Canberra Hire Pty Ltd v Koppers Wood Products Pty Ltd [2008] ACTSC 92 (8 September 2008)

Last Updated: 24 October 2008

CANBERRA HIRE PTY LTD v KOPPERS WOOD PRODUCTS PTY LTD

[2008] ACTSC 92 (8 September 2008)

EX TEMPORE JUDGMENT

No. SC 822 of 2007

Judge: Rares J

Supreme Court of the ACT

Date: 8 September 2008

IN THE SUPREME COURT OF THE )

) No. SCC 822 of 2007

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: CANBERRA HIRE PTY LTD

Plaintiff

AND: KOPPERS WOOD PRODUCTS PTY LTD

Defendant

ORDER

Judge: Rares J

Date: 8 September 2008

Place: Canberra

THE COURT ORDERS THAT:

1. Grants leave to the plaintiff to further amend its originating application in accordance with the draft being annexed to the affidavit of Gavin Scott Donald Stuart sworn 29 May 2008.
2. Orders the plaintiff to pay the defendant’s costs thrown away by reason of the amendment.
3. Orders the defendant to pay the plaintiff’s costs of the hearing today.
4. Orders that the costs in Orders 2 and 3 may be set off.

BY CONSENT, THE COURT ORDERS THAT:

5. The plaintiff file and serve its further amended originating application on or before 11 September 2008.
6. The defendant file and serve its defence and third party claim (in nature of a cross-claim) on or before 29 September 2008.
7. The defence to cross-claim is to be filed and served on or before 6 October 2008.
8. Categories of documents to be produced to be exchanged on or before 6 October 2008.
9. Documents to be produced within categories on or before 27 October 2008.
10. Affidavits in chief, including expert reports to be filed and served on or before 17 November 2008.
11. Any affidavits in reply to be filed and served on or before 1 December 2008.
12. Stand the matter over for directions at 9.30 am on 1 December 2008.
13. Grants the parties liberty to apply on 3 days’ notice, including in respect of any dispute on categories and subsequent timetable variation.
14. Matter be listed for hearing (estimate 3-4 days) on 3 February 2009.

THE COURT NOTES THAT:

15. The parties will engage in settlement negotiations and a possible mediation after close of proceedings.

1. The question raised in this application for amendment is whether a database could possibly fall within the meaning of the word “register” in a contract for the sale of land entered into on 8 August 2005 between the parties.

2. The plaintiff has sought to amend in these proceedings, which it commenced last year, to raise a new set of material facts in paragraphs 9A-9D of its proposed further amended originating application. It seeks relief claiming that, among other things, in the amendment, the defendant, Koppers Wood Products Pty Ltd, has not complied with its obligations under cl 29.3 of the contract.

The contractual context

3. The contract contained a number of special conditions, clauses 29 and 30 being of present relevance. The land had been used, apparently for a considerable period, by Koppers Wood to treat wood products for the purposes of preservation. This attracted a prima facie obligation for a site assessment under procedures regulated by the Environment Protection Authority in its administration of the Environment Protection Act 1997 (ACT).

4. In essence, cl 29 required Koppers Wood, as vendor, at its cost to remediate the property prior to completion to a particular standard, described in the contract as “HIL ‘F’ levels as per National Environmental Protection (Assessment of Site Contamination) Measure 1999”. It was then required to have that remediation work certified by an EPA-accredited third party auditor, or otherwise as might be required by any condition of approval in respect of the re-zoning application, which the purchaser (plaintiff), Canberra Hire Pty Ltd, was to make under cl 30.

