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400 George Street (Qld) Pty Limited v BG International Limited

 

[2010] QSC 66

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

400 George Street (Qld) Pty Limited & Ors v BG International Limited [2010] QSC 66

PARTIES:

400 GEORGE STREET (QLD) PTY LIMITED ACN 114 251 491

First Plaintiff

TRINKAUS AUSTRALIEN IMMOBILIEN-FONDS NR 1 TREUHAND GMBH ABRN 128 822 328

Second Plaintiff

LEIGHTON PROERTIES PTY LIMITED ACN 009 765 379

Third Plaintiff

GROSVENOR AUSTRALIA INVESTMENTS PTY LIMITED ACN 107 277 592

Fourth Plaintiff

v

BG INTERNATIONAL LIMITED

ARBN 114 818 825

Defendant

FILE NO/S:

BS 13481 of 2008

DIVISION:

Trial Division

PROCEEDING:

Hearing

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

16 March 2010

DELIVERED AT:

Brisbane 

HEARING DATE:

16-19 November 2009

JUDGE:

McMurdo J

ORDER:

The claim is dismissed.

CATCHWORDS:

CONTRACTS – GENREAL CONTRACTUAL PRINCIPLES – OFFER AND ACCEPTANCE – where the plaintiffs’ solicitors and the defendant’s solicitors negotiated the terms of an agreement for lease and a lease instrument – where the plaintiffs’ solicitors sent copies of the then unexecuted agreement for lease and the lease instrument to the defendant’s solicitors – where the defendant executed the agreement for lease and the lease instrument and the defendant’s solicitors delivered the executed documents to the plaintiffs’ solicitors – whether the plaintiffs’ solicitors sending the then unexecuted documents to the defendant’s solicitors constituted an offer, which was accepted by the defendant executing and delivering the documents

DEEDS – WHAT AMOUNTS TO A DEED – GENERALLY – where the agreement for lease was drafted in terms of a contract but the signing page indicated that the document was executed as a deed – whether the agreement for lease was a deed

ESTOPPEL – GENERAL PRINCIPLES – where the defendant, but not the plaintiffs, had executed an agreement for lease and a lease instrument – where the plaintiffs claimed to have assumed that an agreement was in place between the parties and incurred certain expenses on the faith of this assumption – whether the defendant is estopped from denying that a binding agreement existed

Corporations Act 2001 (Cth), s 127

Foreign Acquisitions and Takeovers Act 1975 (Cth)

Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485

Beesly v Hallwood Estates Ltd [1961] 1 Ch 105

Commonwealth of Australia v Verwayen (1990) 170 CLR 394  

Dean and Westham Holdings Pty Ltd v Lloyd (1991) 3 WAR 235

Ex parte Ryrie [1983] 2 Qd R 194

FJ Richards Pty Ltd v Mills Pty Ltd [1995] 1 Qd R 1

Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109 

Interchase Corporation Ltd (in liq) v Commissioner of Stamp Duties (Qld) (1993) 27 ATR 154

Macquarie Bank Limited v Lin [2005] QSC 221

Meredith Projects Pty Ltd v Fletcher Construction Australia Ltd [2000] NSWSC 493

Nowrani Pty Ltd v Brown [1989] 2 Qd R 582

Pianta v National Finance & Trustees Limited (1964) 180 CLR 146

Rose v Commissioner of Stamps (1979) 22 SASR 84

Rymark Australia Development Consultants Pty Ltd v Draper [1977] Qd R 336

Summit Properties Pty Ltd v Comserv (No. 784) Pty Ltd (1981) 2 BPR 9173

Vincent v Premo Enterprises (Voucher Sales) Ltd [1969] 2 QB 609

Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387

Xenos v Wickham (1867) LR 2 HL 296

COUNSEL:

Mr P L O’Shea SC with Mr T J Bradley for the plaintiffs

Mr B D O’Donnell QC with Mr K A Barlow for the defendant

SOLICITORS:

Freehills for the plaintiffs

Mallesons Stephen Jaques for the defendant

  1. The first and second plaintiffs are the registered owners of an office building at 400 George Street, Brisbane.  The third and fourth plaintiffs constructed the building and during that construction, they were responsible for introducing potential tenants.
  1. In late 2008, when the building was about a year from being completed, each of the plaintiffs and the defendant executed documents in the form of an agreement for lease and an instrument of lease.  They provided for a lease to the defendant of four floors of the building, from its completion.  The documents were not executed by the parties at the same time.  They were executed first by the defendant, which I will call “BG”.  They were executed last by the second plaintiff, which I will call “Trinkaus”, about seven weeks later.  By the time BG was told that all other parties had executed the documents, BG had changed its mind and purported to withdraw from the transaction.  The ultimate question in this case is whether it was, or should be, permitted to do so.
  1. The plaintiffs seek declaratory relief. They seek a declaration that the parties entered into a binding contract in the terms of the agreement for lease. Their case is that by their solicitors sending the then unexecuted documents to the solicitors for BG for execution, the plaintiffs made an offer to contract which was accepted by BG’s execution of the documents and notification of the execution to the plaintiffs’ solicitors. BG defends that case upon the basis that it was the offeror, and that it withdrew its offer prior to notification of an acceptance by the plaintiffs.
  1. Alternatively, the plaintiffs say that BG became bound by the agreement for lease because it was a deed, duly executed and delivered by BG. Accordingly, it was not entitled to withdraw although Trinkaus was yet to execute the same document. Even if BG delivered this alleged deed as an escrow, on condition that it would not have to perform its obligations unless and until the plaintiffs executed the document and notified BG of their execution, nevertheless BG would not have been entitled to withdraw as it purported to do. BG says that the document was not a deed, or that it was not delivered. Alternatively, it argues that it should be relieved from performance of the deed because more than a reasonable time elapsed between its execution and that of Trinkaus. Again alternatively, it says that Trinkaus has not duly executed the document, so that if the deed was delivered as an escrow, the relevant condition was not fulfilled at all.
  1. Thirdly, the plaintiffs claim that BG is estopped from denying its obligation to perform in terms of the agreement for lease, upon the basis that the plaintiffs did various things, and in particular paid commission to their letting agents, on the faith of BG being bound by it.

