Land and National Development Corporation P/L v Tatebrook P/L [1999] NSWSC 669 (6 July 1999)

Last Updated: 6 July 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Land & National Development Corporation P/L v Tatebrook P/L [1999] NSWSC 669

CURRENT JURISDICTION: Equity

FILE NUMBER(S): 1293/99

HEARING DATE{S): 24/05/99

JUDGMENT DATE: 06/07/1999

PARTIES:

Land & National Development Corporation Pty Limited (ACN 003 184 914) (P)

Tatebrook Pty Limited (ACN 051 906 926) (D)

JUDGMENT OF: Santow J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

R W White, SC (P)

M Leeming (D)

SOLICITORS:

Rod J Barnett & Assoc (by their City Agents: Turner Whelan) (P)

Mallesons Stephen Jaques (D)

CATCHWORDS:

CORPORATIONS -- Statutory Demand -- Fulfilment of conditions precedent affecting whether debt released -- Genuine dispute -- Waiver of fulfilment of condition or conventional estoppel precludes reliance on non-fulfilment -- Requirements for waiver -- Need for unambiguity and precision as to shared assumption for conventional estoppel -- waiver clauses requiring writing distinguished from variation clauses -- Extent to which a question of law can be resolved when contesting a statutory demand.

ACTS CITED:

Corporations Law s459G(1)

DECISION:

Appeal dismissed.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

IN EQUITY

SANTOW J

No. 1293/99

LAND & NATIONAL DEVELOPMENT CORPORATION PTY LIMITED (ACN 003 184 914)

Plaintiff

TATEBROOK PTY LIMITED (ACN 051 906 926)

Defendant

JUDGMENT

6 July 1999

INTRODUCTION

1 This is an appeal by the Plaintiff from the decision of Master McLaughlin, delivered on 22 April 1999, that the Plaintiff's Summons be dismissed. By that Summons, the Plaintiff, Land & National Development Corporation Pty Ltd ("Land") sought an order that the Statutory Demand dated 19 January 1999 served upon it by Tatebrook Pty Limited ("Tatebrook") the Defendant and Respondent in these proceedings, be set aside, pursuant to the provisions of s459G(1) of the Corporations Law. This is on the basis that there is a genuine dispute between Land and its claimant creditor, Tatebrook, about the existence of the relevant debt to which the Demand relates. No issue arises as to offsetting claim. Nor did the Plaintiff either before the Master or before me, press any case under s459J of the Corporations Law based on any defect in the Demand.

2 Put generally, the issue before the Master was whether, in the events that had happened, a release of the relevant debt by Tatebrook had taken effect. That in turn depended upon whether a condition of the release of that debt, namely completion of an associated agreement, referred to as "the Lidoform Share Sale Agreement", remained unfulfilled, because either of two of the conditions precedent to the latter's completion had not been fulfilled.

3 The Master concluded that neither condition had been fulfilled nor had either condition been waived, with the result that there was no genuine dispute as to the liability of the Plaintiff to pay the amount in the Statutory Demand. As is common ground, both conditions must be satisfied, before in consequence the release can take effect; if only one is satisfied (or waived or the subject of estoppel) the release fails of effect and the debt is due and payable rather than released.

4 The two relevant conditions precedent are contained in Cl 13 of a Deed of Acknowledgment and consisted of:

"(a) completion of the First Stage by the First Stage Completion Date, including the release of the LAND Debt to Viebell;"

(as defined in the relevant documents) and

"(e) compromise of the Tax Claims in an amount and on terms satisfactory to Contractors by the Second Stage Completion Date ..."

(also defined in the relevant documents).

5 It was not disputed that

(a) Land was very substantially indebted to Tatebrook, and

(b) Although a conditional release of that indebtedness had been given by Tatebrook, two of the conditions precedent had not in actuality been satisfied.

6 Land contends that the Master was in error in failing to address himself to the proper question. According to Land, the Master addressed himself to the question whether the Plaintiff's claim was correct that fulfilment of these conditions had been waived or were the subject of a conventional estoppel precluding reliance on either condition. Whereas the question he should have addressed was whether the Plaintiff's contentions to that effect raised a "plausible contention requiring investigation", or a serious question to be tried; Eyota Pty Limited v Hanave Pty Ltd (1994) 12 ACSR 785 at 787; Jarpab Pty Limited v Winter (1994) 14 ACSR 255 at 261.

