This interesting decision concerns the obligation of a seller of land listed on the contaminated land register or the environmental land register to give notice to a potential buyer pursuant to s 421 of the Environmental Protection Act. His Honour was called on to consider whether providing the seller with a link and access to an electronic data room which contained copies of searches indicating that the site was included on the environmental land register was written notice. His Honour concluded that it was.
20 December 2017
The plaintiff entered into a contract to sell 12 lots of land to the first defendant. The first defendant defaulted, after which the plaintiff served a default notice. The first defendant subsequently purported to rescind the contract on account of alleged non-compliance with s 421 of the Environmental Protection Act 1994 (the EPA), which relates to the giving of certain notices. The plaintiff claimed damages against the first defendant for breach of contract. . The first defendant, by way of counterclaim, sought to recover a deposit paid under the contract before it was rescinded.
Prior to entering into the contract with the first defendant, the plaintiff had negotiated with a related company, Fridcorp Projects Pty Ltd. . As part of the due diligence process, Mr Roche, an employee of Fridcorp, requested and was provided with a hyperlink to an electronic data room which contained various folders and files, including environmental contamination reports. The files in the data room included copies of search responses that indicated that the site was included in the environmental management register as a site that had been subject to a notifiable activity pursuant to s 374 of the EPA. .
Mr Roche was subsequently appointed as sole director of the first defendant. . The first defendant was then nominated to be the buyer under the contract. . In July 2015, the contract was entered into between the plaintiff and the first defendant. .
The first defendant defaulted in payment of an amount due under the contract. . The plaintiff’s solicitors subsequently gave a default notice, requiring that the default be remedied. . The first defendant’s solicitors responded by alleging that the plaintiff had failed to give written notice to the first defendant under s 421 of the EPA. . The first defendant said it was rescinding the contract. .
Section 421(2) relevantly provides that before the owner agrees to dispose of land to the buyer, the owner must give written notice to the buyer – if particulars of the land are recorded in the environmental management register or contaminated land register – that the particulars have been recorded in the register and, if the land is subject to a site management plan, details of the plan. . Failure to do so gives the buyer a right to rescind the agreement by written notice: s 421(3). Although s 421 was repealed with effect from 30 September 2015, Jackson J explained that the right under s 421(3) was an accrued right, unaffected by the repeal. .
The primary issue was whether the plaintiff as owner had given written notice to the first defendant in compliance with s 421(2) of the EPA before the plaintiff had agreed to dispose of the contaminated lots to the first defendant. . The defendants raised various arguments as to why the written notice did not comply with s 421(2)(a). .
One argument raised on behalf of the defendants was that in providing the relevant documents electronically, by uploading them to the data room, the plaintiff had not given written notice. . In dealing with this argument, Jackson J observed that s 11 of the Electronic Transactions Act 2001 provides that if, under a State law, a person is required to give information in writing, that requirement is taken to have been met if the person gives the information by an electronic communication and (i) at the time the information was given, it was reasonable to expect the information would be readily accessible so as to be useable for subsequent reference, and (ii) the person to whom the information is required to be given consents to the information being given by electronic communication. .
Jackson J held that the requirement to give notice under s 421(2)(a) of the EPA was a requirement under a State law to give information in writing. . Further, the process of uploading data to a data room, “may constitute giving information by an electronic communication”. . His Honour also noted that Mr Roche’s request for the information to be made available this way was “unambiguous”. . Accordingly, s 11 of the Electronic Transactions Act applied. .
Another argument raised on behalf on the defendants was that the notice was given to Fridcorp, not to the first defendant. . However, the plaintiff submitted that the written notice given to Fridcorp through Mr Roche was also given to the first defendant in circumstances where Mr Roche was the sole director of the first defendant and the directing mind and will of the first defendant. Jackson J said:
“In the present case, there is no suggestion that the notice given to Mr Roche on behalf of Fridcorp was not communicated to the defendant in the sense that from the time when Mr Roche became the sole director of the defendant he full well knew what had been brought to the attention of Fridcorp by the plaintiff giving written notice to Fridcorp.” .
His Honour therefore held that the plaintiff had given written notice to the defendant in compliance with s 42(2) of the EPA. .
Turning to the plaintiff’s claim for damages for breach of contract, Jackson J noted that the plaintiff, as seller, was seeking loss of bargain damages measured by the difference between the contract price and the value of the land, either (i) at the date on which the contract would have been performed, or (ii) as at the date of termination. . The plaintiff had not sold the land. . It submitted that the correct date was at the time when performance would have been due. . On its case, there had been a fall in market value over a period of about four months. . The defendants submitted that the correct date was the date of the termination of the contract. .
Ultimately, Jackson J was persuaded that the date of assessment should be the date of performance and not the date of termination. . His Honour did, however, suggest that this statement of principle would be subject to qualifications. . For example, on a falling market, it would not be open to a seller, who re-sold promptly after termination, to claim the greater difference between the contract price and the market value at the date when performance would have been due. .
His Honour assessed damages in the sum of $5.25 million, being the purchase price payable under the contract ($25 million), less the value of the land at the date of performance of the contract ($17 million), with a further deduction of $2.75 million on account of the deposit which had been paid by the defendant. .