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Nashvying Pty Ltd v Giacomi

 

[2007] QCA 454

SUPREME COURT OF QUEENSLAND

 

CITATION:

Nashvying P/L & Ors v Giacomi [2007] QCA 454

PARTIES:

NASHVYING PTY LTD ACN 058 373 390

(first plaintiff/first respondent)
CQ INNOVATIONS PTY LTD ACN 112 207 646

(second plaintiff/second respondent)

MOHAMMED VALI YOUSEFPOUR

(third plaintiff/third respondent)

v

LILLIAN MARY GIACOMI

(In her own right as executrix of the estate of the late ALDO GIACOMI)

(defendant/appellant) 

FILE NO/S:

Appeal No 4251 of 2007

SC No 98 of 2006

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

21 December 2007

DELIVERED AT:

Brisbane 

HEARING DATE:

31 October 2007

JUDGES:

McMurdo P, Muir JA and Dutney J

Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER:

  1. The appeal be allowed, but only to the extent that the declarations in paragraphs 1.1, 1.2 and 1.3 of the order of 23 April 2007 be set aside and that the following declaration be substituted therefor:

"Neither the lease nor the licence referred to respectively in paragraphs 2 and 7 of the statement of claim filed on 1 March 2005 were terminated by the appellant as alleged by the appellant in the amended defence and counterclaim being exhibit 13 in these proceedings." 

  1. That the appellant pay one half of the respondents’ costs of and incidental to the appeal

CATCHWORDS:

LANDLORD AND TENANT – CREATION OF RELATIONSHIP – DISTINCTION BETWEEN LEASE AND LICENCE  – GENERALLY – where appellant agreed to permit the third respondent to quarry land – where third respondent obliged to obtain permits – where appellant entitled to terminate if work not commenced within stipulated time  – where third respondent unable to obtain permits – where third respondent transferred its interest to first respondent, which transferred interest to second respondent – where further permit applications refused – where appellant purported to terminate agreement – where respondents successful at first instance in claim for declaration that the appellant was not entitled to terminate – whether instrument was a lease or licence – whether instrument a profit a prendre

CONTRACTS –  GENERAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE –  MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – LEASES – where appellant agreed to permit the third respondent to quarry land – where third respondent obliged to obtain permits –  whether the contract was uncertain through not providing for ascertainable rent or royalties and a certain leased area  – whether contract illusory

CONTRACTS –  GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – GENERALLY – where appellant agreed to permit the third respondent to quarry land – whether the respondents were in breach of the agreement due to their failure to obtain permit within a reasonable time – whether other terms breached

TRADE AND COMMERCE – TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION – CONSUMER PROTECTION – MISLEADING AND DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – MISLEADING AND DECEPTIVE CONDUCT GENERALLY – where appellant agreed to permit the third respondent to quarry land – where third respondent transferred its interest to first respondent, which transferred interest to second respondent – where appellant claimed that the third respondent made misleading representations in order to gain her consent to the transfer – whether the third respondent’s conduct was such that there was a chance that the appellant was likely to be lead into error

 

Real Property Act 1861 (UK), s 146(1)

Trade Practices Act 1974 (Cth) , s 52

Integrated Planning Act 1997 (Qld), s 3.4.4, s 3.4.5, s 3.4.6, s 3.4.7

Land Title Act 1994 (Qld), s 97E, s 97EA, s 97F, s 97G, s 97H, s 97I, s 97J, s 97K, s 97L, s 97M

Property Law Act 1974 (Qld), s 124

Real Property Regulation 1986 (Qld) , form 8 

Akici v LR Butlin Limited (2006) 1 WLR 201, distinguished

Batson v De Carvalho (1948) 48 SR (NSW) 417, applied

Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187, CA Nos 40924 of 1999 and 40325 of 2000, applied

Butcher v Port (1985) 3 ANZ Insurance Cases 78,922, cited

Butt v M’Donald (1896) 7 QLJ 68, applied

Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, applied

Commissioner of Stamp Duties (NSW) v Henry (1964) 114 CLR 322, cited

Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458, applied

Mackay v Dick (1881) App Cas 251, cited

Majala Pty Limited v Ellas [1949] VLR 104, cited

Pacific Coal Co Pty Ltd v Perpetual Trustees Co (Ltd) (1954) 91 CLR 486, cited

Pacific Coal Co Pty Ltd v Perpetual Trustees Co (Ltd) (1955) 93 CLR 479, cited

Panamena Europea Navigacion (Compania Limitada) v Frederick Leyland & Co Ltd [1947] AC 428, cited

Perri v Coolangatta Investments (1982) 149 CLR 537, cited

Placer Development Pty Ltd v The Commonwealth (1969) 121 CLR 353, cited

Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17, cited

Rugby School (Governors) v Tannahill, [1934] 1 KB 695, cited

Scala House and District Property Co Ltd v Forbes [1974] 1 QB 575, distinguished

Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Ltd (1979) 144 CLR 596, applied

Tricontinental Corporation Ltd v HDFI Ltd (1990) 21 NSWLR 689, cited

York Air Conditioning & Refrigeration (A/Asia) Pty Ltd v the Cth (1949) 80 CLR 11, applied 

COUNSEL:

D North SC, with him D Morzone, for the appellant

AR Philp SC, with him MA Jonsson, for the respondents

SOLICITORS:

Murray Lyons Solicitors for the appellant

Williams Graham Carman for the respondents

  1. MCMURDO P: I agree with Muir JA.
  1. MUIR JA:

Introduction  

On 6 August 1992 Aldo and Lillian Giacomi entered into a written agreement with Mohammed Yousefpour, the third respondent, under which, in consideration of a royalty payable by the third respondent, the Giacomis agreed to permit the third respondent to win and remove quarry materials from part of their land. The agreement, which I will refer to as "the Lease", was expressed to be for a term of 25 years.  By a deed dated 7 February 1994 entered into between the Giacomis and the third respondent, clause 8(4) of the Lease was varied to extend the period during which the third respondent was not obliged to commence quarrying on the land from five years from the commencement of the Lease to five years from the issue by the Council of the Shire of Mulgrave of an extractive industry permit or extractive quarry licence.  The term of the Lease was extended to 55 years by a further deed dated 1 June 1994.

  1. The third respondent first made application to the Council of the Shire of Mulgrave for town planning consent to establish an extractive industry[1] in December 1992.  The application was refused. The third respondent appealed and the appeal was dismissed. A second such application made in about March 1994 was also unsuccessful. An appeal against the Council's decision was commenced but was discontinued after a few months. 
  1. In 1995 the third respondent, with the Giacomis’ consent, transferred his interest in the Lease to the first respondent.
  1. In mid-2004 the third respondent commenced work on a further application for development approval. In December of that year he spoke to Mrs Giacomi, the appellant, about the proposed application. By that time Mr Aldo Giacomi had died. It was contemplated by the third respondent that the application be made by the second respondent, and the appellant’s consent to a transfer of the first respondent’s interest in the Lease to the second respondent was obtained.
  1. In late 2005 the appellant became concerned about the lessee’s failure to obtain the requisite development approvals. She wrote to the third respondent on 2 November 2005 seeking information as to the present status of any applications for development approval. There were then a number of communications between the parties. Solicitors were instructed on both sides and the appellant purported to terminate the Lease by letter from her solicitors to the solicitors for the respondents dated 24 February 2006.

The Proceedings

  1. The respondents commenced these proceedings by claim on 1 March 2006 seeking, amongst other relief:
  1. A declaration that the appellant was not lawfully entitled to terminate the Lease;
  1. Alternatively, relief against forfeiture; and
  1. An order that the appellant consent to an application for development approval.