7 I observe that what the Master did in relation to condition (a) was to conclude in terms suggesting no room for genuine dispute. Thus he simply concluded that, "there was no waiver" (para 27 of his judgment). He did not address conventional estoppel but whether that was argued independently of waiver is open to question. In any event waiver remains the principal basis of the Plaintiff's case. In relation to condition (e), the Master concluded that he was "not satisfied" that the Plaintiff has established that the relevant conduct of the Defendant constituted a waiver of the requirement contained in condition (e) (para 39 of his judgment). In para 41 of the judgment the Master says "it follows that there is, and can be, no genuine dispute as to the liability of the Plaintiff to pay the amount in the statutory demand". It can be seen in relation to each condition but relevantly here condition (e). that what the Master needed to be satisfied about was whether there was a genuine dispute about whether the debt was payable. But this in turn necessarily directs attention to the genuineness of the grounds for denying the existence of the debt and thus to the genuineness of the grounds for disputing fulfilment of the conditions for the release of the debt. This is not in the sense of reaching any ultimate determination of the merits, but rather to see if the claim bears the perception of genuineness. What he therefore needed to be satisfied about in relation to both conditions was whether the Plaintiff had established there was a plausible contention requiring further investigation concerning waiver in either case, as that in turn ultimately determined whether the debt was released.

8 Finally before me, but not before the Master, the Plaintiff initially pressed the argument that whether or not there has been a waiver or estoppel, whilst fulfilment of the two conditions still remains a possibility, there can be no debt presently due and payable.

9 To this the Defendant had a relatively straightforward answer, which the Plaintiff in the end did not seriously contest. That answer involves these steps. The non-fulfilment of either condition precedent to completion of the Lidoform Share Sale Agreement can be taken to give rise to a right of rescission, but it does not follow that the debt under that share sale agreement was never payable. The parties could agree, as they did in the Tatebrook Deed of Release, that if a certain event (completion of the Lidoform Share Sale Agreement) were to take place in the future, the debt would then be released. If either of the conditions upon which that event depended had not been fulfilled by the last date allowed for fulfilment, namely 31 October 1997 in relation to condition (a) and 30 June 1998 in relation to condition (e), then the monies must still remain due and owing, these conditions being conditions of the release. The condition (a) had not been actually fulfilled by 31 October 1997 concededly (nor indeed by 30 June 1998), leaving only the question of waiver (or conventional estoppel). The loan and shareholder's agreement entered into between the parties on 13 January 1995 clearly enough provided for the loan constituting the debt by the Defendant to the Plaintiff to be repaid by 18 November 1997, save so far as the Tatebrook Deed of Release provided otherwise.

10 Thus the real issue between the parties relates to whether there was a plausible contention requiring further investigation in relation to whether both the relevant conditions precedent had been either waived or were the subject of conventional estoppel, thereby precluding reliance upon them. If the answer is "no", in relation to either condition, then there can be no release and therefore no genuine dispute as to the relevant debt being due and payable.

ELABORATION OF FACTUAL BACKGROUND

11 The relevant Statutory Demand seeks payment by the Plaintiff to the Defendant in the amount of $1,739,758.56, being the amount of the debt described in the schedule to that notice. The schedule contains the following description of the amount of that debt: "The amount outstanding as at 17 September 1997 under a loan and shareholder's agreement between the company, the creditor and others, dated 13 January 1995, being $2,339,758.56 less an amount of $600,000 of that debt, which has been assigned by the creditor to Idogear Pty Ltd ACN 008 592 434."

12 It is convenient that I now set out below the Statement of Agreed Facts as common ground between the parties, together with what are agreed to be the essential points at issue (para (4)).

(1) The Plaintiff ("Land") acknowledged a loan of $3,141,704 to it from the Defendant ("Tatebrook") in a Deed described as a "Loan and Shareholders Agreement" entered into on 13 January 1995 (Exhibit AWB1). The loan was to be repaid by 18 November 1997.

(2) "On and from the date of (but subject to) completion of the Lidoform Share Sale Agreement", Tatebrook released Land from its obligation to repay the then outstanding balance of the loan ($2,339,758.86). This release was contained in clause 3 of a deed described as the "Tatebrook Deed of Release" entered into on 17 September 1997 (Exhibit AWB2).

(3) Completion of the Lidoform Share Sale Agreement was conditional on and subject to the satisfaction of each of the 6 conditions contained in clause 13.3 of a Deed of Acknowledgment entered into on 17 September 1997 (Exhibit AWB5).

It is common ground that the relevant two conditions were conditions precedent to completion of the Lidoform Share Sale Agreement and had not been satisfied in terms of the relevant deed.

(4) The only basis on which it is said that there is a genuine dispute between the parties in relation to the debt the subject of the statutory demand is in relation to the effectiveness of the release. In these proceedings, Tatebrook contends that conditions (a) and (e) of the 6 conditions in the Deed of Acknowledgment have been neither satisfied nor waived, with the consequence that Land's debt to Tatebrook was not released and remains payable as alleged in the statutory demand. Land contends that conditions (a) and (e) have been waived or that Tatebrook is otherwise unable to rely upon any non-fulfilment of conditions by reason of conventional estoppel and the debt has been accordingly released.

13 Clause 3 of the Tatebrook Deed of Release provided as follows:

"On and from the date of, but subject to completion of, the Lidoform share sale agreement, Tatebrook releases LAND from its obligations to pay to Tatebrook the amount in item 2 of the schedule (RELEASE)."

