Hudpac Corporation Pty Ltd v Voros Investments Pty Ltd
[2009] QSC 275
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- Notable Unreported Decision
- Hudpac Corporation Pty Ltd v Voros Investments Pty Ltd[2009] QSC 275
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Hudpac Corporation Pty Ltd v Voros Investments Pty Ltd[2009] QSC 275
Hudpac Corporation Pty Ltd v Voros Investments Pty Ltd[2009] QSC 275
SUPREME COURT OF QUEENSLAND
CIVIL JURISDICTION
APPLEGARTH J
No 3785 of 2009
HUDPAC CORPORATION PTY LTD | Applicant |
and | |
VOROS INVESTMENTS PTY LTD | Respondent |
BRISBANE
DATE 27/04/2009
ORDER
HIS HONOUR: The applicant seeks various orders, including a declaration that it validly terminated a contract of sale and that it is entitled to forfeit a deposit. The material filed in support of the application was voluminous but sensibly and helpfully, the parties agreed that the matter should proceed today on the basis that I would be required to determine what was described as a threshold legal issue which would render other factual disputes nugatory.
The threshold legal issue concerns the operation of s 22 of the Land Sales Act 1984 (Qld) ("the LSA"). Depending upon my view as to whether the applicant was obliged to give a notice under s 22(1) of the LSA, I am asked to consider whether what is described as its breach of that section was an inessential breach that did not prevent the applicant from being entitled to terminate if the respondent breached a fundamental term of the contract.
The factual background to the matter for present purposes is that the respondent and the applicant entered into a contract for the purchase of a unit at 43 Peel Street, South Brisbane. The contract was dated 29 December 2006. The contract was governed by the LSA because at the time the parties executed the contract the relevant lot was not registered, but it was intended to become part of a community titles scheme under the Body Corporate and Community Management Act 1997 (Qld) ("the BCCM Act").
Before the respondent entered into the contract and as part of the contract, the applicant provided a statement under both s 213 of the BCCM Act and s 21 of the LSA. This appears at page 85 to the affidavit of Mr Forrester.
On the 2nd of December 2008 the applicant, by its solicitors, provided a further statement which was said to be given under s 214 of the BCCM Act. That statement did not expressly refer to the LSA but did refer to the fact that the notice under s 214 of the BCCM Act was "rectifying the inaccuracies in the first statement given to you". It is unnecessary to dwell upon the relevant changes or inaccuracies, but they are said to include the size of the unit and the size of the balcony.
Importantly, for the purposes of the application of s 22(1) of the LSA, the proposed lot was not created and the title was not issued in respect of it on 2 December 2008 when this notice was given. The proposed lot was created and title issued in respect of it on 5 December 2008. It was on that date that the applicant, through its solicitors, called for settlement on 19 December 2008. There were later extensions by agreement extending the date for settlement up to 13 March 2009.
There was no settlement on 13 March 2009. After further correspondence between the parties concerning their respective entitlements to call for settlement, the applicant purported to terminate the contract on 20 March 2009 and to forfeit the deposit. The applicant then resold the property for the same price, namely $399,000.
The essential issue is whether the respondent was obliged to pay the balance of the purchase price in circumstances in which the respondent contends the applicant was obliged to give a s 22(1) notice. The applicant acknowledges that it did not give the notice under s 22(1). It submits that it was not obliged to in the circumstances because, amongst other things, such an obligation does not arise on a proper interpretation of the statute and the notice that it did give was apt to alert the purchaser to relevant inaccuracies and, the notice having been given under s 214 of the BCCM Act, the inaccuracy at which s 22 was directed, was addressed.
On this first point, the issue is not whether the applicant's purported non-compliance with s 22(1), ipso facto, gave the respondent a right to avoid. Whether or not it had a right to avoid depends upon a failure to give the notice in circumstances in which a notice was required, and the conferral of a right to avoid by s 25 or the general law.
The issue, it seems to me, is whether s 22 applied in the present circumstances so as to preclude the vendor from delivering a registrable instrument of transfer and more importantly, for present purposes, whether 22(4)(b) of the LSA, did not oblige the purchaser to pay the outstanding purchase moneys.
Section 22 relevantly provides:
"(1)If a statement in writing of particulars referred to in section 21(1) given in accordance with, or pursuant to section 21(4) or (6) in sufficient compliance with, section 21(1):
(a)is not accurate at the time it is given; or
(b)contains information that subsequently to the time it is given becomes inaccurate in any respect;
it is the duty of the vendor and the vendor’s agent to give to the purchaser or the purchaser’s agent a statement in writing signed by the vendor or the vendor’s agent of particulars required to be included in a statement given for the purposes of section 21(1) as soon as is reasonably practicable after the proposed lot has become a registered lot;
(2)Subsection (1) applies whether the statement in writing is given in due time in accordance with section 21 or at a later time.
...
(4)Where a vendor or a vendor’s agent is required under subsection (1) to give to the purchaser or the purchaser’s agent a statement of particulars then:
(a)the vendor or the vendor’s agent shall not deliver to the purchaser or the purchaser’s agent a registrable instrument of transfer in respect of the lot the subject of the purchase in question; and
(b)the purchaser shall not be required to pay the outstanding purchase moneys;
until the expiration of a period of 30 days after the receipt by the purchaser or the purchaser’s agent of a copy of the statement of particulars in accordance with subsection (1) or until the time stipulated by the instrument made in respect of the sale and purchase for the payment of those moneys (whichever period is the later to expire) unless it is otherwise agreed in writing between the vendor or the vendor’s agent and the purchaser or the purchaser’s agent, after receipt by the purchaser or the purchaser’s agent of a copy of the statement of particulars in accordance with subsection (1)."