The appellant counter-claimed for a declaration that the Lease was void for uncertainty or, alternatively, had been rescinded.  In the further alternative the appellant sought a declaration that her consent to the assignment of lease dated 23 December 2004 was void by reason of contravention of s 52 of the Trade Practices Act 1974 (Cth).

  1. After a two day trial in the Supreme Court in Cairns the appellant’s counter-claims were dismissed.

The Instrument of lease

  1. The Lease is contained in an instrument the front page of which[2] describes Aldo Giacomi and Lillian Mary Giacomi as the lessors and the third respondent, Mohammed Yousefpour as the lessee.  Against the words, "description of land being leased [demised premises]" in item (7) of form 8 appears "part of the land as hachured in black on the attached sketch." [emphasis added]  The commencing date is stated to be 31 July 1992.  Item (11) of form 8 provides:

"For the royalty hereby reserved the lessor hereby leases to the lessee the above described land for the term stated above and the lessee accepts this lease subject to the covenants and conditions contained in the schedule hereto and it is hereby covenanted and agreed by and between the lessor and lessee in terms of such schedule."

  1. The land is described in item (6) of the form 8 as, "Lot 5 on Registered Plan No. 713931" in the "County of Nares, Parish of Sophia." The Certificate of Title reference is also given in item (6).
  1. The balance of the instrument takes the form of:
  1. A 16 clause schedule in form 33 of the forms prescribed under the Real Property Regulations 1986 (Qld);
  1. A first schedule which describes the land; and
  1. A second schedule which contains a plan of the leased area and a third schedule which contains a plan of an area the subject of an easement for access purposes.
  1. References below to clauses in the Lease are references to clauses in the form 33 schedule.

Was the Lease a licence rather than a lease and uncertain through not providing for ascertainable rent or royalties and a certain leased area? – The appellant’s submissions.

  1. The appellant’s submissions on this aspect of the case may be summarised as follows. The Lease did not impose any positive obligation on the respondent to commence quarrying operations and hence pay royalty or rent. Although the Lease makes provision for payment of royalties, in the absence of an obligation to obtain a permit and to commence quarrying operations, no rent or royalty is payable. Under the terms of the Lease the respondent has a discretion as to:
  1. When to commence performance of any obligation to obtain the relevant permit or quarry licence; and
  1. When, if at all, to commence work.
  1. The respondent, at its option, may terminate the Lease if work has not been commenced within five years from the date of issue of an extractive industry permit or quarry licence.
  1. In view of the foregoing, the Lease is an illusory contract as the words of the Lease show, "…that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise...": See Placer Development Ltd v The Commonwealth.[3]
  1. The "demise" is set out in clause 1 of the Lease. It does not give the lessee any right of occupation of the lands described in the first schedule and shown on the plan in the second schedule. The lessee has an absolute discretion as to the quantity and method of quarrying and excavating "all the quarries and beds of granite etc" and there is therefore no certainty as to the subject matter of the demise.

Was the Lease a licence rather than a lease and uncertain through not providing for ascertainable rent or royalties and a certain leased area? – Conclusions.

  1. In the context of leases the word "demise" is normally used to denote a conveyance or grant of an estate or interest in land by way of lease.[4] In the form 8 the land is described in the manner stated earlier and item (11) of the form 8 provides that the lessors lease to the lessee "the above described land".
  1. Clause 1 provides that the lessors "hereby demise to the lessee all the quarries and beds of granite with quartz veins locally covered, altered and weathered and other rocks and minerals…within or under the lands more particularly described in the first schedule hereto and which lands are more particularly hatched in red on the plan which forms the second schedule to this Lease (hereinafter referred to as ‘the premises’)."  The first schedule refers to part of Lot 5 on Registered Plan No. 713931 containing an area of 26.95ha hatched in red on the plan in the second schedule.  It is accepted by the parties that item (7) of the form 8, the first schedule and the second schedule, all describe or depict the same piece of land.
  1. The appellant’s argument sets much store by the fact that the "demise" is expressed in clause 1 to be of certain quarry materials within the land rather than of the land itself. That the drafter intended the term "demise" to relate to the quarry materials appears from clause 3 of the schedule which commences with the words:

"There are included in the said demise and for the purposes thereof the liberties following:"

  1. There then follows a list of rights conferred on the lessee including the right:
  1. "to enter (the said lands) and work…and obtain by excavations and quarryings…the demised granite…";
  1. "to erect buildings and machinery and execute works…upon or below the surface of the said lands as may be considered necessary and/or desirable by the lessee…";
  1. "to erect caretaker’s accommodation…upon the said lands…";
  1. "…to…make use and repair any roads…over the said lands…";
  1. "to place and stack upon the said lands any [quarry materials], waste and rubbish." [emphasis added]
  1. The instrument is described as a lease but to determine its true character it is necessary to consider the nature of the rights it creates and, in particular, whether it creates a right of exclusive possession in the lessee. The existence of such a right in an instrument of the nature of a lease will normally lead to the conclusion that it is a lease rather than a licence.[5]
  1. Although the "demise" in clause 1 is not of the land described in the first schedule, that land is expressly stated to be leased in the Form 8.[6]  Clause 2 provides that "the premises" are to be held "by the lessee as lessee…"  In clause 1 the lands described in the first schedule are defined as "the premises".  The fact that the quarry materials, to put it broadly, are expressly demised, is not inconsistent with a lease of the land containing the quarry materials.[7]  In Pacific Coal Co Pty Ltd v Perpetual Trustees Co Ltd,[8] the demise in an instrument regarded in the Supreme Court of New South Wales, the High Court and the Privy Council[9] as a lease was of "the mines, beds, veins and seams of coal, shale and minerals of a similar character in or under" the subject land.
  1. The Lease does not provide for payments described as rent but royalties for materials extracted from the land under mining leases, traditionally, have been regarded as rent.[10] And for centuries leases of land have been granted for mining or quarrying purposes.[11]
  1. The rights listed in clause 3 are consistent only with a grant of exclusive possession. Those rights may be exercised in respect of any part of "the premises." Consequently the use by the lessors or a third party of any part of "the premises" would derogate from the grant. Moreover, clause 7 expressly confers on the lessee the right of quiet enjoyment of "the premises." Although the right of quiet enjoyment is conferred in respect of "the mines premises liberties and powers hereby demised and granted", I think it tolerably plain that "premises" is used in clause 7 in its defined sense. In other parts of the schedule, it is assumed that "the premises" means the land marked out on the plan in the second schedule.[12] Also, clause 8(1) refers to re-entry "upon the demised mines and premises".
  1. The parties plainly intended to enter into a lease. There is no uncertainty about the leased area or, for reasons given below, any other term of the Lease. The lessee has a right to quiet enjoyment and I am in no doubt that the subject instrument is a lease.
  1. Except in relation to the giving of statutory notices under the Property Law Act 1974 (Qld), it does not seem to matter whether the instrument is a lease or a licence.  One of the appellant’s arguments, not advanced orally, appeared to be that if the instrument gives rise to a mere licence it is revocable by the appellant at will.  However, even if the instrument is not a lease it would create a profit à prendre: a right to enter another’s land "and to take some profit from the soil, or a portion of the soil itself, for the use of the owner of the right."[13]  The grant of a profit à prendre creates an interest in land and a licence coupled with such a grant is not revocable at will.[14]

Was the subject instrument a profit à prendre rather than a lease or did it create both a lease and a profit à prendre?