14 On 17 September 1997 the parties and others entered into a deed described as a Deed of Acknowledgment. This contained the relevant conditions in these terms:

"Notwithstanding any provision of the Lidoform share sale agreement to the contrary, completion of the Lidoform share sale agreement is conditional on and subject to

(a) completion of the First Stage by the First Stage Completion Date, including the release of the LAND Debt to Viebell

......

(e) compromise the Tax Claims in an amount and on terms satisfactory to Contractors by the Second Stage Completion Date;

......"

15 In clause 1.1, "First Stage" means "the matters and transactions contemplated by this deed to occur on or before the First Stage Completion Date". "First Stage Completion Date" means "31 October 1997 in respect of which time is of the essence"; see clause 1.1.

16 It was not disputed that although the releases referred to were only part of the LAND Debt to Tatebrook, it was clearly envisaged by other of the interrelated documents executed on the same day that the release, on completion of the Lidoform Share Sale Agreement, would be of the entirety of the debt. Clause 3(b) of the Lidoform Share Sale Agreement provided that the consideration payable for each Share was to include: "the release of the LAND Debt to Tatebrook and all securities held for it from LAND and any guarantee held for it from Alexander William Brinkmeyer."

17 A similar statement appears in clause 13.2 of the Deed of Acknowledgment (AWB5) which went on to provide (in clause 13.4) that:

"on and by virtue of completion of the Lidoform Share Sale Agreement ...... Tatebrook ...... release(s) the Land Group from all debts ...... at the date of completion of the Lidoform Share Sale Agreement ......".

(With certain debts excluded, not material here.)

18 It was thus admitted before Master McLaughlin by the Defendant that on and subject to completion of the Lidoform Share Sale Agreement the Defendant had agreed to release the Plaintiff from the then outstanding balance of the loan, namely $2,339,758.86.

19 Completion of the Lidoform Share Sale Agreement was required to take place on the day on which the last of the conditions contained in clause 13 of the Deed of Acknowledgment was satisfied; see clause 4 of the Lidoform Share Sale Agreement (in fact 30 June 1998). On completion, certain matters were required to be attended to; clause 5 of the Lidoform Share Sale Agreement. It is as I have said common ground that there has in actuality been no completion. What divides the parties is whether the Defendant is nonetheless entitled to rely upon the non-fulfilment of the two conditions precedent which I have earlier quoted, being those contained in clauses 13.3(a) and 13.3(e) of the Deed of Acknowledgment, or is precluded from doing so by waiver or conventional estoppel.

20 To complete the picture of the relevant provisions of the Deed of Acknowledgment, clauses 8.1 required that by 31 October 1997 (the First Stage Completion Date) what are described as "the Gordon Shops" must be the subject of a completed sale (clause 8.1) failing which Land must procure re-financing for an amount not exceeding $600,000 by that date (clause 8.2).

21 It was common ground before Master McLaughlin that the position in relation to the Gordon Shops was as stated in a document called "Summary of Current Status" ("the Summary") attached to a letter from Woden Contractors Pty Ltd to a member of companies including the Plaintiff and marked for the attention of Alex Brinkmeyer, a principal of the Plaintiff company who has sworn its principal affidavits. This letter is dated 18 November 1988 ("AWB10"). From the searches contained in AWB16 and 17, Woden Contractors is closely associated with the Defendant Tatebrook Pty Limited. Thus the letter's signatory Doug Fryer is a common director also of Tatebrook. Also Woden Contractors' ultimate holding company is Woden Constructions Pty Limited which latter company holds 4,999 shares of Tatebrook out of 6,000, so is its holding company. Accepting this document as admissible as a business record, according to the Summary, the Gordon Shops were sold on the date after the First Stage Completion Date, namely 3 December 1997; see clause 1.1 and note also clauses 1.2 and 1.3. I am satisfied that the Summary constitutes, prima facie, representations made on behalf of Tatebrook. But it does not automatically follow that Tatebrook has thereby itself waived (in writing) a right under the Lidoform Share Sale Agreement, within the strict requirements of clause 12.4 of that Agreement requiring written waiver by a party; see para 50 of this judgment.

22 However, the sale of the Gordon Shops could only be completed if what was called the Carwoola Street Sale Agreement was completed at the same time. Clause 8.3 of the Deed of Acknowledgment provided:

"8.3 The sale contemplated by clause 8.1 or the re-financing contemplated by clause 8.2 may only be completed if the Carwoola Street Sale Agreement is simultaneously completed."

23 The Summary acknowledged (in item 1.2) that there had been a simultaneous completion of the Carwoola Street Sale Agreement.

24 The Carwoola Street Sale Agreement was defined (in clause 1.1 of the Deed of Acknowledgment) by reference to a document referred to as the "Idogear Deed of Assignment" ("the Idogear Deed"), being Annexure A to the affidavit of Mr Brinkmeyer of 13 April 1999 and page 58 of Exhibit AWB8).

