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In brief

The case of FKP Commercial Developments Pty Ltd v Albion Mill FCP Pty Ltd & Anor [2017] QSC 322 concerned a claim for damages for breach of contract in the Supreme Court of Queensland by FKP Commercial Developments Pty Ltd (Plaintiff). The Plaintiff sought damages from Albion Mill FCP Pty Ltd and its guarantor (Defendants) in the order of $5-6 million for the breach of a put and call option contract for the sale of land owned by the Plaintiff situated at 60 Hudson Street, Albion.
 
The Plaintiff was required to give written notice of the contaminated nature of parts of the land under the now repealed section 421 of the Environmental Protection Act 1994 (EPA). In the event written notice had not been given, the EPA gave the buyer a statutory right to rescind the contract before the completion of the contract or possession under the agreement, whichever was earlier.
 
The Defendants contended that written notice had not been given under section 421 of the EPA on a number of grounds and that the contract had been rescinded. The Court considered each of the grounds raised by the Defendants and determined that notice had been given in compliance with section 421 of the EPA and, consequentially, the contract could not be rescinded under the EPA.
 
The Court considered the appropriate assessment of damages and concluded that the Plaintiff was entitled to damages in the sum of $5.25 million for damages for breach of contract.

Plaintiff was required to give written notice of the contaminated nature of parts of the land under the Environmental Protection Act 1994 

The land included a number of lots which were included in the environmental management register under the EPA and were the subject of approved site management plans.
 
On 17 July 2015, when the contract was entered into, section 421 of the EPA required an owner of land on the environmental management register to give written notice of this fact, and the details of any site management plan, to a potential buyer of that land before agreeing to dispose of the land. 
 
Where the owner did not comply with this requirement, the EPA provided the buyer with a statutory right to rescind the contract before the completion of the contract or possession under the agreement, whichever was earlier.
 
Since this time section 421 has been removed from the EPA by legislative amendment, however, a similar, but not identical, requirement is now contained in section 408 of the EPA. Despite this amendment of the EPA, section 421 continued to regulate the rights of the parties because of the operation of section 20(2)(c) of the Acts Interpretation Act 1954, which preserved the right accrued under section 421 of the EPA prior to its amendment.

Plaintiff disclosed search results for the contaminated lots to a corporate entity which did not ultimately enter the contract

The Plaintiff's initial negotiations for the sale of the land were with Fridcorp Projects Pty Ltd (Fridcorp). These negotiations included a due diligence process and proceeded on the basis that the purchaser of the land would be Fridcorp or a wholly owned subsidiary of Fridcorp.
 
As part of the due diligence process, the development director of Fridcorp requested that the Plaintiff provide data to enable Fridcorp to conduct a due diligence, including environmental contamination reports for the land. Fridcorp's development director suggested that this could be done by way of a data room or file share mechanism.
 
The Plaintiff established an electronic data room and uploaded various files, including a folder named "Land Contamination", which contained separate search responses for the contaminated lots that annexed the approved site management plans.
 
Albion Mill FCP Pty Ltd (Albion Mill), which entered into the put and call option contract on 17 July 2015, was ultimately not a wholly owned subsidiary of Fridcorp but rather the same individual who held all shares in both Fridcorp and Albion Mill. It is also relevant to note that the development director of Fridcorp was the sole director of Albion Mill when it entered into the contract.

Court considered whether the Plaintiff had complied with the requirement to give written notice under section 421 of the EPA

The Defendants asserted that the contract had been rescinded by Albion Mill for a failure on the part of the Plaintiff to comply with the notice requirements under section 421 of the EPA. 
 
The Defendants asserted non-compliance with section 421 of the EPA on five grounds. These grounds, and the Court's consideration of each ground, were as follows:
(a) The first ground was that providing the relevant documents electronically by uploading them to the data room was not giving written notice. The Court considered relevant provisions of the Acts Interpretation Act 1954 and the Electronic Transaction (Queensland) Act 2001 and found that in circumstances where the development director of Fridcorp had consented to the relevant information being conveyed by an electronic data room, the Plaintiff was permitted to give the information in an electronic manner.
 
(b) The second ground was that providing the search responses for the contaminated lots among other information on a variety of other subject matters was non-compliant. The Court found that the EPA did not prescribe a form the notice must take and found no basis for non-compliance with section 421 of the EPA due to the fact that the written notice was given with other information.
 
(c) The third ground was that providing access to the search responses for the contaminated lots without specifying that doing so constituted giving written notice under section 421 of the EPA was non-compliant. The Court found that section 421 of the EPA did not include a requirement that the notice must be expressed as being given under that section.
 
(d) The fourth ground was that because the Plaintiff later stated that the due diligence material should not be relied upon, any notice otherwise given was non-compliant. The basis of this ground was that the Plaintiff had declined to give a contractual promise as to the accuracy of the information in the data room. In circumstances where there was no contention about the accuracy of the search results, the Court did not accept that the Plaintiff's failure to contractually assure the accuracy of the information should affect compliance with section 421 of the EPA.
 
(e) The fifth and final ground was that any notice that was otherwise compliant was given to Fridcorp and not to Albion Mill. It was clear in the materials before the Court that the development director of Fridcorp, who was also the sole director of Albion Mill at the time the contract was entered into, was aware of the contamination issues with the land. Being the sole director of Albion Mill, this individual was the directing mind of the company and his knowledge was the knowledge of the company. In the factual circumstances of the case, the Court found that written notice had been given in compliance with section 421 of the EPA.

Having dismissed each of the grounds raised by the Defendants, the Court found that the Plaintiff had given notice in compliance with section 421 of the EPA and, consequentially, it was not open to Albion Mill to rescind the contract.

Court found that the Plaintiff was entitled to damages for breach of contract

The Court considered the appropriate assessment of damages and the valuation evidence before it. The Court concluded that the appropriate amount of damages was the difference between the purchase price payable under the contract and the value of the land at the date of performance of the contract, being an amount of $8 million. Subtracting the $2.75 million already paid under the contract, the Court found that the Plaintiff was entitled to judgement against the Defendants of $5.25 million for damages for breach of contract, as well as interest on that amount.

This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal advice. Please seek your own legal advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.​

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