  1. With a view to avoiding the consequences of indefeasibility of title resulting from registration of the Lease under the Real Property Act 1861 (UK), it was argued on behalf of the appellant that those parts of the Lease which demised the quarry materials and provided for the right to win and remove such materials constituted a profit à prendre distinct from the parts of the instrument constituting a lease.  It was submitted that even if the provisions of the subject instrument which constituted a lease were saved from invalidity as a result of indefeasibility of title, the provisions comprising the profit à prendre were not so protected. During the hearing, the appellant’s senior counsel became aware of provisions in the Land Title Act 1994 (Qld)[15] which made it plain that, for the purposes of the Act, a profit à prendre was an interest in a lot and was indistinguishable from any other registrable interest insofar as the principle of indefeasibility was concerned. The argument was abandoned, at least implicitly.
  1. The notion of the Lease being an instrument which contained both a profit à prendre and a separate lease, however, resurfaced in reply. Senior counsel for the appellant advanced the notion again in support of a contention that, if for some reason a notice had not been given in compliance with s 124 of the Property Law Act, that did not prevent the Notice being effective in respect of the alleged profit à prendre.
  1. The argument, with respect, has no substance. It pays scant attention to the notice of termination which purported to terminate the Lease. The Lease, for reasons already discussed, is a mining lease or a lease for quarrying purposes. As previously explained, there is no difficulty in regarding the provisions relating to the extraction of quarry materials and the payment of royalties as provisions of the Lease: royalties in such cases have the character of rent. Also, the covenants in clauses 5 and 8, on their face, are not restricted to some part of the subject instrument which can be identified as a grant of a profit à prendre: they extend to "the premises". Nor is it possible to identify any other terms and conditions which are referable only to a profit à prendre.

 

The illusory contract argument

  1. The principle upon which the appellant relies for its illusory contract argument is expressed as follows by Kitto J in Placer Developments Pty Ltd v The Commonwealth:[16]

"It is that wherever words which by themselves constitute a promise are accompanied by words showing that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought at all. The succinct statement of the principle in Leake on Contracts, 3rd ed, p 3: ‘Promissory expressions reserving an option as to the performance do not create a contract’ was approved by the Lord Justice, as it was later by Lord Wright in Hillas and Co Ltd v Arcos Ltd (1932) 147 LT 503, at p 517."

  1. The consideration for the granting of the Lease is expressed to be the royalty reserved by the Lease.[17]  Clause 5(1) imposes an obligation on the lessee to pay "the reserved royalties at the times and in the manner hereinafter appearing".  Clause 5(2) obliges the lessee to work the demised quarries in a proper and efficient manner.  It includes the following qualifying words relied on by the appellant:

"…but nothing in this clause shall be construed or interpreted to require the lessee to work the lands either in whole or part continuously during the term."

This proviso is certainly generous to the lessee and detrimental to the interests of the lessor but where the land is unworked in any twelve month period the lessor has her rights under clause 14(1). And mining leases, historically, did not invariably contain covenants requiring the land to be worked continuously.[18]

  1. Clause 5(12) requires the lessee to obtain at his own expense all "permits, consents and approvals as may be required". The royalties payable for quarrying materials won and removed from the land are set out precisely and in detail in clause 9. Clause 14(1) provides that the Lease "shall determine" if in any one year period of the term of the Lease there is "no mining or quarry production incurring a liability for royalty payment".
  1. Clause 8(4), as amended, provides:

"The lessee shall be entitled for five (5) years from the date of issue by the Council of the Shire of Mulgrave of the extractive industry permit/Quarry License [sic] as is required by the lessee to quarry the lands to an establishment period for the benefit of the lessee to enter and work the premises in accordance with the covenants herein contained.  Both parties hereto acknowledge that work may not be commenced on the premises or if so commenced may not be undertaken continuously during such period and accordingly no default shall attach to the lessee either generally or in terms of Clause 5(2) hereof.  In the event, at the lessee’s election work is not commenced or if commenced is abandoned by the lessee within the aforesaid period it is agreed this lease may be terminated by the lessee but without prejudice to any antecedent rights and obligations create and in that event the lessors shall be entitled to receive from the lessee copies of all results or works carried out by the lessee on the premises."

  1. The subclause is not a model of the draftsman’s art but it is reasonably clear that it gives the lessee five years from the date of issue by the Council of any required permit or licence within which to commence and undertake continuous work on the land. Clause 8(4) is not made subject to clause 14 but it is apparent that the contractual intention was that there be no right of termination in reliance on clause 14 within the "establishment period". No express limit is placed, by clause 8(4), on the time within which any such licence or permit must be obtained, but an obligation to obtain all permits, "consents, and approvals as may be required" is imposed on the lessee by clause 5(12). For the reasons given later, an obligation that such permits or licences be obtained within a reasonable time is implied by law.
  1. Even if no obligation is placed on the lessee to commence working the land by a particular time after the expiration of the "establishment period", failure to work the land so as to create an obligation to pay royalties in any one year gives the lessors the right to terminate the Lease. Clause 14, although far from onerous on the lessee, protects the lessor against complete inactivity on the part of the lessee. The establishment period also appears generous to the lessee but it may have been the parties’ expectation that the obtaining of the Council’s approval would have been an expensive and time consuming process. But even if the bargain was a poor one from the lessor’s perspective, that does not assist the appellant’s illusory contract argument. For the reasons given above, the lessee does not have a "discretion or option as to whether he will carry out that which purports to be the promise" and the Lease is not an illusory contract.
  1. Were this case a borderline one, it would be relevant that the parties had proceeded for 13 or so years in the belief that there was a binding lease. Courts are willing to uphold commercial bargains wherever reasonably possible[19] and where parties have acted for a considerable time on the understanding that an agreement exists there is an even greater reluctance to find uncertainty.[20]

Were the first and third respondents in breach of an obligation under clause 5(12) of the Lease to apply for and obtain an extractive industry permit or quarry licence within a reasonable time?

  1. It is pleaded in the counterclaim that it was an implied term of the Lease that the lessee would do all that was necessary to secure performance of the Lease and in particular "to apply for and obtain an extractive industry/quarry licence to work the quarries granite and other rocks and minerals on the land within reasonable time." It is further alleged that in breach of such term the first and/or third respondents failed to perform their obligations under it.
  1. The respondents argue that the Lease imposes no positive obligation on the lessee to commence quarrying operations "within a particular timeframe" or at all. It is asserted that the Lease, in effect, confers on the lessee a right or liberty to commence and carry out quarrying activities. Reliance is also placed on clause 8(4) which provides for the "establishment period" of five years from the date of issue of the "extractive industry permit/quarry licence".  It is contended that as there was no positive obligation on the lessee to carry out quarrying activities within the "establishment period" or at all, there could be no obligation on the lessee to apply for the permit/licence.
  1. The Lease was entered into for quarrying purposes. It contains elaborate provisions aimed at ensuring that the quarrying activities are carried out properly and efficiently and that royalties are paid by the lessee to the lessor. The underlying assumption of the parties is that quarrying activities take place. Clause 14 permits the Lease to be terminated if the land is not being worked.
  1. The respondents’ submissions in this regard cannot be accepted. The important right conferred on the lessors by clause 14 cannot be exercised unless the permit/quarry licence is obtained. That is because the five year "establishment period" commences to run only after the issue of such permit/licence.
  1. In the words of Dixon J in York Air Conditioning & Refrigeration (A/sia) Pty Ltd v The Commonwealth:[21]

"The ordinary prima-facie rule is that when a contract provides for the doing of an act and there is no express provision as to time the law implies that it must be done within a reasonable time."