25 Referring to the Idogear Deed, the Carwoola Street Sale Agreement is defined in Recital D thereof. It was an agreement for the sale of land made between Idogear Pty Limited as vendor and the Defendant as purchaser. The objective of the Deed was to make provision for the payment by the Defendant of the purchase price (Recital E). The provision which was made in relation to the purchase price appears in clause 4, which provided:

"4. Idogear, LAND, AWB and JB acknowledge that, notwithstanding any other provision of the Carwoola Street Sale Agreement, the Relevant Amount is payable only by assignment of the Relevant Amount according to Clause 3 (Assignment). If the assignment is void, voidable, unenforceable or ineffective in whole or in part for any reasons (including, without limitation under any law relating to insolvency or the protection of creditors) (Invalidity):

a) Idogear, LAND, AWB and JB acknowledge that no further or other amount is payable by Tatebrook to Idogear on any account whatsoever in respect of the Unpaid Purchase Price as a result of or in connection with the Invalidity; and

b) Idogear releases Tatebrook from all actions, claims, suits, demands, claims for costs and expenses, and any other proceeding whatever arising out of or in any way connected with the Unpaid Purchase Price or the Invalidity."

26 Thus, clause 4 provided that the unpaid purchase price could be satisfied simply by the assignment by the Defendant to Idogear Pty Limited of a debt.

27 Clause 3.1 of the Idogear Deed provided that:

"3.1 On the First Stage completion Date but subject to the Conditions Precedent, in full and final satisfaction of its obligation to pay the Unpaid Purchase Price, Tatebrook assigns to Idogear all of its right, title and interest in so much of the LAND Debt to Tatebrook as set out in Item 2 of the Schedule (Relevant Amount)."

28 Item 2 of the above referred to schedule specified an amount of $600,000 of the LAND Debt to Tatebrook of $2,339,758.56. The expression "conditions precedent" was defined in clause 1 of the Idogear Deed to mean "completion of the sale or re-financing of Gordon Shops according to Clause 8 of the Deed of Acknowledgment".

29 Thus it can be accepted that the effect of the Idogear Deed was to enable completion of the Carwoola Street Sale Agreement by the assignment on the part of the Defendant to Idogear Pty Limited of $600,000 of the LAND Debt to Tatebrook, subject to there being completion of a sale or re-financing of the Gordon Shops "according to Clause 8 of the Deed of Acknowledgment".

30 The Summary states that "the Carwoola Street Sale Agreement was completed simultaneously with the sale of the Gordon shops" (item 1.2). In relation to the Idogear Deed, the Summary states (in item 14):

"14. The conditions precedent (as defined in the Idogear Deed of Assignment) have been satisfied and accordingly on the First Stage Completion Date Tatebrook assigned to Idogear all its right, title and interest in so much of the LAND Debt to Tatebrook as is set out in Item 2 of the Schedule to the Idogear Deed of Assignment (being $600,000). Otherwise the Idogear Deed of Assignment continues in full force and effect."

31 In relation to the Summary, the Defendant places particular emphasis on the fact that it was enclosed with the letter from Woden Contractors Pty Limited dated 18 November 1998 (AWB10) earlier referred to and that this letter contained the significant final paragraph precluding any intention to waive, which I quote below. I do so, first quoting the earlier two paragraphs to provide context:

"We note that your views differ from ours as to the effect of the Deed of Acknowledgment and the status of transactions contemplated by it. It may be that our further discussions will resolve these issues. Nevertheless, we think it is important that you understand the position of Woden Contractors Pty Limited and Woden Constructions Pty Limited (Wodens) in relation to the Deed of Acknowledgment and the transactions contemplated by it.

We summarise the current status of transactions contemplated by the Deed of Acknowledgment and associated documents, (using the headings and defined terms used in the Deed of Acknowledgment for convenience), on the attachment to this letter.

This letter and the attachment do not waive, limit or vary any rights Wodens may have under the Deed of Acknowledgment or any other document referred to in, or contemplated by it."

THE CONTENTIONS OF THE PARTIES

The Plaintiff's Case

32 By reference to the foregoing facts, the relevant agreements, and the Summary the Plaintiff contends that the Carwoola Street Sale Agreement and Idogear Deed of Assignment must be treated as if completed as at the First Stage Completion Date. This, it is said, necessarily presupposes that those transactions could only have been completed by that date if the contractual necessity for the Gordon shops to be the subject of a completed sale or re-financing by the First Stage Completion Date were waived. The argument is said to be supported by the fact that the transactions the subject of the documents entered into on 17 September 1997 were interconnected.

33 If then that condition were waived, the Plaintiff contends that it was not open to the Defendant to selectively waive nor does the evidence suggest any selective waiver. Thus the Plaintiff contends that there is at least a plausible contention requiring further investigation that the consequence of the conduct of the Defendant to which reference has been made was to waive the need to satisfy condition precedent 13.3(a) of the Deed of Acknowledgment or, at least, to waive the requirement for it to be fulfilled by the First Stage Completion Date.