The applicant submits that it was not required to comply with s 22 for the reasons that I have earlier previewed. It relies particularly upon the reasons of Derrington J in Sommer v Abatti Holdings Pty Ltd [1992] 1 Qd R 300 at 304-305, and submits that the temporal restriction stated in s 22(1) is of no assistance to the respondent. It submits that s 22 of the LSA does not operate because by s 214(5) of the BCCM Act, the disclosure statement is taken to be the date of the further disclosure statement.
The basis of that submission is further explored in the applicant's submissions, but in essence, the submission is that s 22(1) of the LSA should be construed to apply on a basis identical to that provided in s 214(5) of the BCCM Act because otherwise, these closely-related sections would require needless repetition of information.
I am unable to agree with that submission, and it seems to me Sommer's case is not necessarily supportive of it. Sommer's case dealt with a different fact situation, and importantly, in that case, the present issue did not arise.
It is clear from the legislation that so far as the original disclosure statement is concerned that there is a legislative intent to ensure that there is not unnecessary duplication or repetition of the original information. However, the Act, in its terms, does not similarly state that a notice given under s 214 of the BCCM Act will operate to relieve a party from complying with the obligation in s 22(1) of the LSA. Such relief from the operation of section 22(1) cannot, in my opinion, be implied into the Act or carried forward by reason of the provisions in relation to the original statement.
The principal reason that I reach that conclusion is that s 22(1) of the LSA and s 214 of the BCCM Act confer different rights in different circumstances. The obligation to give a statement, which I will refer to as a rectification statement, under each Act may arise in some cases at different times. The most important point of distinction is that s 22(4) gives a purchaser, in the circumstances in which a notice under s 22(1) is received, a period of 30 days after receipt of the relevant document to pay. That section does not give a right to avoid.
However, the period of 30 days, amongst other things, will permit such a purchaser to check the title as registered and to, amongst other things, consider whether the changes are such as to give them a right to avoid the contract. By contrast, s 214 of the BCCM Act does not give that simple extension of time. It provides a buyer with an opportunity to cancel the contract if, amongst other things, the buyer "would be materially prejudiced if compelled to complete the contract, given the extent to which the disclosure statement was, or has become, inaccurate."
In some cases the contents of the rectification statement will be relatively innocuous and not give a party such a right to avoid. In other cases, it may. In other cases, it may be a matter of uncertainty.
It might have been possible for the legislation to be better aligned so as to avoid the unnecessary provision of rectification statements pursuant to both s 22 of the LSA and s 214 of the BCCM Act. However s 22 gives important rights to a purchaser. One right is to consider their position. It is a right which is conferred by statute, being a statute that has the purpose of protecting the interests of consumers in relation to property development and I do not consider that, in those circumstances, the Act can be construed so as to make it apply on a basis identical to that provided in s 214 of the BCCM Act. In essence, s 22(4) of the LSA gives important rights conferred by statute to an extension of time to settle.
I do not consider that the provision of the notice that was given on the 2nd of December removed the obligation to give a notice complying with s 22(1). The timing requirement in s 22(1) cannot be overlooked. It is submitted on behalf of the applicant that such a result is commercially absurd. As inconvenient as it may be in some circumstances, I cannot regard it as commercially absurd. In some cases, as I have said, it may be possible for one notice to suffice as having been given under each Act. In other cases, it will not be. In this case it might have been possible. I do not reach any concluded view about this. However, to comply with s 22(1) of the LSA it was necessary to give the notice that was given on the 2nd of December shortly after the registration of the plan whereupon the proposed lot became registered.
Accordingly, I uphold the submissions of the respondent on the first point, and find that the applicant was obliged to give a notice under s 22(1) of the LSA as soon as reasonably practicable after the proposed lot had become a registered lot.
The second point is the consequences of what is said to be a breach of s 22. The applicant submits that if it failed to comply with s 22 by calling for settlement before the 30 days after a notice had issued that such a breach was rendered inessential by the statutory limitations on the respondent's right to rescind.
Particular reference is made to the fact that under s 25 a purchaser has a right to avoid where, amongst other circumstances, a statement in writing has not been given to the purchaser when required by s 22(1). It seems to me that s 25 is not an exhaustive statement of the rights of a purchaser in such a case.
The present case may be one in which the purchaser might have elected to avoid - and there may be consequences of making an election. However, s 22 in its terms postponed the date for settlement and gave the purchaser, as it were, the right to not settle and not part with money until the notice under s 22(1) had been given. I do not construe the apparent non-compliance with s 22 as obliging the purchaser to settle on the basis that the breach was some kind of inessential or unimportant non-compliance.
The occasion to settle simply had not arisen by virtue of the operation of the statute. Reliance is placed upon Lee v Surfers Paradise Beach Resort Pty Ltd [2008] 2 Qd R 249 but that seems to me to be a case which is factually different to this one. As appears at paragraph 56 of the judgment, in the judgment of Dutney J, his Honour observed:
"In this case the fundamental breach lay in failing to tender the purchase price on the date specified in the contract where time has been made of the essence by clause 1.4."
In this case, one is not concerned with a similar situation in which the issue arises as to whether a breach of an inessential term or obligation precludes a party from relying upon a fundamental breach by the other. Here, one has a different situation in which the applicant purported to terminate for failure to settle in circumstances where, on the facts that I have found them, the obligation to settle had not arisen by virtue of non-compliance with s 22 of the LSA.
Those are my reasons. I will hear the parties as to appropriate orders that arise as a consequence of those reasons.
...
HIS HONOUR: The orders that I will make will be the application is dismissed and the applicant pay the respondent's costs of and incidental to the application to be assessed.