  1. If no such implication arises by operation of law, there is no difficulty in implying a term to the same effect in accordance with the principle stated in Codelfa Construction Pty Ltd v State Rail Authority of NSW.[22]  Such a term would be "reasonable and equitable…necessary to give business efficacy to the contract…so obvious that ‘it goes without saying’...capable of clear expression [and]…not contradict any express term of the contract."  Absent such a term, the lessee could "warehouse" the land for the term of the Lease as extended from time to time without the payment of any rent or other consideration.  Throughout this period the lessors would be deprived of the use of the land although obliged to pay the rates, taxes and other outgoings relating to it.  It is highly unlikely that this was the contractual intention particularly having regard to the elaborate provisions in the Lease regarding the calculation and payment of royalties. The respondents’ construction also produces the curious result that the Lease continues on foot even if approvals to work the land cannot be obtained.
  1. The primary judge found that there was no expenditure in respect of any application for approval in the years 1999 to 2004 and that the third respondent "was not particularly active in pursuing a quest for approval during this time." In the light of these findings and the lapse of about 13 years between November 2005 and the date of the Lease, it is difficult to resist the conclusion that the approvals required by clause 5(12) were not obtained within a reasonable time.

The relevance, if any, of the appellant’s conduct including her failure to consent to the application for development approval

  1. The appellant gave notice dated 29 November 2005 to the first and third respondents requiring that the breach be remedied. It seems probable that at that date the lessee had been in breach of the subject obligation for a lengthy period of time. The second application for town planning consent was refused in April 1995 and an appeal against the Council’s decision was withdrawn on September 1995.
  1. The appellant relies on clause 8(1) which relevantly provides:

"…if any covenant on the lessee’s part…(after due written notice requiring compliance by the lessee within one (1) calendar month thereafter has been served) then and in any of the said cases it shall be lawful for the lessors at any time thereafter to re-enter upon the demised mines and premises or any of them…and thereupon this demise shall absolutely determine…"

  1. The respondents’ argument at first instance and on appeal sought to rely on lack of complaint by the appellant until near the end of 2005. But any historical failure by the appellant to object to the conduct of the respondents or otherwise put them on notice that she would require them to perform their obligations under the Lease is irrelevant. The respondents’ pleadings did not allege estoppel, waiver or acquiescence. The respondents could not rely on the mere effluxion of time to make out a case of waiver or acquiescence.[23] Accordingly, subject to the qualification about to be addressed and assuming that the breach was capable of being remedied, the appellant had the right to terminate under clause 8(1) should default not be remedied within 30 days of the giving of notice under the clause.
  1. It is necessary to consider the finding that, "by the time the formal notice was given, it was the [appellant’s] own conduct which prevented rectification of this alleged concern".
  1. In a letter of 2 November 2005 written by the appellant, concern was raised about there being no quarrying works on the land despite the lapse of 13 years since the commencement of the Lease. Reference was made to the lack of approvals or consents and it was observed: "We are aware of the significant efforts you made in this respect…" Information was requested as to the current status of any application for approval.
  1. The third respondent wrote to the appellant on 9 November 2005 explaining the current position in relation to the application. Enclosed with the letter was a request that the appellant sign a development application form for lodging with the local authority. The form showed the applicant to be CQ Pty Ltd. No such company existed. On 22 November 2005 the respondents’ solicitors sent a facsimile to the appellant’s solicitors in which they requested that the solicitors for the appellant retain the application for development approval until such time as the respondents’ solicitors were able to provide a copy of a new Certificate of Registration on Change of Name for CQ Innovations Pty Ltd. The second respondent, then called Behana Gorge Enterprises Pty Ltd, was in the process of changing its name to CQ Innovations Pty Ltd, having failed to obtain approval to change its name to CQ Pty Ltd. The solicitors said that they expected to have the new certificate "within the next couple of days".
  1. The change of name took effect on 24 November 2005 but before the solicitors for the respondents mentioned the matter again to the appellant’s solicitor the appellant gave the notice requiring remedy of breach dated 29 November 2005. A development application in the name of CQ Innovations Pty Ltd was sent to the solicitors for the appellant by the respondents’ solicitors under cover of a letter of 30 November 2005. On 9 December 2005 the respondents’ solicitors wrote to the appellant’s solicitors enclosing an application for development approval in the name of the first respondent. They asked that this form and/or one in the name of CQ Innovations Pty Ltd be returned promptly. There was no response to the letter and the solicitors for the appellant purported to give notice terminating the Lease and related agreements by a letter dated 24 February 2006.
  1. Plainly the appellant was under an obligation to assist in obtaining the development approval if its assistance was required for that purpose[24] and it was not contended on behalf of the appellant that her consent was not required.  The prescribed application form stated:

"Section 3.2.1(10)(a) of the IPA prescribes that an application cannot be taken to be properly made without the landowner’s consent."

  1. A party cannot rely on breach of a condition if non-fulfilment of it is due to his own fault and a party to a contract is absolved from performance where performance is prevented by the wrongful act of another contracting party.[25] In some circumstances, a condition, performance of which is wrongfully prevented by a party, will be taken to have been fulfilled.[26]
  1. The respondents however did not allege in their pleadings that development approval could not be obtained without the appellant’s consent or that the appellant was in breach of a contractual obligation by failing to give such consent or by failing to sign and return any particular form. Nor was it part of the respondents’ pleaded case that the appellant by her conduct had relieved the lessee from an obligation to obtain development approval. There is no direct evidence of what may or may not have happened had the appellant signed and returned the development approval application but it is quite improbable that a development approval could have been obtained prior to the expiration of the 30 day period fixed by clause 8(1) even if the appellant had signed and returned the development application form on 30 November.
  1. Under the Integrated Planning Act 1997 (Qld) a notice of application for development approval is required to be:
  1. Published at least once in a newspaper circulating locally;
  1. Placed on the land;
  1. Given to all adjoining land owners.[27]
  1. In general terms, the minimum period for such notices is 15 business days starting on the day after the last of the notices has been given.[28]  Where the applicant carries out such notifications it must, after the notification period has expired, give notice of compliance to the "assessment manager".[29]
  1. In the case of a substantial project such as the subject one, the notification stage may not be reached for some weeks after the lodging of the application and after the expiration of the notification period it remains for the local authority to make its decision. In his letter to the appellant of 9 November 2005 the third respondent advised that referral agencies as well as the Council would have to be served with the Environmental Impact Statement and that, normally, both the agencies and the Council would require additional information.
  1. There is no evidence to the effect that the respondents had advanced the application to a position such that the granting of the approval could be expected to be a formality. On the contrary, there is evidence that the proposed quarrying activities were of considerable political and social sensitivity. The Council refused the second application for town planning consent on grounds including:
  1. The proposal would constitute a traffic hazard, prejudice the use of surrounding lands for the growing of sugar cane and would conflict with "objectives relating to visual amenity";
  1. The proposal would conflict with the Council’s draft Hillslopes Development Control Plan;
  1. The proposal would unacceptably impact on existing residents through noise and blasting;
  1. Need was not established;
  1. The proposal would conflict with the Council’s intention to preserve "its natural shire image" and "Behana Hill" is considered "an important landscape feature which ought not to be removed or altered."

The quarry site is a knoll visible from the Bruce Highway and is adjacent to mountainous terrain included in the Wet Tropics World Heritage Area.

  1. Consequently the appellant’s conduct in relation to the development approval application was not shown to have had any bearing on the first respondent’s ability to obtain approval within the 30 day period allowed by the 29 November 2005 notice or prior to the giving of notice of termination by the letter dated 24 February 2006. These conclusions, however, have no bearing on the outcome of the appeal for the reasons now advanced.

