Reported Decision : (2005) NSW ConvR 56-127 New South Wales Supreme Court CITATION : Peatties Road v Hanson & Anor [2004] NSWSC 831 HEARING DATE(S) : 01/09/04 JUDGMENT DATE : 9 September 2004 JUDGMENT OF : Gzell J DECISION : Declaration that contract became unconditional on purchaser's waiver of the benefit of the condition and an order for specific performance. CATCHWORDS : CONVEYANCING - Relationship of Vendor and Purchaser - Matters Arising between Contract and Conveyance - Whether condition was inserted for the sole benefit of the purchaser - Whether the purchaser was entitled to waive its rights under the condition Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153 Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 Newmont Pty Ltd v Laverton Nickel NL (1982) 57 ALJR 348 CASES CITED : Gange v Sullivan (1966) 116 CLR 418 Toga Development No 10 Pty Ltd v Gibson (1973) 2 BPR 9260 Amber Holdings (Aust) Pty Ltd v Polona Pty Ltd [1982] 2 NSWLR 470 Bedroff Pty Ltd v Rennie [2002] NSWSC 928 G & S Koikas v Green Park Construction Pty Ltd [1970] VR 142 Peatties Road Pty Ltd - Plaintiff PARTIES : Brian Edward Hanson - 1st Defendant Phillip Raymond Balckley 2nd Defendant FILE NUMBER(S) : SC 1495/04 COUNSEL : Mr G Sirtes - Plaintiff Mr M Willmott SC - Defendant SOLICITORS : Bale Boshev Lawyers Parke Maher Solicitors IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J THURSDAY 9 SEPTEMBER 2004 1495/04 PEATTIES ROAD PTY LTD v BRIAN EDWARD HANSON & ANOR JUDGMENT 1 The plaintiff, Peatties Road Pty Ltd, as purchaser, entered into a contract for the sale of land with the defendants, Bryan Edward Hanson and Philip Raymond Blackley. The contract was conditional upon Peatties Road obtaining a consent to a development application from the local authority by a specified date. The consent was not forthcoming. Peatties Road purported to waive its rights under the condition and called on Mr Hanson and Mr Blackley to complete the contract. They refused to do so, claiming the contract was at an end when the specified date passed without local authority approval. The confined question raised in the proceedings was whether or not Peatties Road was entitled to waive its rights. 2 The contract stated opposite the words "Completion date" the words "AS SET OUT IN CLAUSE 30(v)". Clause 30 contained the condition in question. It was in the following terms: "(i) This Contract is subject to the purchaser obtaining from Lake Macquarie Council ("the Council") on terms satisfactory to the purchaser consent to a development Application ("development consent") for the residential subdivision of the land on or before 31st December 2003. (ii) The purchaser will lodge the Development Application with the Council on or before 31 May 2003 and will diligently pursue the obtaining of the development consent. (iii) The vendor will, on request, sign any form of application reasonably required for the lodgement of the Development Application. (iv) If development consent is refused or approved on terms not satisfactory to the purchaser by the 31 of December 2003 then the purchaser may rescind this Contract by fourteen (14) days notice in writing from the date of receipt by the purchaser of the decision of Council. Such rescission shall be a rescission pursuant to Clause 19. (v) Completion is to take place twenty eight (28) days after the purchaser receives development consent." 3 Clause 30 was a further condition added by the parties to the standard form of contract. The standard form contained in cl 29 provisions with respect to a conditional event. In some respects its terms were in conflict with cl 30. It was common ground that cl 30 prevailed. 4 It was submitted that the contract was absolute in its terms. Completion could only occur if the purchaser was satisfied with a consent to a development application by the local authority given on or before 31 December 2003 and at the expiration of 28 days from receipt of that consent. In the absence of such a consent, it was submitted that the contract became void. There was an earlier "let-out" available to the purchaser if the local authority refused consent or granted it on terms unsatisfactory to the purchaser. In those circumstances the purchaser might rescind. It was submitted that there was no room for waiver and the purchaser could not insist upon completion in the absence of a satisfactory consent by the local authority on or before 31 December 2003. 5 In Sandra Investments Pty Ltd v Booth (1983) 153 CLR 153 a contract for sale of land stated opposite the words "date for completion" the words "see annexure 'A' hereto". The annexure contained a number of special conditions including the following: "24 This contract is subject to and conditional upon the approval of the Beaudesert Shire Council to a plan of subdivision and engineering plans on terms and conditions satisfactory in all respects to the Purchaser within six (6) calendar months from the date hereof. In the event that such approval is not obtained then the Purchaser may at their option cancel this contract and in that event all deposit moneys paid hereunder by the Purchaser shall be refunded in full to the Purchaser and thereafter neither party shall have any claim upon the other. The Purchaser shall use all reasonable endeavours to secure the said approval within the said six (6) calendar months period. …. 27 The Purchaser shall notify the Vendor or his solicitors in writing forthwith upon receipt by the Purchaser of approval by the said local authority to the plan of subdivision and engineering plans on terms and conditions acceptable to the Purchaser in all respects and settlement shall take place within thirty (30) days from the date of the Vendor's receipt of such approval from the said local authority." 