34 The Plaintiff further contends that Master McLaughlin incorrectly perceived the Plaintiff to be asserting that the waiver was constituted by the Summary. The conduct grounding waiver relied upon by the Plaintiff is said to be antecedent to the Summary being produced. It consists of (late) completion of the Carwoola Street Sale Agreement and the completion of the Idogear Deed, that is after the First Stage Completion Date in fact.

35 The Plaintiff however also contends that the effect of the Summary, read with the related documents, is that the conditions precedent must be taken to have been satisfied; see clause 14 quoted above. It adds that the purported exclusion of waiver in the last paragraph of the accompanying letter does not alter that result.

36 It is convenient that I deal with the arguments pertaining to this first condition (a), before turning to condition (e), though it should be noted that non-fulfilment of either condition would be fatal to the Plaintiff's case.

37 I first set out more fully the detailed steps, cross-referenced to relevant clauses, in the Plaintiff's argument for waiver or for conventional estoppel.

(i) Concededly the Gordon shops were actually sold after the First Stage Completion Date of 31 October 1997, namely on 3 December 1997; see clause 1.1 of the Summary.

(ii) That sale, acknowledged then to have taken place in clause 1.1 of the Summary could only be completed if the Carwoola Street Sale Agreement were simultaneously completed; see clause 8.3 of the Deed of Acknowledgment. According to clause 1.2 of the Summary, the Carwoola Street Sale Agreement was completed simultaneously with the sale of the Gordon shops.

(iii) To complete the Carwoola Street Sale Agreement, the purchase money had to be paid pursuant to the Idogear Deed, such payment being effected by assignment of "the Relevant Amount", viz a debt of $600,000; see Recital C and clause 4 of the Idogear Deed.

(iv) That assignment of the debt of $600,000 must be taken to have occurred, by force of clause 3.1 of the Idogear Deed, though the assignment there expressed is "subject to the Conditions Precedent". See clause 1.2 of the Summary reinforced by clause 14 where it is said

"... Tatebrook assigned to Idogear all its right, title and interest in so much of the LAND Debt to Tatebrook as set out in item 2 of the schedule to the Idogear Deed of Assignment (being $600,000)."

(v) The Conditions Precedent referred to above are defined by clause 1 of the Idogear Deed and "means completion of the sale or re-financing of the Gordon shops according to clause 8 of the Deed of Acknowledgment". That in turn meant that the Gordon shops sale had to be completed by 31 October 1997 simultaneously with completion of the Carwoola Street Sale.

(vi) The end result of the foregoing is either

(a) that the fact or conduct of the Defendant in actually completing late the sale of the Gordon shops and the Carwoola Street Sale Agreement (as recorded in the Summary) sufficiently substantiates a plausible contention requiring further investigation that completion by 31 October 1997 (the First Stage Completion Date required by the Lidoform Share Sale Agreement incorporating clause 13 of the Deed of Acknowledgment) was either waived or the parties acted in accordance with a shared assumption giving rise to conventional estoppel that completion was effected by that time, or

(b) that in any event, the Summary amounts to an express waiver or sufficiently substantiates a conventional estoppel.

The Defendant's Response

38 The Defendant deals first with the argument that the Master incorrectly perceived the Plaintiff to be asserting that the waiver was constituted by the Summary. The Plaintiff's assertion is that the conduct relied upon as giving rise to the waiver or conventional estoppel, was antecedent to the Summary being produced, and consisted of actual late completion of the Carwoola Street Sale Agreement and completion of the Idogear Deed. But the fundamental problem with that contention is that the only evidence put forward by the Plaintiff that the assignment of debt pursuant to the Idogear Deed of Assignment occurred on 31 October 1997 -- or as I would put it, must be taken then to have occurred by reason of waiver or conventional estoppel -- is the letter dated 18 November 1998 read with clause 14 of the Summary. As independently thereof there is no factual assertion by the Plaintiff that the necessary assignment of the debt occurred pursuant to the Idogear Deed of Assignment on 31 October 1997 then, contrary to the Plaintiff's assertion, the Plaintiff could not rely on the anterior conduct but only on the letter and Summary and its contrariety with what in fact occurred.

39 I turn therefore to the effect of the letter dated 18 November 1998 which enclosed the Summary, against the background of the documentation earlier referred to. It must be remembered, that the onus on the Plaintiff remains one of establishing "sufficient prima facie plausibility to merit further investigation as to [its] truth, or whether it constitutes "a patently feeble legal argument or an assertion of facts unsupported by evidence", as cited by McLelland CJ in Eq in Eyota Pty Limited (supra) at 787. Is it a patently feeble argument to contend that, in the context of what in fact occurred, this Summary gives rise to waiver, or substantiates a conventional estoppel precluding reliance on non-fulfilment of the relevant conditions? By conventional estoppel is meant a shared assumption from which it would be unconscionable to permit departure. In Gillford Pty Ltd v Burdon Pty Ltd (FCA, 1 December 1995, unreported) Hill J at para 36-38, Whitlam J agreeing suggested that such a legal question can on occasion be determined. Thus accepting the interlocutory character of such determinations nonetheless where the position of any party is obviously untenable, to the point where summary judgment (or a strike out application) could not be resisted, the Court may dispose of the point:

"37. An analogy can be drawn from cases where summary judgment is resisted. The general rule is that a party is not to be denied a trial unless the absence of a cause of action or defence is clearly demonstrated. The question is often said to be whether a defence is so obviously untenable that it can not possibly succeed: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, see at 129, Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91.