Were the notices given by the appellant effective to terminate the Lease?

  1. It is contended on behalf of the appellant that the breaches complained of, including the one now under consideration, are "once and for all" breaches and therefore incapable of remedy. If that contention is wrong it is submitted that, the appellant, in giving the Notice to Remedy Breach dated 29 November 2005 and the purported Notice of Termination dated 24 February 2006 failed to comply with the requirements of s 124 of the Property Law Act 1974. The section relevantly provides that a right of forfeiture under any provision in a lease for a breach of covenant may not be enforceable by action or otherwise unless the lessor serves on the lessee a notice:

"(a)specifying the particular breach complained of; and

(b)if the breach is capable of remedy, requiring the lessee to remedy the breach; and

(c)

and the lessee fails within a reasonable time after service of the notice to remedy the breach, if it is capable of remedy …" (emphasis added)

  1. The notice dated 29 November 2005 relevantly provided:

"You have failed to carry out your obligations under those written documents.[30] Particulars of your failure may be summarised as follows –

eeYou failed to obtain an extractive industry/Quarry Licence from the Council of the Shire of Mulgrave as is required under the amended lease of 7th February 2004 – to quarry the lands. …

You are required to comply with all of the obligations under the lease and particularly those set out above within one month of today as required by clause 8(1) of the lease."

  1. The notice thus allowed the lessee 30 days within which to remedy the subject breach. That is hardly a reasonable time as the above discussion shows. I note that the appellant’s outline of argument submits that "a reasonable time in which to obtain a permit would be whatever period was necessary to prepare the necessary material, make the application and, if necessary, fight any appeal. The evidence shows that that can be done in about 69 weeks".
  1. The notice of 29 November was also deficient in that it failed to contain the following note in the prescribed form or information to like effect:

"[NOTE: The lessor will be entitled to re enter or forfeit the lease in the event of the lessee failing to comply with this notice within a reasonable time – see s 124 of Property Law Act 1974]"

  1. The purpose of the note is to give to the defaulting lessee notice of what may be done to remedy default and of the consequences of failure to remedy. The absence from the notice of the information contained in the note is fatal to the validity of the notice.[31] It is thus unnecessary to decide whether the notice was also defective for failing to give adequate particulars of the alleged breach.
  1. The appellant submits, on the authority of Scala House and District Property Co Ltd v Forbes[32] and Akici v LR Butlin Limited[33] that the subject breaches are not capable of being remedied. Scala House was the subject of analysis by Slade LJ, with whose reasons the other members of the Court agreed, in Expert Clothing Services and Sales Ltd v Hillgate House Ltd.[34] The breach in Scala House was of a covenant not to assign, underlet or part with possession. It was held incapable of being remedied within the meaning of s 146(1) of the Law of Property Act 1925 (UK), the analogue of s 124(1) of the Property Law Act 1974. Slade LJ noted that the covenant under consideration in Scala House was a negative covenant and concluded that the case was not "authority for the proposition that the once and for all breach of a positive covenant is never capable of remedy". His Lordship made the following observation:[35]

"Nevertheless, I would, for my part, accept the submission of counsel for the defendants that the breach of a positive covenant (whether it be a continuing breach or a once and for all breach) will ordinarily be capable of remedy. As Bristow J pointed out in the course of argument, the concept of capability of remedy for the purpose of s 146 must surely be directed to the question whether the harm that has been done to the landlord by the relevant breach is for practical purposes capable of being retrieved. In the ordinary case, the breach of a promise to do something by a certain time can for practical purposes be remedied by the thing being done, even out of time."

  1. The covenants found to have been breached by the lessees required the lessees to reconstruct the demised premises by a particular date and prohibited the charging of the lessees’ interests under the lease without giving notice in writing thereof to the lessor within one month of the giving of the charge. O’Connor LJ, who agreed with Slade LJ’s reasons, in short reasons of his own, remarked that the reasoning of Russell LJ in Scala House, in his view, was unsatisfactory. He explained:[36]

"…it cannot be right to describe a breach which has been remedied as a breach which is incapable of remedy, and thereafter to say that it was incapable of remedy before it was remedied. To my mind a breach which has been remedied has been demonstrated to have been a breach which was ab initio capable of remedy. In my judgment the contrary view leads inexorably to the result that there are no breaches of covenant capable of remedy, and I am quite sure that Russell LJ cannot be taken as so deciding."

  1. Referring to s 146, he observed:[37]

"How are such breaches to be identified? [ie, breaches not capable of remedy] Looking at s 146(1) as a whole, I would say that the question must be examined at the date of the notice. Once a breach of covenant has been committed, the fact that there has been a breach cannot be expunged so that to remedy a breach must mean to do what is necessary to put the lessor back into the position he would have been in had no breach been committed. If this cannot be done within a reasonable time or at all, the breach is not capable of remedy; if it can, it is."

  1. O’Connor LJ, like Slade LJ, considered himself bound by Scala House insofar as its statement of principle related to breaches of negative covenants.
  1. Akici was another case concerning breach of a negative covenant. The alleged breach was "assignment or alternatively subletting or alternatively parting with possession of the premises without the landlord’s consent".
  1. Neuberger LJ, with whose reasons Mummery LJ agreed, said[38] had he considered the matter free of authority he would, like the primary judge, have been "firmly of the view that a covenant against sharing possession, indeed a covenant against parting with possession, should be capable of remedy". He concluded, however, that he was bound by Scala House to conclude that the covenant against assigning without consent was incapable of remedy.
  1. Neuberger LJ noted in the course of his reasons[39] that:

"Any idea that negative covenants are by their nature irremediable has been put to rest by the decision of this Court in Savva v Hussein (1996) 73 P & CR 150). In that case the breach of covenant consisted of carrying out alterations in breach of a covenant not to do so."

  1. The approach taken in the more recent English authorities[40] was anticipated by that of Sugerman J in Batson v De Carvalho.[41] That case concerned a parting with possession of the demised premises in breach of a covenant in the lease. The lessor, in reliance on English authorities including Rugby School (Governors) v Tannahill,[42] argued that the breach was "once and for all" and incapable of being remedied.
  1. In the course of his reasons,[43] Sugerman J referred to the view expressed by MacKinnon J in Rugby School (Governors) that there was a radical distinction between affirmative and negative covenants. In that regard, MacKinnon J had said:

"A promise to do a thing, if broken, can be remedied by the thing being done. But breach of a promise not to do a thing cannot in any true sense be remedied; that which was done cannot be undone. There cannot truly be a remedy; there can only be abstention, perhaps accompanied with apology. I think the breach of a negative covenant of this sort is not one ‘capable of remedy’ within the section."

  1. After noting the contrary views of Maugham LJ in the same case which admitted of the possibility of there being negative covenants capable of remedy, Sugerman J said:[44]

"I agree entirely with what was said on this subject by Morris J in Egerton v Esplanade Hotels London Ltd ([1947] 2 All ER 88 at 90): ‘I think it is clear that the phrase "remedy the breach" cannot mean, and was not intended to mean, that the breach was to be wiped out, for that clearly would be an impossibility. That which has taken place cannot be obliterated as an event or as a fact. Counsel for the second defendants submitted that a useful way in which to approach the phrase "remedy the breach" would be to consider whether the consequences of the breach were capable of remedy.

‘I think that the section is precise in its language and that it is necessary to look at the facts of each case where there has been a breach of covenant and to say whether the breach was, or was not, capable of remedy. I do not think that it would be desirable to lay down or suggest that there are certain categories, or groups, or types, of breaches of covenants which are incapable of remedy.’"

