Albion Mill FCP Pty Ltd & Anor v FKP Commercial Developments Pty Ltd

This appeal concerned the attempted sale of contaminated land. The purchaser purported to rescind on the basis that notice required by the Environmental Protection Act 1994 had not been given. The primary judge had found that the notice requirement had been satisfied by the vendor providing access to a number of documents in a “data room” which included a Land Contamination Folder to an associated company of the purchaser (with whom the purchaser shared the same “corporate mind”). The Court of Appeal upheld this conclusion.

Sofronoff P and Philippides JA and Henry J

21 September 2018

Background

The appellant, Albion Mill FCP Pty Ltd ("Albion Mill"), entered into a contract with FKP Commercial Developments Pty Ltd ("FKP") to purchase land in Albion. [1]. That land was “contaminated land", as that term is used in the Environmental Protection Act 1994 ("the Act"). [6].

Albion Mill failed to pay the purchase price by a specified date, and purported to rescind the contract in reliance on s 421(3) of the Act. [1]. That provision provided a statutory right to rescind an agreement for the sale of land, if the vendor failed to comply with certain notice requirements that arise where land is, or is likely to be, contaminated. [19].

At first instance, the primary judge concluded that the notice requirements had been met, and awarded $5,459,640.41 in damages to FKP. [3]. On appeal, Albion Mills challenged the conclusion that notice had been given, as well as the assessment of damages. [4].

The statutory notice requirement, and the parties’ contentions

Section 421(2) (now repealed) of the Act provided that if an owner proposed to dispose of contaminated land, it must, before agreeing to dispose of it, “give written notice to the buyer” of certain things relating to it being, or likely to be, contaminated – for example, of the fact that the land is recorded in the Environmental Management Register, Contaminated Land Register, or subject to a Site Management Plan. [19].

The primary judge had concluded that notice had been given by the disclosure of a number of documents in an electronic “data room”. [58]. The data room included a “Land Contamination Folder”, which contained Site Management Plans, search results revealing that three of the lots were registered on the Environmental Management Register and Contaminated Land Register, and a report recording those facts. [60]–[62]. In its Amended Rejoinder, the appellant admitted that it "had the benefit of" these documents prior to entering into the contract. [66].

Nonetheless, Albion Mill denied that it had been given written notice as required. [67]. The three key arguments advanced to support this conclusion on appeal were that: (1) the obligation imposed by the Act is to notify of present fact, rather than historical fact; (2) that adequate notice must state the fact plainly, not simply allow an inference to be drawn as to that fact; and (3) the documents were given to Fridcorp Pty Ltd and not the appellant purchaser (Albion Mill). [68]–[70]. That circumstance arose because a clause in the contract allowed Fridcorp Pty Ltd (as principal) to nominate a "nominee" to become the actual contracting party. The appellant was nominated for that purpose. [77].

Whether notice had been provided

Sofronoff P, with whom Philippides JA and Henry J agreed, began by observing that a notice under s 421, or the manner of its giving, was not required to be in any particular form, provided it was in writing. The relevant case law suggested that "the question of whether there has been effective notice has always been answered by reference to the particular purpose to be served by a notice in the circumstances of the case". [35]. In this case, his Honour considered that the notice requirement would be satisfied "if the efforts of the seller have resulted in the buyer receiving a written document, thereby becoming aware of the essential facts required to be communicated". [51].

In relation to arguments (1) and (2) (outlined above), his Honour considered that they were met by evidence of actual access to the data room documents, and an email concerning them, which supported the "inescapable inference" that the documents had been understood by the appellant "as communicating the present fact that the land had been and remained registered and that the site management plans remained current". [75]. In conclusion, the documents disclosed by FKP "were read, understood, believed and acted upon as disclosing the statutory facts that s 421 requires to be notified". [76].

In relation to argument (3), his Honour noted that prior to the contract being entered into, Mr Roche, who had been developments director of Fridcorp Pty Ltd (to whom the data room documents had been disclosed), was made sole director of the appellant. Mr Roche was "the relevant corporate mind for the purposes of this project irrespective of the corporate carapace that would be chosen to contain that main". As a consequence, notice given to FKP was also sufficient to notify the appellant. [77]–[79].

The appeal was dismissed with costs. [115].

W Isdale