5. Clause 29 went on to provide that remediation works were to include a number of items specified in cl 29.2. Next, cl 29.3 commenced by saying that “[w]ithout limiting clause 29.1” the remediation had to be carried out to a level required for either the removal of the land “... from any register of contaminated sites or similar register (for land used for General Industry ... purposes)”, or endorsement as being remediated to the HIL“F” level. “General Industry purposes” were defined as those in an identified Territory planning policy. And, prior to completion, Koppers Wood at its cost had to cause the “[l]and to be removed from any such register or endorsed as being remediated to HIL ‘F’ Level”. Koppers Wood then acknowledged that the land was not noted on any such register, at the date of the contract. And both parties agreed that they had to notify the other immediately, but not less (scil: more) than two business days, after receipt of the auditor’s certificate referred to in clause 29.1 if the land appeared on any such register or was endorsed as being remediated to HIL“F” level.

6. Koppers Wood was entitled to an extension of time to complete the contract. This was to enable it to have a reasonable time to effect “removal of notification of the [l]and from any such register” or the endorsement of the land as contemplated on such a register (cl 29.3).

7. Canberra Hire had a right of termination if it obtained a development consent for the land, but Koppers Wood failed to remediate it in accordance with its obligation under cl 29. If that occurred then Koppers Wood was obliged to indemnify Canberra Hire for its reasonable costs incurred directly in relation to its application for change of use and any betterment tax paid.

8. Next, cl 29.6 provided that Canberra Hire would indemnify Koppers Wood against all liabilities it incurred from any breach of an environmental law, the escape of any contaminant or hazardous substance into the environment or any other environmental matter, as defined, which related to the land on and from completion, including any requirement to remediate the land to a higher standard than that referred to in cl 29.1. That clause was not to merge on completion.

9. By cl 30, Koppers Wood consented to Canberra Hire applying for a change of use of the land to general industry (being the land use identified in cl 29.3). Within 21 days of the date of the contract, Canberra Hire had to lodge such an application for change of use and it covenanted that the application, among other things, would not, directly or indirectly, seek, suggest, represent, warrant or commit anyone to remediate the land to a level other than HIL“F” level.

The proposed amendment

10. The proposed amendment seeks to rely, first, on facts which are essentially not in dispute, namely that, at all relevant times including before the contract, the land was recorded on a database maintained by the Environment Protection Authority as affected by contamination. It was common ground that the land never was on the register of contaminated sites maintained under the Act.

11. Secondly, the amendment contends, which is in dispute, that the contaminated sites management database maintained by the Authority was within the meaning of the word “register” as used in the contract.

12. Thirdly, the amendment alleges that Koppers Wood had not complied with its obligations under cl 29.3 of the contract because the land remained noted on the database and had not been endorsed as remediated to the level specified in the contract.

13. And one further factual circumstances giving rise to the present litigation is that in about June 2007 an auditor certified that the remediation work complied with the particular standard required in cl 29.1 but the auditor qualified the certificate. The parties are at issue as to whether the qualification affected the ability of Koppers Wood to rely upon the auditor’s certificate as a compliance by it with its obligations under cl 29.1, or whether it was required to do further remediation work to obtain an unqualified, at least in that respect, certificate.

14. The matters pleaded in the proposed amendment are material facts. They are not, as appears to have been assumed in argument, causes of action. A pleading in the Judicature Act system must allege or plead material facts so as to allow the court to grant whatever relief might be appropriate once the facts have been found: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 at 577-578 [64] per Gaudron, McHugh, Gummow and Hayne JJ.

15. The present issue involves the construction of a contract. Contracts are not made in a vacuum and are now to be construed not in accordance with the subjective intentions of the parties but in the context in which a reasonable person in their position would have understood the words used in the contract, including any implications contained in those words, to have meant. The common intention of the parties is the product of the Court’s construction of their contract. That is ascertained by construing what each party, by their words and conduct, would have led a reasonable person in their position to have understood they had expressed in their agreement: see Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 178-179 [38]- [40] where Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ explained the principles upon which the court construes a contract.

16. I was informed during the course of argument that there will be some evidence in the present case as to the surrounding circumstances in which this contract was made. The contract must be construed as a whole. It is not a correct approach to construe parts of the contract divorced, first, from the rest of its provisions, and, secondly from the context of the objective matrix of facts in which the parties entered into the contract and the purpose and object of the transaction: Toll 219 CLR at 179 [40].