38. If the case is one which can be disposed of by determining a short question of law, or perhaps a question of construction of an instrument, this can be done. Where facts may be in dispute, however, it would ordinarily be inappropriate to proceed to determine the merits. If the case is one where there is a "plausible contention requiring investigation" the case will ordinarily be one where there is a "genuine dispute": Eyota Pty Ltd v Havane Pty Ltd (1994) 12 ACSR 785 per McLelland CJ in Eq, Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379 at 384."

40 The distinct, intentional and knowing act required to constitute waiver is brought out by the cases. In Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64; (1920) 28 CLR 305 at 326, Isaacs J said:

"A waiver must be an intentional act with knowledge. First, some distinct act ought to be done to constitute a waiver; next, it must be intentional, that is, such as either expressly or by imputation of law indicates an intention to treat the matter as if the condition did not exist or as if the forfeiture or breach of condition had not occurred; and, lastly, it must be with knowledge."

That passage was approved by Gibbs ACJ in Deaves v CML Fire and General Insurance Co Ltd [1979] HCA 12; (1979) 143 CLR 24 at 42. In Commonwealth v Verwayen (1990) 170 CLR 394, Mason CJ said that "waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right" (at 406). Toohey J said that "waiver ... may be found in the deliberate act of a defendant not to rely upon a defence available to him" (at 473). See also per Brennan J (at 427), Dawson J (at 451), Gaudron J (at 485). In Presmist Pty Ltd v Turner Corporation Pty Ltd (1992) 30 NSWLR 478 at 486, Cole J held that there was no waiver of a contractual provision because there was no "specific, conscious, demonstrated surrender of the right conferred by cl 42 to cancel the contract".

41 Often the construction of a document or the explanation of conduct said to constitute such an express or implied waiver, or to substantiate a conventional estoppel, can give rise to a degree of doubt as to its having that consequence. In those cases, it would be inappropriate for the present equivalent of interlocutory proceedings to attempt any final conclusion resolving that doubt, certainly in the case where the full extent of that evidence is unlikely to be forthcoming before the substantive trial. Essentially, the Court has to decide whether the only possible conclusion in the circumstances is that contended for by the party, here the Defendant, whose statutory demand is the subject of a claimed genuine dispute. It is not enough, in other words, for the Defendant merely to have the better of the argument at this point unless the balance in favour of the Defendant could not be expected to be affected by further possible evidence as might substantiate a different construction.

42 The present case is one where the proposition of waiver or conventional estoppel is based on the letter and Summary, as applied to the actual facts. As so advanced by the Plaintiff, I am satisfied that the argument for waiver fails to rise even to the modest level of a plausible contention requiring further investigation, when regard is had to those documents themselves in their context. The starting point is the covering letter of 18 November 1998. It can be taken that Woden Contractors Pty Limited, the company whose director wrote the letter, is closely associated with the Defendant. That letter states, as the Master has properly emphasised, that "this letter and the attachment do not waive, limit or vary any rights Wodens may have under the Deed of Acknowledgment or any other document referred to in, or contemplated by it".

43 It was acknowledged by the Plaintiff that the company search earlier referred to of both the Defendant and of Woden Contractors Pty Limited (earlier included under the expression "Wodens" in the second paragraph of the letter) disclosed that they shared a common director and there was no suggestion that Wodens was not here speaking for the Defendant as well. As I have earlier pointed out, Mr Fryer the director who signed the letter is also a director of Tatebrook, the Defendant, and there is no issue taken as to the share ownership in Tatebrook ultimately residing in the Woden group. Thus the letter, including the disclaimer quoted as well as the Summary which formed an attachment, can be taken to embrace Tatebrook.

44 The actual Summary apart from recording the actual date that the Gordon shops were sold and the Carwoola Street Sale Agreement was completed as being 3 December 1997, contains the important provisions of clause 4, not referred to in the Plaintiff's argument at all:

"4.1 LAND AWB and JB entered into the Lidoform Share Sale Agreement as vendors in favour of Contractors or its nominee as purchaser on 17 September 1997. In relation to that agreement

(a) Conditions Precedent 13.3(a), (c), (e) and (f) of the Deed of Acknowledgment have not been satisfied;

(b) The Conditions Precedent to completion of the Lidoform Share Sale Agreement set out in clause 13.3(a), (c) and (e) of the Deed of Acknowledgment can no longer be satisfied as timing requirements relating to those Conditions Precedent are not capable of being satisfied; and

(c) The release in clause 13.4 of the Deed of Acknowledgment has not taken effect."

