shall have no application. See for example In re Meredith, Stone v. Meredith (1898) 67 LJ Ch 409 and In re Lysaght, Lysaght v. Lysaght (1898) 1 Chancery 115.
So far as the first issue is concerned, section 232(3) preserves to the vendor the same rights to recover the apportioned part of turnover rental as it would have had if entitled to the whole of the rental. If the effect of clause 19.6 is to assign this right to the purchaser however, then a question arises as to the effect of section 232(4) which provides, in effect, that despite subsection (3), it shall be the purchaser who recovers the rent from the lessee, with the vendor having a right of action for any apportionable part against the purchaser.
These matters, in my view, raise questions of interpretation of the sale agreement as well as questions of construction of the provisions of the Property Law Act, which of themselves would justify the refusal of summary judgment.
In Garms v. Birnzwejg (1990) 2 Queensland Reports 336 at 242, Thomas J referred to “The wisdom of giving leave to defend where the matter depends on questions of statutory construction which are not absolutely clear”. His Honour also observed that, “To enter summary judgment against the defendant in such cases does not conform with the intention behind the procedures of (Rule 153 of the District Court Rules)”.
There is, in any event, a further matter to be considered in this application. There is evidence from the directors of the defendant company of their belief that upon completion of the contract, no further money by way of rental was payable to the plaintiff. They depose to their intention that the settlement statement would constitute full settlement of all amounts between the parties to the sale.
A unilateral mistake as to the nature of the contractual terms will not, of course, be sufficient to ground rectification. The defendant must show the existence of an identical corresponding contractual intention on either side “an intention common to both parties at the time of contract to include in their bargain a term which, by mutual mistake, is omitted therefrom”, per Wilson J in Pukallus v. Cameron (1982) 180 CLR 447 at 452.
In my view, there is in this case evidence from which it could be concluded that the plaintiff shared the intention deposed to by the defendant in relation to the payment of turnover rental.
There is firstly the settlement statement (see Exhibit 5 to the affidavit of Mr Richard Attwood) which makes no reference of any kind to any adjustment of turnover rental. Secondly, on 21 December 1994 in a letter written by the plaintiff's solicitors to the real estate manager for the shopping centre, it was indicated that “all rental and outgoings have been adjusted between the parties....and that all rentals and payment of outgoings by tenants for the period 1 January 1995 should be paid to the new owner”. Finally, it was not until 8 May 1996 that the plaintiff company through its solicitors made any call upon the defendant for the payment of outstanding turnover rental.
Considered collectively, these circumstances, in my view, give rise to a reasonable inference that the plaintiff might have intended that there should be no apportionment of the turnover rental. They thus give rise in my view to a triable issue, and in accordance with the principles which govern an application for summary judgment, it follows that the summons in this matter should be dismissed, and the respondent given leave to defend. I so order.
That leaves only the question of costs. My proposal, subject to being persuaded to the contrary, is that costs should be reserved in this application. However, if either of you want to make submissions, I will hear from you?
MS SCHEINPFLUG: That's what we'd be seeking, Your Honour.
HIS HONOUR: Yes, Ms Scheinpflug. Do you want to say anything, Mr Guy?
MR GUY: Your Honour, I'm instructed to make an application for costs, on the basis of correspondence that was sent to the solicitors for the plaintiff on 17 July which is------
HIS HONOUR: Exhibited.
MR GUY: Yes, and an affidavit of my own. I really can't take it any further than that, Your Honour.
HIS HONOUR: I am mindful of that, Mr Guy, but in the circumstances I have no reason to doubt the bona fides of the application. I think the appropriate order is that costs be reserved to the Trial Judge.