17. I am of opinion that I should reject Koppers Wood’s submission that no possible relevance to the proceedings can be demonstrated in the amendment. It argued that the amendment raised a cause of action which could not succeed. In my opinion, the question of what a “register” is for the purposes of cl 29.3 is not able to be answered on a summary judgment application or an application to amend pleadings simply by looking at the provisions of the legislation or policies issued by Environmental Protection Authority.

18. Clause 29.3 refers to a “register of contaminated sites or similar register” and then expressly states, in that connection: “for land used for General Industry”, an expression which is picked up in cl 30 relating to an application to change the use of the land.

19. Although I have not been referred to any relevant legislation, ordinarily planning authorities maintain registers of planning consents. Among other things, those consents generally operate in rem: cf: PE Bakery Pty Ltd v Yehuda (1988) 15 NSWLR 437 at 445D-E per Hope JA, Samuels and McHugh JJA agreeing. The registers enable persons dealing, or proposing in the future to deal, in the land to know what planning affectations there are on it.

20. In my opinion, it is arguable that the contaminated sites management database could be a “similar register (for land used for General Industry ... purposes)” or a “register of contaminated sites” within the meaning of cl 29.3. That is not to say that it will be found to be so at the hearing.

21. The question is whether the matter is fairly arguable. Queensland v JL Holdings Pty Limited [1997] HCA 1; (1997) 189 CLR 146 at 154-155 per Dawson, Gaudron and McHugh JJ. They said that, if a matter was fairly arguable, the party wishing to amend should be permitted to argue it, provided that any prejudice to the other party might be compensated by an order for costs. As I discussed in argument with the parties, one consequence of the database being held to be a register within the meaning of cl 29 of the contract may be that the audit report, as now qualified, or with the qualification later removed, may itself amount to an endorsement within the meaning of that clause so as to enable Koppers Wood to have satisfied, or not, depending on the ultimate facts, the obligations with which it must comply in cl 29.

22. Here, no relevant prejudice is suggested by Koppers Wood if the amendment were granted, other than the ordinary inconvenience of having to meet another argument which here is basically of a legal nature. It seems to me that the most convenient and practical course in the circumstances is to allow the matter to go to trial so that the trial judge would be able to assess, in the context of the evidence as a whole, how best to construe cl 29.3 and the rest of the contract.

23. For these reasons, I am of opinion the application to amend should be granted. Koppers Wood also argued that, if I were to grant the application, I should order that, in addition to the costs thrown away by reason of the amendment being paid by Canberra Hire, the costs of the motion seeking the amendment, including particulars and related correspondence, should only be Canberra Hire’s costs in the cause, or that there should be no order as to costs, or that costs should be reserved.

24. The general discretion to order costs on an amendment application is unconstrained. In my opinion, the amendment raises what is essentially a legal argument for which no relevant prejudice has been suggested.

25. The efficient conduct of this litigation would have been assisted by progressing it quickly to trial, since it is a vendor/purchaser suit involving a contract entered into some time ago, albeit that I was told the remediation work took two years or so to complete at least to the point of the qualified audit report.

26. In my opinion, the opposition to the amendment having been unsuccessful, it is appropriate in all the circumstances to order Koppers Wood to pay Canberra Hire’s costs of the application. Those costs may be set off against Koppers Wood’s costs thrown away by reason of the making of the amendment which Canberra Hire must pay.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Rares

Associate:

Date: 23 September 2008

Counsel for the Plaintiff: Mr R Newlinds SC, Mr R Arthur

Solicitor for the Plaintiff: Bartier Perry

Counsel for the Defendant: Mr G Burton SC, Mr R Clynes

Solicitor for the Defendant: Etienne Lawyers

Date of hearing: 8 September 2008

Date of judgment: 8 September 2008