Brisbane City Council v Group Project Pty Ltd

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Citation: (1979) 145 CLR 143

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 455-457 [17.25]

Contents

Background facts

  • Group Projects owned some land.
  • They reached an agreement with the council that if they do some work both on and off the land, the council will let them develop the land once it was rezoned.
  • However, the Crown took the land for the purposes of building a school.
  • Group Projects claimed that the contract was frustrated since the foundation of the contract (their desire to develop the land) is now gone.

Legal issues

  • Frustration
    • Can a contract be frustrated simply because the commercial reasons behind it have been removed?

Judgment

  • Although performance has not been rendered impossible (because most of the work was not on the land taken back by the Crown), the entire reason why GP entered the contract has ceased to exist.
    • "in principle this is not a case in which performance of contractual obligations has either been rendered impossible or more oneous by the frustrating event[1]."
    • "Although GP no doubt remains able to perform the bulk of the obligation which it has undertaken, being that part of the work which is not to be undertaken on the acquired land, and although that work will have neither changed in character nor become more onerous, yet the acquisition of the land for a school site has wholly destroyed GPs purpose in undertaking the obligations at all[2]."
    • "There is, i suppose, no doubt but that the acquisition of the land by the Crown for use as the site of a school has deprived Group Projects of all desire to now proceed with the work...[3]"
  • Applies the ruling of Davis Contractors Ltd V Fareham UDC[4]:
    • Lord Reid:
      • The task for a court is to determine on the true construction of the terms of the contract, read in light of the nature of the contract and of the relevant circumstance when the parties made it,"Whether the contract which they did make is on its true construction wide enough to apply to the new situation, if it is not , then it is at a end[5]."
      • Thus, a comparison is made between the contemplated situation, as revealed by construction, and the situation in fact resulting from the frustrating event
  • In this case, the situation is so different (and the purpose/foundation is gone), that the contract is frustrated.
    • "There has arisen, as a result of the compulsory acquisition of the land by the Crown for a school site, such a fundamentally different situation from that contemplated when the contract was entered into that it is properly to be regarded as having come to an end at the date of acquisition by the Crown[6]."
  • The contract is frustrated.

References

  1. (1979) 145 CLR 143, 157
  2. (1979) 145 CLR 143, 157-8
  3. (1979) 145 CLR 143, 157
  4. [1956] AC 696
  5. [1956] AC 696, 729, 720-1
  6. (1979) 145 CLR 143, 162
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