6 The purchaser was unable to obtain consent from the local authority within the stated period. It waived the condition and sued for specific performance. It was held that the vendor had no right to treat the contract as being at an end. 7 Gibbs CJ at 157 cited Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 and Newmont Pty Ltd v Laverton Nickel NL (1982) 57 ALJR 348 and pointed out that while cl 24 was expressed in the form of a condition precedent, it was a condition precedent to the obligation to complete and not a condition precedent to the formation of the contract. At 157-158 his Honour took the view that while the provision did not expressly deal with the situation that arose when the approval of the local authority was not obtained within the stipulated time, it gave the purchaser the choice of cancelling the contract or of allowing it to remain it on foot and the plain implication was that if the purchaser did not choose to cancel the contract, the vendor had no right to treat it as being at an end. The Chief Justice went on to say that in the event that the purchaser chose to allow the contract to remain on foot, it was to be implied that completion should take place within a reasonable time from the date on which the purchaser exercised that option. Mason and Murphy JJ agreed with the Chief Justice. 8 While different wording may give rise to different implications, I see no essential difference between the provisions in Sandra Investments and the provisions in this case. The submission that a purchaser in the position of Peatties Road could not elect to keep the contract on foot was rejected by the High Court and, applying the same logic to the instant circumstances, it should be rejected here. 9 An alternative submission was put on behalf of Mr Hanson and Mr Blackley that cl 30 was not solely for the benefit of Peatties Road and it could not be waived by the unilateral action of the purchaser. 10 The right to waive a condition depends upon its insertion entirely for the benefit of one party (Gange v Sullivan (1966) 116 CLR 418). In Toga Development No 10 Pty Ltd v Gibson (1973) 2 BPR 9260 Mahoney J concluded that the right was exercisable only if the term was simply and solely for the benefit of one party. That view was endorsed by Holland J in Amber Holdings (Aust) Pty Ltd v Polona Pty Ltd [1982] 2 NSWLR 470 and by Young CJ in Eq in Bedroff Pty Ltd v Rennie [2002] NSWSC 928. 11 In Amber Holdings at 475-476, Holland J concluded that the presence of express bilateral rights to rescind on failure of a contingency that might otherwise be thought to protect only the purchaser, precluded unilateral waiver by the purchaser. 12 There were bilateral rights of rescission in both Toga and Bedroff. In that context, Young CJ in Eq in Bedroff at [37] expressed the view that the vendor had some interest as to whether the special condition for development consent by a local authority was fulfilled. His Honour said: "Apart from certainty, any development consent in relation to industrial land would probably be of some benefit to the vendor and furthermore, the purchaser has expressly contracted in special condition 10 to bring that about. In my view the clause is not solely for the benefit of the purchaser and the purchaser alone cannot waive it." 13 It was submitted that Mr Hanson and Mr Blackley had some interest in cl 30 in that they had the certainty that if the development application was not approved by the specified date the contract would be at an end and, in consequence, cl 30 was not for the sole benefit of Peatties Road and it could not waive the condition. 14 That was not the view that was formed of the like provision in Sandra Investments. In G & S Koikas v Green Park Construction Pty Ltd [1970] VR 142 a sale was subject to the purchasers receiving permission from a statutory authority to erect a brick veneer dwelling house on the land and purchasers were to do all things necessary to obtain such permission forthwith. At 149, Little J took the view that the condition was introduced for the benefit of the purchasers in order to enable them to free themselves of any obligation to perform the contract should it eventuate that, having taken all necessary steps, they were unable to obtain the permission. His Honour went on: "Equally so, I can see no reason for thinking that it was not open to them at any stage up to completion date to waive the condition. The vendor would have no interest in opposing that course, or in insisting upon the condition, for if the purchasers could and did waive it the contract would be unconditional and the vendors concern to have a contract finally binding on the purchasers would have been realised." 15 I adopt with respect his Honour's reasoning. In my view the alternative submission fails. Clause 30 was, in my view, inserted into the contract for the benefit of the purchaser alone. It was Peatties Road alone who was to be satisfied with any consent from the local authority. It was Peatties Road alone that was entitled to rescind if no approval satisfactory to it was obtained by the specified date. There was no relevant interest in Mr Hanson and Mr Blackley that might convert the condition into one for the benefit of the vendors as well. Their interest was to have a contract finally binding on Peatties Road. 16 It follows that I am of the view that Mr Hanson and Mr Blackley were not entitled to treat the contract at an end on 31 December 2003. Peatties Road is entitled to a declaration that the contract became unconditional upon its waiver of the benefit of cl 30 and to an order for specific performance. I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons. ********** Last Modified: 09/13/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.