  1. Later in his reasons, his Honour observed:[45]

"To ‘remedy’ a breach is not to perform the impossible task of wiping it out – of producing the same condition of affairs as if the breach had never occurred. It is to set things right for the future, and that may be done even though they have for some period not been right, and even though that may have caused some damage to the lessor (for which he is entitled to claim compensation under s 129(1)(c)) provided: Rugby School (Governors) v Tannahill ([1935] 1 KB 87), that the breach has not resulted in a detriment to the premises which cannot be removed within a reasonable time."

  1. The approach to construction reflected in the above passages from the reasons in Batson was referred to with approval in the separate reasons of Samuels JA and Waddell AJA in Tricontinental Corporation Ltd v HDFI Ltd.[46] The New South Wales Court of Appeal in Burger King Corporation v Hungry Jack’s Pty Ltd[47] also referred to the reasoning in Batson with apparent approval. Both of these cases concerned the construction of commercial agreements other than leases but it is now established that the ordinary principles of contract law apply to leases.[48] The approach to determining whether a breach is "capable of remedy" taken in Batson, Burger King and Tricontinental Corporation has been adopted or approved of in other Australian decisions.[49]
  1. The weight of authority thus supports the conclusion that "once and for all" breaches, whether of negative covenants or otherwise, are not necessarily incapable of remedy within the meaning of s 124(1) of the Property Law Act. The evidence does not establish that the subject breach was incapable of remedy within a reasonable time: that was not a focus of the evidence on the trial. The notice of 29 November 2005 failed to comply with the requirements of s 124 and the purported notice of termination, insofar as it relied on the failure to remedy the subject breach, was ineffective. In view of the above conclusions, it is unnecessary to decide whether it is necessary to give a notice under s 124 in respect of a breach incapable of being remedied.

Alleged breach of clause 5(10) and of clause 15 of the Lease

  1. Clause 15 creates a right of first refusal. It relevantly provides:

"In the event either of the lessors or lessee desire to offer for sale their or his right entitlement and estate in and to the within lease then such party shall first offer such right estate and entitlement to the other on identical terms and conditions as may have been so offered by or to a third party…"

  1. The appellant’s counterclaim[50] alleged that the appellants "breached the Lease in that [they]…failed to do all that was necessary to secure performance of the agreement by:

"Particulars

(d)purported (sic) to transfer and assign the lease to an assignee in breach of clause 5(10) and 15 of the Lease."

  1. No particulars of the allegation in paragraph 37(d) were sought or provided.
  1. The relevant part of the appellant’s notice of 29 November 2005 requiring breaches to be remedied is paragraph 2(d). It provides:

"You have attempted to assign possession of the premises to another Company without meeting the requirements of the Lease document."

  1. The assignment of lease referred to in paragraph 37 of the counterclaim was an assignment by the first respondent Nashvying Pty Ltd to the second respondent, then called Behana Gorge Enterprises Pty Ltd. The third respondent in a letter to the appellant dated 15 December 2004 wrote:

"My consultant firms are working on a new Environmental Impact Study (EIS) to lodge a fresh application with Cairns City Council for quarry approval.  This application will be in the name of my new company called "Behana Gorge Enterprises Pty Ltd".  Therefore, I request your consent to transfer the following from the current entities to the above Company:

  • Lease No. T652330L and Easement No. T652331T from Nashvying Pty Ltd to Behana Gorge Enterprises Pty Ltd.
  • License [sic] of the Land to the north of the lease (attached plan) from Mohammed Vali Yousefpour to Behana Gorge Enterprises Pty Ltd.

Your cooperation is appreciated."

  1. The appellant gave her consent to the assignments by a document dated 23 December 2004.  There was thus no breach of clause 5(10) and any rights the appellant may have in this regard depend on her claim under the Trade Practices Act which will be discussed shortly.
  1. It is impossible to construe paragraph 2(d) as alleging a failure to offer for sale the lessee’s interest in the Lease pursuant to a right of first refusal. The paragraph is concerned with an attempted assignment, not even an assignment, let alone a sale. It does not identify the term of the Lease which has been allegedly breached and the most obvious conclusion to be drawn is that the allegation concerns a covenant against assignment. An object of s 124 is to give a lessee allegedly in breach "precise information of what is alleged against him and what is demanded of him".[51]  And, as was expressed earlier, the notice failed to contain the note on the prescribed form. Consequently, the notice of 29 November 2005 failed to comply with the requirements of s 124 of the Property Law Act. It follows that the notice could not have terminated the Lease for breach of clause 15. It is therefore not necessary, for present purposes, to decide whether there was a breach of clause 15. That question, however, is relevant to the remaining issue to be decided.
  1. The second respondent, CQ Innovations Pty Ltd, was registered on 15 December 2004, the date of the third respondent’s letter to the appellant. Its name on registration was Behana Gorge Enterprises Pty Ltd and the third respondent was its only director as well as its secretary. In the course of a dispute over disclosure the solicitors for the respondents made the following admission on behalf of their clients:

"In or about August, 2004, instructions were received by Williams Graham Carman to prepare documents which would set up a legal framework for the possible future involvement of TW Hedley (Investments) Pty Ltd with Nashvying Pty Ltd in relation to proposed quarrying operations on the land the subject of the lease and licence referred to in the pleadings."

  1. On 21 January 2005 heads of agreement were entered into between the first, second and third respondents, Thomas Hedley and TW Hedley (Investments) Pty Ltd, a developer well known in the Cairns region. The heads of agreement recited that:

A.The first respondent is the registered lessee of the Quarry Land pursuant to the Lease;

B.The third respondent is a director of the first respondent and is to become a director of the second respondent;

C.TW Hedley (Investments) Pty Ltd wishes to finance a proposed quarry project;

D.Mr Hedley is a director of TW Hedley (Investments) Pty Ltd and is to become a director of the second respondent;

E.The first respondent and TW Hedley (Investments) Pty Ltd wish to develop the quarry business through a joint venture and intend to establish [the second respondent] for that purpose.

