Park v Brothers

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: Gleeson CJ,Gummow,Hayne,Callinan,Heydon JJ.
• Judgment Date: 06 December 2005
• Neutral Citation: 2005-1206 HCA A,[2005] HCA 73
• Docket Number: S226/2005
• Date: 06 December 2005

Lindsay Gordon Park & Anor

Appellants

and

Clive Roy Brothers

Respondent

[2005] HCA 73

Gleeson CJ, Gummow, Hayne, Callinan AND Heydon JJ

S226/2005

HIGH COURT OF AUSTRALIA

Park v Brothers

Vendor and purchaser — Sale of land — Purchasers entitled to possession prior to completion on conditions including requirement of vendor's approval — Vendor wrongly purported to rescind contract — Vendor denied purchasers access to land — Purchasers sued for damages for breach of access provision — Whether necessary for purchasers to seek vendor's approval notwithstanding purported rescission — Whether vendor's conduct waived condition of approval.

Contract — Construction of contract — Purchasers to have access to land prior to completion to farm in areas approved by vendor — Whether vendor required to act reasonably in granting or withholding approval.

Contract — Construction of contract — Implied duty to co-operate — Limits of operation of implication.

Practice and procedure — Appeal — Whether it is open to an appellate court to allow an appeal on a new ground that was not raised at trial and that, if raised, could have been the subject of evidence.

1 Gleeson CJ, Gummow, Hayne, Callinan AND Heydon JJ. On 25 September 2000, the respondent agreed to sell, and the appellants agreed to buy, a rural property of a little less than 25,000 acres, located about 40 km west of Hay. The purchase price was $3,350,000. Although the contract provided for completion on 7 December 2000, disputes and litigation intervened. In the event, completion took place on 24 March 2001. The pre-settlement litigation involved proceedings brought by the appellants in the Equity Division of the Supreme Court of New South Wales, seeking a declaration that a purported rescission of the contract by the respondent was ineffective and, if necessary, an order for specific performance. On 27 February 2001, Young J held in favour of the appellants, but it was unnecessary to make a formal decree for specific performance1. Following completion of the contract, the proceedings remained on foot, to enable the appellants to pursue claims for damages.

Gleeson CJ

2 The proceedings next came before Campbell J, who dealt with various claims by the appellants for damages arising out of certain pre-contractual representations said to have been made in contravention of theFair Trading Act 1987 (NSW) (‘the Fair Trading Act’), and for damages for breach of contract. On 7 October 2003, Campbell J gave judgment in favour of the appellants, upholding most of their claims, and awarding damages in the total amount of $1,512,052 plus interest2.

3 The respondent appealed to the New South Wales Court of Appeal (Giles JA, Ipp JA, Wood CJ at CL). The Court of Appeal upheld the appeal on one ground relating to part of the claim for damages for breach of contract, and reduced the amount of the judgment to $464,641 plus interest3. The present appeal is concerned only with the issue that gave rise to that reduction in damages. We are not concerned with the damages awarded for breaches of the Fair Trading Act, and we are concerned with part only (albeit the larger part) of the damages originally awarded for breach of contract. In order to explain that issue, it is necessary to say something more about the contract, and the litigious history.

The contract

4 The property, known as ‘Jellalabad’, was a mixed farming property, fronting the Murrumbidgee River. It was originally put on the market for sale by auction in August 2000. The advertising material made reference to extensive areas available for irrigation and for rice production. The first appellant is a farmer experienced in growing both rice and wheat. In pre-contract conversations with the respondent and the respondent's agent, particular reference was made to the availability of water, and the potential for rice production. Developing land for rice production requires substantial expenditure on infrastructure. Part of the land had already been developed for that purpose. On one inspection of the property the first appellant told the respondent that he wanted to increase the area available for rice production. The respondent said: ‘There is plenty of land to do that — but there is no infrastructure — that is your job.’

