Coast Corp Pacific Pty Ltd v Stockland Development Pty Ltd [2018] QSC 305

Mr Corcoran of the plaintiff wished to purchase land approved for a town house development from the defendant.  He expected that the townhouses would have an attractive view over the developed wetlands site, which would enhance their value.

First, that was because he expected that all or nearly all of the trees on the wetlands site that obscured views would be removed. Second, that was because he expected the attractive landscape features shown on the wetlands plan would improve the visual amenity of the wetlands site.

LEGAL ISSUES

In summary, the matter concerns a contract entered into between two parties, one of whom relied on statements and promises made outside of the contract. Was an entire agreement clause in the signed contract enough to exclude any collateral contract alleged to be made between the parties when there were no provisions regarding collateral contracts specifically?

The plaintiff argued that the contract was entered into in reliance on the promise that was not included in it. The Honourable Judge had to consider the following matters presented before the court:

  1. Whether the contract was signed in reliance of an oral promise made from the vendor to the buyer and whether the vendor could be bound by such a promise.
  2. Whether a clause in the contract stating that the document constitutes the entire agreement between the parties was enough to cancel out the alleged collateral contract.

JUDICIAL FINDINGS

His Honour held that the email sent from the buyer to the seller regarding the development were promissory in nature. The oral discussions and representations of the same nature were not, however.

The parol evidence rule usually comes into use when one party to a contract seeks to admit evidence of a promise made outside of said contract. Such evidence can only be admitted when the party who was the recipient of the oral promise only signed the contract because they relied on that promise. On that basis, it was held that the promise to carry out the works on the wetland site was certain enough to be able to be seen as a contractual promise.

An entire agreement clause in the contract sought to supersede any earlier agreements between the parties in relation to a specific subject matter of the sale of land and function as the only agreement between the parties. It was determined due to this clause, any collateral contract between the parties would be made void.

DECISION

In the Court’s view, there was no special rule of construction that applied to the operation of an entire agreement clause, to the effect that something amounting to express words of exclusion of a collateral contract is required before an entire agreement clause can apply to a collateral contract

The collateral contract was declared void and the plaintiff’s claim was dismissed.

OUR COMMENT

Entire agreement clauses are common and on any one occasion, a Court may well not agree that it is “odd” for an entire agreement clause to exclude a collateral contract, because otherwise the very reason the promisee under the collateral contract entered into the main contract would count for nothing.

Indeed as His Honour went on to say: “If primacy is to be given to that reason for entering into the main contract, logically it extends to all of the terms of the main contract that would operate inconsistently with the promises made by the promisor under the collateral contract.

When a contract is drafted, each party needs to be diligent in checking that every promise they wish to rely in forms part of the contract terms and conditions or annexures.