  1. Clause 3.1 acknowledged that the third respondent had arranged for the incorporation of the second respondent with himself as the sole director and with the first respondent as the holder of 4,500 ordinary shares. Provision was made in the clause for Hedley Investments, subject to the consent of the lessor to the proposed transfer of the Lease, to subscribe for 400 ordinary shares in the second respondent for $400,000. Clause 4 provided that after the formation of the second respondent and subject to the lessor’s consent under the Lease, the first respondent would enter into a contract to transfer the Lease to the second respondent for a purchase price of $2,500,000.
  1. The third respondent admitted in cross-examination that by 15 December 2004 he had reached agreement in principle with Mr Hedley concerning their proposed agreement and that his solicitors had been working on the documentation of that agreement for some months prior to 15 December 2004. No agreement had been signed by then but it was his expectation that the concluding of an agreement would result in Mr Hedley taking shares in the second respondent.
  1. The primary judge concluded that, as the appellant had freely given her consent to the assignment from the first respondent to the second respondent, she thereby had elected not to exercise her right of first refusal under clause 15 and that, consequently, there was no breach of the clause. The clause however is expressed to operate only where the lessor or lessee "desire to offer for sale [an]…interest in the…Lease." The notion of a "sale" in most contexts, including the present, involves a conveyance or transfer of property from one person to another for a valuable consideration, normally as a result of a contract expressed or implied.[52]
  1. The consent dated 23 December 2004 was for the first respondent to "transfer and assign" its interest. The letter of request of 15 December 2004 did not mention a sale. The appellant was not requested to consent to a sale and she did not do so.
  1. If the operation of clause 15 is to be triggered, having regard to the pleading, it must be because there was an assignment from the first respondent to the second respondent which was pursuant to or in consequence of an "offer for sale" by the first respondent of its interest in the Lease to the second respondent. But no transfer of the first respondent’s interest in the Lease to the second respondent was disclosed and no such transfer was shown to have been lodged for registration or, for that matter, brought into existence. No agreement for sale in respect of that interest between those parties, other than the heads of agreement, is in evidence.
  1. On one construction of it, clause 15 required the first respondent lessee to offer its interest in the Lease for sale to the appellant before offering it for sale to a third party in the event that the first respondent "desire[s] to offer [the interest] for sale". On that construction, the obligation to make an offer is triggered where a party has formulated the terms and conditions of an agreement for sale and proposes to make an offer to a third party on those terms and conditions. That the clause contemplates that terms and conditions of sale will have been formulated before the right to an offer arises may be seen from the obligation to offer the interest to the other party to the Lease "on identical terms and conditions" as "may have been so offered by or to a third party…". Those words do not sit comfortably with the obligation by a party desiring to offer its interest for sale to "first offer" its interest to the other party.
  1. Clause 15 plainly operates when a third party has made an offer to acquire a party’s interest and that party desires to accept the offer. In such a case the requirement that the offeree "first offer" its interest to the other party must be construed as an obligation to offer such interest on the terms of the third party’s offer prior to acceptance of a third party’s offer. Similarly, the clause appears to contemplate that an offer to a third party may be made without breach of the clause if an offer in identical terms is made to the other party to the Lease and if acceptance of that offer will result in a sale of the interest to the other party.
  1. The heads of agreement was entered into about a month after the provision of the consent. It is not suggested this agreement lacks contractual force. But the evidence, although establishing that agreement in principle had been reached with the Hedley interests by 15 December 2004, does not show that the precise terms of the offer the respondents were prepared to make to the Hedley interests had been decided by the third respondent or agreed by the Hedley interests. Consequently, even if the appellant had given a notice which complied with s 124 in respect of the alleged clause 15 breach, such breach has not been proved. In my view, the notice was non-compliant as it insufficiently identified the alleged breach. It is likely that it in fact alleged a breach, which had not been committed: an assignment without consent. Also, for the reasons given in respect of the alleged clause 8(4) breach, the breach was not one incapable of remedy.

The misleading and deceptive conduct claim

  1. The appellant’s case, putting aside allegations of oral representations which were not upheld by the primary judge, is as follows. Before the third respondent on behalf of himself and the other respondents gave the appellant the form of consent which she signed on 23 December 2004, the third respondent telephoned the appellant and told her that he was "changing the name of [the first respondent] to Behana Gorge Enterprises which would have the same number as the [first respondent]." At that time the third respondent intended to enter into the heads of agreement and related agreements and intended that 400 shares in the second respondent be allotted to Investments. The third respondent failed to inform the appellant of these matters and the agreements were subsequently entered into as intended.
  1. By reason of the above conduct the first and third respondents represented to the appellant and intended her to believe that:
  1. the first respondent was merely changing its name to that of the second respondent; and
  1. the first respondent was not transferring or assigning its interest in the Lease to a third party.
  1. The representations were false in that:
  1. the first respondent was not changing its name;
  1. the second respondent was a new entity with a membership different to that of the first respondent;
  1. the first respondent did, or did intend to, transfer or assign its interest in the Lease to a third party.
  1. "The conduct in making the representations in the context of the said arrangements the plaintiffs intended to enter into, and the obligations in clause 5(10) and 15 of the Lease:
  1. was in trade or commerce within the meaning of s.52 of the Act;
  1. was misleading or deceptive in contravention of s.52 of the Act.

48A.In reliance on the representations and induced thereby, the [appellant] signed the consent."

  1. The letter of 15 December 2004 was not relied on in the pleading but was in evidence before the primary judge and referred to by him.
  1. On appeal the argument advanced on behalf of the appellant was that the failure by the third respondent to reveal the role of the Hedley interests, in the context of the third respondent’s contractual obligations, was itself misleading and deceptive. It was submitted that had that information been given to the appellant it would have triggered the enquiries she needed to make to protect her rights under clause 15. According to the argument, the relevant question is whether the respondents’ conduct was such that there was a real chance that the appellant was likely to be lead into error.
  1. Counsel for the respondents relied on the following passage from the reasons of Gleeson CJ in Lam v Ausintel Investments Australia Pty Ltd:[53]

"Even so, a question arises as to how these matters should now be regarded. Where parties are dealing at arms' length in a commercial situation in which they have conflicting interests it will often be the case that one party will be aware of information which, if known to the other, would or might cause that other party to take a different negotiating stance. This does not in itself impose any obligation on the first party to bring the information to the attention of the other party, and failure to do so would not, without more, ordinarily be regarded as dishonesty or even sharp practice. It would normally only be if there were an obligation of full disclosure that a different result would follow. That could occur, for example, by reason of some feature of the relationship between the parties, or because previous communications between them gave rise to a duty to add to or correct earlier information."

  1. The above passage was quoted by the primary judge in his reasons. His Honour found that the relationship between the parties was "a commercial one" and that there was nothing in the evidence which "establishes a special relationship which would require [the respondents] to volunteer to the [appellant] details of the commercial circumstances that brought about the need to seek her consent to the assignment of the Lease".
  1. I would respectfully disagree with that conclusion if, at the time of the conduct relied on by the appellant, the appellant’s right to an offer under clause 15 had been triggered by the respondents’ conduct. In that event, having regard to the obligations under clause 15, the respondents would have been representing, implicitly, that the assignment for which consent was requested was a transaction or part of a transaction which did not give rise to an obligation under clause 15 to make an offer.
  1. It is not necessary to pursue this question any further, however, as it is not a matter within the scope of the relevant allegations in the counterclaim. Those allegations centre on oral representations which had the effect that the appellant was led to believe that the first respondent was merely changing its name to that of the second respondent and that the first respondent was not transferring or assigning to a third party. It is those representations and the beliefs induced thereby which are alleged to have caused the appellant to sign the consent. The primary judge rejected the appellant’s evidence concerning the oral representation and there is no challenge to his findings in this regard. That is not surprising as the third respondent’s letter to the appellant of 15 December 2004 makes it plain that the consent sought is for a transfer from the first respondent to a new or different company. That is also plain on the face of the consent signed by the appellant.
  1. The claims based on the Trade Practices Act thus fail. In my view it is not appropriate to scour the facts with a view to ascertaining whether the respondents were guilty of misleading conduct other than that pleaded. Apart from anything else the respondents will have been denied the opportunity to respond to the new allegations. 