5 The rice growing season is such that a crop must be planted by the end of October, or early November, and its growing cycle should be completed by late summer. The first appellant gave evidence that, at a pre-contract inspection, the agent explained that the contract would provide for the purchasers ‘to immediately take possession of the farm and look after it’, because the respondent had been ill and was unable properly to farm the land himself. Rural properties in the area are sometimes sold in the spring, just before the time when rice crops are planted, and it is not uncommon for purchasers to be allowed immediate possession of the property to grow crops. The agent told the first appellant that there would be 1000 acres ploughed ready for a crop. The evidence showed that the parties to the contract contemplated that, after contract, and before completion, the purchasers would plant a rice crop in land that had already been developed for that purpose, for the 2000–2001 growing season.

6 The contract was signed by the appellants on 12 September 2000, although formal exchange of contracts did not take place until 25 September 2000. The appellants went into possession on 12 September 2000 and immediately set about planting a rice crop for the 2000–2001 season. They spent about $225,000 on the necessary work. The contract provided for completion on 7 December 2000, and the terms of payment of the purchase price were $250,000 deposit, $250,000 on completion, and the balance of $2,850,000 secured by mortgage back to the vendor, payable as to $500,000 on 7 July 2001, as to $350,000 on 7 September 2002, and as to $2,000,000 on 7 September 2005.

7 Special condition 22.4 of the contract is not directly relevant to the present appeal, but it was relevant to a dispute that arose between the parties. It requiredthe purchasers, on or before 7 October 2000, to reimburse the vendor in respect of a sum of $150,000 which the vendor was to pay to a certain authority in connection with water supply. This was a topic that was important in the litigation before Young J. For present purposes, it suffices to say that there was conflicting evidence about whether the respondent agreed to postpone that payment until completion; a conflict which Young J found it unnecessary to resolve.

8 Special condition 24 of the contract, which is central to this appeal, provided:

‘Early occupation by purchaser to do farming work — no reimbursement to purchaser.

The purchaser may enter the property and occupy the Manager's Cottage as licensee only at any time after the date of this Contract and payment of the deposit without payment of any occupation fee to work up ground for crops such work to be at his expense and risk and in locations first approved by the vendor. The purchaser agrees in doing such work to adopt the highest farming standards used in the local district and the purchaser's entry shall also be governed by the provisions of special condition 25 hereof. The purchaser acknowledges that 14 days notice given to the vendor will be required prior to occupancy of the cottage, which is presently occupied.’

9 Special condition 25 is presently immaterial.

10 The first appellant gave evidence that he attended the property every day between 12 and 21 September 2000. He engaged a contractor to fertilise the area which had been ploughed for rice growing. After that, the fields were progressively flooded, and banks were built up to retain water. In October, a rice crop was sown by contractors. No approval was either sought or obtained under special condition 24, but there was no objection by the respondent. What was done was within the joint contemplation of the parties. The question of prior approval of location was never raised, either at the time or later.

11 Disputes arose between the parties about a number of matters, the most important of which was the payment of the amount of $150,000. Young J held that time for that payment was not of the essence and, further, that in any event, if a right of rescission had arisen, it had been waived by the respondent. However, on 12 December 2000 the respondent purported to rescind the contract, and ordered the appellants to leave the property, as they did. The appellantscommenced the present proceedings, which were determined first by Young J on 27 February 2001. The contract was completed on 24 March 2001. The first appellant's evidence was that, in early March 2001, he inspected the rice crop he had previously sown, and engaged someone to look after it. He visited the property twice a week until he had full access from 24 March 2001.

The proceedings before Campbell J

12 The claims for damages for breaches of the Fair Trading Act based on alleged pre-contractual misrepresentations are not relevant to this appeal.

13 Of indirect relevance is a claim for damages relating to the 2000–2001 rice crop. The claim that is presently in issue relates to losses in respect of the 2001–2002 rice crop, but in considering that claim it is relevant to note the claim in respect of the earlier crop.

14 There were no formal pleadings in the proceedings. They were commenced by Summons. Evidence was by way of affidavit, supplemented by some oral evidence. However, Points of Claim were filed, presumably pursuant to a direction, in July 2003, and Points of Defence (which amounted to nothing more than a general denial of each and every allegation including, for example, the allegation that a contract of sale had been entered into) were filed in August 2003. The Points of Claim, relevantly for...