[my emphasis]

45 There could hardly be a clearer or more emphatic statement that the relevant condition precedent not only has not been satisfied but can no longer be satisfied with the consequence that the release has not taken effect and cannot now take effect.

46 But then finally one comes to clause 14 which, for convenience, I quote again:

"The Conditions Precedent (as defined in the Idogear Deed of Assignment) have been satisfied and accordingly on the First Stage Completion Date, Tatebrook assigned to Idogear all its right, title and interest in so much of the LAND Debt to Tatebrook as is set out in item 2 of the schedule to the Idogear Deed of Assignment (being $600,000). Otherwise the Idogear Deed of Assignment continues in full force and effect."

47 Significantly, the Conditions Precedent are referred to as being "as defined in the Idogear Deed of Assignment". In the Idogear Deed of Assignment, Conditions Precedent means "completion of the sale or re-financing of the Gordon shops according to clause 8 of the Deed of Acknowledgment" -- with clause 8 in turn picking up the sale of the Gordon shops by the First Stage Completion Date, with that sale only being able to be completed if simultaneously the Carwoola Street Sale Agreement is completed.

48 Thus clause 14 if it is to be reconciled with clause 4 treats the Conditions Precedent as fulfilled only for the purposes of there being an effective assignment of the $600,000 LAND Debt to Tatebrook, but with the very clear and distinct express provision in clause 4 that the actual Conditions Precedent in clause 13 of the Deed of Acknowledgment not only have not been satisfied but can no longer be satisfied, with the consequence that the release in clause 13.4 has not taken effect.

49 Such a reconciliation avoids clause 14 being in direct contradiction to so clearly stated an express provision as clause 4, dealing as it does with the very issue of fulfilment of the relevant Condition Precedent. But whatever be the meaning of clause 14, the letter of 18 November 1998 in its concluding paragraph in any event dispels any notion that clause 14 was intended to constitute a waiver. The letter (last para) affirms the very opposite. The parties quite clearly are not behaving as if their rights were varied or waived in treating the condition in clause 13.3(a) of the Deed of Acknowledgment as having been satisfied, when first the reality was that it had not and second, the letter disclaims any such intention. By the same reasoning, any shared assumption to the effect that condition (a) was fulfilled is clearly negated.

50 The Defendant finds further support for this conclusion in clause 12 of the Lidoform Share Sale Agreement in requiring a written waiver by the party said to have waived. Thus clause 12.1 headed `Waiver and Variation" provides

"12.1 A provision of or a right created under this agreement may not be:

(a) waived except in writing signed by the party signing the waiver; or

(b) varied except in writing signed by the parties."

Then under clause 12.4 it is stated:

"12.4 A provision of or a right created under this agreement may not be:

(a) waived except in writing signed by the party granting the waiver; or

(b) varied except in writing signed by the parties."

51 To this the Plaintiff responds that there is no corresponding provision in the Deed of Acknowledgment, and the Deed of Acknowledgment is the source of the relevant conditions. The only provision in the Deed of Acknowledgment is headed "Waiver" and provides as follows:

"25. All conditions precedent in this deed are included for the benefit of Contractors and Constructions and may be waived by those parties (but not by any other party) in which case the condition precedent waived will be taken to have been satisfied."

52 One may take Woden Contractors and Woden Constructions because of their close association with Tatebrook, as capable of representing Tatebrook in the letter and Summary. But when it comes to a formal waiver this must, if under the Lidoform Share Sale Agreement, be signed in writing by the actual party, here Tatebrook. And the right to require fulfilment of the Condition Precedent arises under the Lidoform Share Sale Agreement, notwithstanding that the Conditions Precedent are incorporated by reference to another document, namely the Deed of Acknowledgment. That is borne out by the reasoning elaborated below.

53 Thus first to put matters in context, the basic transaction as evidenced by this complex of agreements was the sale of shares in Lidoform under the Lidoform Share Sale Agreement, in consideration of (relevantly) a release of debt owed by Land to Tatebrook. The fundamental transaction document was the Lidoform Share Sale Agreement, with clauses 2 and 3 of that document describing that basic transaction. Clause 4 then provides that, "completion is conditional on satisfaction of the Conditions Precedent on or before the Second Stage Completion Date."

54 Accordingly, when the basic transactional document provides that completion is conditional upon the satisfaction of Conditions Precedent and the right asserted is the release which is obtained only on completion, that is properly described as "a right created under this agreement" within the meaning of clauses 12.1 and 12.4 of the Lidoform Share Sale Agreement.