Conclusion

  1. The challenges to the primary judge’s findings that the subject agreements in writing constituted a valid lease and variations of lease and that the Lease was not terminated by the purported notice of termination dated 24 February 2005 have not succeeded. The appellant also appealed against a declaration by the primary judge that the appellant was not lawfully entitled to terminate a deed dated 1 June 1994 entered into between the appellant and her late husband on the one hand and the third respondent on the other.  No argument was advanced on the hearing of the appeal in support of the ground of appeal which related to the deed. 
  1. In summary:
  1. The subject instrument, as amended, is a lease;
  1. The Lease is not an illusory contract;
  1. The instrument containing the Lease does not contain provisions which constitute a profit à prendre distinct from the balance of the provisions of the same instrument, which provisions constitute a lease.
  1. It is a term of the Lease implied by law that the permit/licence referred to in clause 8(4) be obtained within a reasonable time;
  1. In breach of clause 8(4), the permit/licence was not obtained within a reasonable time;
  1. The lessor, in order to terminate the Lease for that breach, had to give notice under and in accordance with s 124 of the Property Law Act requiring the breach to be remedied within a reasonable time;
  1. The notice given by the appellant did not comply with the requirements of s 124 and was not effective to terminate the Lease;
  1. Breaches of clauses 5(10) and 15 were not established.  Had the breaches been established there would have been non-compliance with the notice requirements of s 124 in respect of the breaches.
  1. Breach of s 52 of the Trade Practices Act 1974 was not established; and
  1. The appellant, if she has not done so already, is free to give a further notice requiring the existing breach of clause 8(4) to be remedied within a reasonable time.
  1. I would order that the appeal be allowed only to the extent that the declarations in paragraphs 1.1, 1.2 and 1.3 of the order of 23 April 2007 be set aside and that the following declaration be substituted therefor:

"Neither the lease nor the licence referred to respectively in paragraphs 2 and 7 of the statement of claim filed on 1 March 2005 were terminated by the appellant as alleged by the appellant in the amended defence and counterclaim being exhibit 13 in these proceedings."

  1. I see no need for the declaration in paragraph 1.3 of the order and the declarations in paragraphs 1.1 and 1.2. On one construction, they are broader than necessary or appropriate.
  1. The appellant, although unsuccessful in establishing that the Lease and subject licence were terminated, has had a measure of success in relation to the construction of the Lease. In order to reflect that success I would order that the appellant pay one half of the respondents’ costs of and incidental to the appeal.
  1. DUTNEY J: I have read the reasons for judgment of Muir JA. I agree with his Honour’s conclusion. I have nothing to add to his Honour’s reasons with which I also agree.

Footnotes

[1] At first instance and on appeal, the obtaining of a development approval was treated by the parties as synonymous with the obtaining of an extractive industry permit or extractive quarry licence.

[2] In Form 8 of the forms prescribed by the Real Property Regulations 1986.

[3] (1969) 121 CLR 353 at 356.

[4] See eg, 27(1) Halsbury’s Laws of England 4th ed Reissue para 1; Butterworths Australian Legal Dictionary, p 343; Stroud’s Judicial Dictionary of Words and Phrases, p 673.

[5] Radaich v Smith (1959) 101 CLR 209.

[6] For a discussion of the diminished significance of the role of the "demise" in the determination of rights and obligations under contemporary leases, see Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 51-53 per Deane J.

[7] See Woodfall, Landlord and Tenant, para 7.043 and the cases there cited.

[8] (1954) 91 CLR 486.

[9] (1955) 93 CLR 479.

[10] Coal Commission v Earl Fitzwilliam’s Royalties Company [1942] 1 Ch 365 at 374; Pacific Coal Co Pty Ltd v Perpetual Trustees Co Ltd (1954) 91 CLR 486 at 506 and (1955) 93 CLR 479 at 484 (PC); Woodfall, Landlord and Tenant, para 7.043 and 31 Halsbury’s Laws of England, 4th ed, para 236.

[11] See 26 Halsbury’s Laws of England, 3rd ed, paragraphs 899-914 and the cases there cited.

[12] Clause 5(8), 5(11) and 5(12).

[13] 14 Halsbury’s Laws of England, 4th ed para 240.

[14] Commissioner of Stamp Duties (NSW) v Henry (1964) 114 CLR 322; Frank Sampson Pty Ltd v Commissioner of Stamp Duties (1975) Qd R 380; Parley & Lewers (Qld) Pty Ltd v Commissioner of Stamp Duties [1977] Qd R 240; and 26 Halsbury’s Laws of England, 3rd ed paragraphs 928-930.

[15] Sections 97E-97M.

[16] (1969) 121 CLR 353 at 356.

[17] Form 8, item 11.

[18] 3 Halsbury’s Laws of England 3rd ed, paragraph 918.

[19] Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 and Queensland Electricity Generating Board v New Hope Collieries Pty Ltd [1989] 1 Lloyd’s Rep 205 (PC).

[20] F & G Sykes (Wessex) Ltd v Fine Fare Ltd (1967) 1 Lloyds Rep 53 at 57 and York Air Conditioning and Refrigeration (A/Asia) Pty Ltd v The Commonwealth (1949) 80 CLR 11 at 53.

[21] (1949) 80 CLR 11 at 62 and see also Perri v Coolangatta Investments (1982) 149 CLR 537 at 543.

[22] (1982) 149 CLR 337 at 347.

[23] Majala Pty Limited v Ellas [1949] VLR 104, 109 and Fuller’s Theatre and Vaudeville Company Limited v Rofe [1923] AC 435 at 443.

[24] Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607 per Mason J referring to Butt v M’Donald (1896) 7 QLJ 68 at pp 70-71.

[25] Butcher v Port (1985) 3 ANZ Insurance Cases 78,922; Panamena Europea Navigacion (Compania Limitada) v Frederick Leyland & Co Ltd [1947] AC 428 and Foran v Wight (1989) 168 CLR 385 at 396.

[26] Mackay v Dick (1881) 6 App Cas 251 at 270.

[27] Integrated Planning Act 1997 s 3.4.4.

[28] Integrated Planning Act 1997, s 3.4.5 and s 3.4.6.

[29] Integrated Planning Act 1997 s 3.4.7.

[30] Lease dated 6 August 1992, amended in 1994.

[31] Ex parte Taylor [1980] Qd R 253.

[32] [1974] 1 QB 575.

[33] (2006) 1 WLR 201.

[34] [1985] 2 All ER 998.

[35] At p 1008.

[36] At p 1015.

[37] At p 1013.

[38] In paragraph 63.

[39] At paragraph 71.

[40] For a discussion of the English position, see Woodfall, Landlord and Tenant, paras 17.105 and 17.132.

[41] (1948) 48 SR (NSW) 417.

[42] [1934] 1 KB 695.

[43] At 425.

[44] At 426.

[45] At 427.

[46] (1990) 21 NSWLR 689 at 702 and 722-723.

[47] [2001] NSWCA 187, CA Nos 40924 of 1999 and 40325 of 2000, 21 June 2001.

[48] Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17 at 29-31 per Mason J, with whose reasons Dawson J agreed, and per Brennan J at 40, 41.

[49] For example: Ansett Australia Ltd v Diners Club Pty Ltd [2007] VSC 102; SC NO 2017 of 2004, 30 April 2007; Konica Business Machines Australia Pty Ltd v Tizine Pty Ltd (1992) 26 NSWLR 687 and Glentham Pty Ltd v Luxer Holdings Pty Ltd [2006] WASC 132; CIV No 2733 of 2001, 30 June 2006.

[50] In para 37.

[51] Horsey Estate Limited v Steiger [1899] 2 QB 79 at 91

[52] See; eg: John Foster & Sons Limited v The Commissioners of Inland Revenue [1894] 1 QB 516; Attorney-General v Felixstowe Gas Light Company [1907] 2 KB 984; Kirkness v John Hudson & Co Ltd [1955] AC 696.

[53] (1989) 97 FLR 458 at 475.

Close

Editorial Notes

  • Published Case Name:

    Nashvying P/L & Ors v Giacomi

  • Shortened Case Name:

    Nashvying Pty Ltd v Giacomi

  • MNC:

    [2007] QCA 454

  • Court:

    QCA

  • Judge(s):

    McMurdo P, Muir JA, Dutney J

  • Date:

    21 Dec 2007

  • White Star Case:

    Yes

Litigation History

No Litigation History

Appeal Status

No Status