55 There is no reason to doubt the efficacy of clauses which define the circumstances in which a waiver is to be taken to have been effected; in particular when they require for that purpose that the waiver be in writing signed by the party actually granting the waiver, as the Lidoform Share Sale Agreement expressly provides. The Plaintiffs attempt to introduce the analogy of cases requiring that all variations are to be in writing (see Halsbury Laws of Australia Vol. 6 "Contract" para 110-697) is not to the point. Thus, as the Defendant said in its written submissions of 27 May 1999:

"However, a clause which provides that any waiver is to be in writing is of different effect. Such a clause consensually restricts or qualifies the unilateral conduct of one party which would otherwise amount to waiver by that party, and is effective in its terms. An illustration is Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689, in which a contractual obligation to demand payment was expressed to be dependent upon an event of default occurring in respect of which "Tricontinental has not waived that particular Event of Default by notice in writing" (see clauses 2.2.1(a) and (b), reproduced at 711). Samuels JA, one of the majority judges of appeal, was able to "put the question of waiver to one side as there was no written notice to Selkis to this effect" (at 702A). (Such a clause does not preclude an effective oral election between two inconsistent choices: R v Paulson [1921] 1 AC 271 at 282-283; Canberra Advance Bank Ltd v Benny (1992) 38 FCR 427 at 440. Although an election is sometimes loosely called waiver, the species of waiver of present relevance is the unilateral conduct of a party to forego a right which is to its exclusive benefit. There having been no agreed variation of the contract, no waiver of this type is available absent writing.)"

56 The Master in his judgment (para 28) correctly states that what is absolutely clear about waiver is that it is "an intentional act, and cannot arise in the face of express opposition by the alleged waiving party to the effecting of such a waiver"; see authorities in para 40 above. The letter of 18 November 1998 is thus the clearest preclusion of any intention to waive. Conventional estoppel likewise requires the alleged common assumption to be unambiguously and precisely established whether it be by representation or implicitly from conduct; Grundt v Great Boulder Gold Mines Pty Ltd [1937] HCA 58; (1937) 59 CLR 641. Here the letter and Summary preclude any such unambiguously established assumption.

CONCLUSION

57 I concur with the Master's conclusion that the first Condition Precedent contained in clause 13.3(a) was not fulfilled, with the consequence that the Deed of Release could not take effect. The legal argument is "patently feeble" that waiver took place or that a conventional estoppel can be found, which precludes reliance on condition (a). There is no plausible contention to the contrary requiring further investigation. Though not put precisely in those terms, the Master's decision was clearly enough to that effect. I am satisfied he had proper grounds so to conclude. That conclusion of itself is sufficient to dispose of the present proceedings, though I should also refer briefly to the condition contained in clause 13.3(e).

58 It is common ground that the "Tax Claims" have not been compromised at all, let alone to the satisfaction of the contractors. It is also common ground that the Second Stage Completion Date has long since past. The Plaintiff contends that notwithstanding this, condition (e) either ceased to be operative or, if it were operative, compliance with it was waived. The basis of that submission is that the Defendant failed to use reasonable endeavours to achieve the compromise with the Australian Tax Office. This is based on there being an implied obligation on the part of Woden Contractors to use reasonable endeavours to conclude negotiations with the ATO and that, where Woden Contractors failed to do so, its affiliated company Tatebrook cannot be permitted to take advantage of the wrong committed by Woden Contractors; see TCN Channel 9 v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 at 147; Suttor v Gundowda Pty Limited [1950] HCA 35; (1950) 81 CLR 418 at 441. That proposition can be accepted.

59 The Plaintiff then relies upon the fact that the tax claim was large and the two offers put to the ATO were a payment of first $100,000 and then $200,000, while the ATO countered with a proposal of $1,655,847.10. The evidence is thus that there was a very great gulf between taxpayer and the ATO. There would still however be difficulties in Land establishing that Woden Contractors did not use reasonable endeavours. There is also the further question as to whether the doctrine of not taking advantage of one's own wrong applies where the wrong is committed by an affiliate. However, now to attempt to resolve such an issue of whether all reasonable endeavours were carried out would be to do so where further evidence is likely to affect the result. That evidence crucially needs to deal with the relative strength of the tax commissioner's case, and there was no evidence from either party on that -- understandably enough, as such a level of detail is not for this stage of proceedings. It would therefore be premature to conclude that there was not even a plausible contention requiring further investigation on that matter, even if the case be close to the line. In all the circumstances, I would with respect, differ from the Master in concluding that there is not on this condition (e) scope for a genuine dispute.

60 That of course does not make any difference to the result, as I have already concluded that the Master was correct in determining that there could be no genuine dispute overall as to the debt the subject of the Statutory Demand. This is because the Conditional Precedent for the release of the relevant debt contained in clause 13.3(a) of the Deed of Acknowledgment was never fulfilled and could not now be fulfilled and there is no basis for a plausible contention requiring further investigation as to waiver or conventional estoppel. In those circumstances the relevant debt must be both due and payable.

CONCLUSION

61 The appeal from Master McLaughlin is dismissed.

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LAST UPDATED: 06/07/1999