Before the documents were executed

  1. The negotiations commenced in about March 2008.  At first the proposal was for a lease of three floors with a right of first refusal over a fourth floor.  The term was to be eight years with two options to renew, each of five years.
  1. On 18 April 2008 a letter was written to BG on behalf of the third and fourth plaintiffs.  It was described as a “letter of offer”.  It set out “the revised terms available to BG”, including the area to be leased, the term, the options to renew, the commencement date and the rental.  Towards the end of the letter was this:

“37Special Condition:

No legally binding agreement is made by this offer.  All documentation is subject to a mutually agreed legal document by both parties.

This offer is made subject to the approval of the Boards of the Joint Venture companies [the third and fourth plaintiffs].”

  1. BG was asked to indicate its concurrence by signing and returning the letter. BG did so by its Mr Maxwell, whose signature was dated 23 April 2008.  At the same time BG amended that clause 37 and added a further condition, clause 38, as follows:

“37No legally binding agreement is made by the parties’ execution of this letter.  All documentation is subject to a mutually agreed legal document by both parties.

38Exclusivity

In consideration of the Lessee entering into this agreement, the Lessor agrees with the Lessee that the Lessor will not negotiate or enter into any agreement with any person in relation to the lease or occupation of the Premises from the date of this agreement until the earlier of:

(a)31 May 2008; and

(b)the Lessee withdraws from negotiations with the Lessor; and

(c)execution of a formal agreement for lease between the Lessor and the Lessee for the lease of the premises.

Despite clause 37, the parties intend that the exclusivity arrangements under this clause 38 will constitute a legal and binding agreement between the parties in relation to exclusivity.”

The case for BG strongly relies upon this document.  For BG it is said that once this letter was countersigned by BG, the parties negotiated upon a “subject to contract” premise, meaning that each understood, or should have understood, that a party could withdraw before all of the parties had executed and exchanged the formal documents.

  1. The respective arguments descended into detailed analyses, in parts sentence by sentence, of this nine page letter.  But it is unnecessary to do so here; neither party seeks to give this document contractual force and its relevance is as a circumstance affecting the characterisation of steps taken nearly six months later when the documents were to be signed.  As I will discuss, it is also a relevant circumstance in assessing whether the agreement for lease took effect as a deed.  The letter at least made it clear that BG did not intend to be bound until there was a “mutually agreed legal document” or “execution of a formal Agreement for lease between the Lessor and the Lessee”.  But then the plaintiffs’ case is that the agreement for lease was a “mutually agreed legal document” and that there was execution of a formal agreement for lease, at least by the proposed lessee. 
  1. In my view, the letter does provide some support for BG’s case. Clause 38, as added by BG, should have indicated to the plaintiffs that at least in April 2008, BG was proceeding upon the basis that it would not be bound until the parties had executed a formal contract.  Of course, BG could have later agreed to become bound before execution of such a document.  But the effect of the April letter, particularly as amended by BG, was that some clear words or conduct from BG would be necessary to demonstrate that change.
  1. Such an intention, at least on the part of BG, was hardly unusual. This was a large transaction involving, even at that stage, a lease over eight years at an initial rental of about $2.8 million per year and the construction of the building to accommodate the particular requirements of BG for its premises.
  1. Over the next five months or so, the parties negotiated the terms of the proposed agreement for lease and the lease itself.  Drafts were prepared by Freehills, the solicitors for the plaintiffs, and sent to and discussed with Mallesons Stephen Jaques, the solicitors for BG.  The proposal became one for the lease of four floors with a right of first refusal over a fifth floor.  Ultimately the solicitors reached a point where it seemed that there was nothing further to be resolved by them in the drafting process.  That point was reached on 7 October 2008, when Mallesons sent to Freehills pages from the then current drafts containing certain handwritten amendments.  They wrote that

“BG has been through the documents but asked if we can have updated, clean versions to sign … If that will be a problem, can you email … copies of the documents [to] compile at this end so that we can get the documents executed”.

  1. On the same day Freehills delivered those “clean” versions of the documents, under cover of this letter:

“We refer to previous correspondence and attach:

  1. Agreement for lease (3 copies); and
  1. Lease (3 copies),

for execution where indicated.  Once executed please return the documents to us together with:

  1. a copy of the power of attorney; and
  1. bank guarantee complying with clause 14 of the Agreement or Lease.

We look forward to receipt of the executed documents. …”

  1. The plaintiffs’ case is that this letter with its attachments constituted an offer capable of immediate acceptance by BG. Yet the agreement for lease was in a form providing for execution by each of the plaintiffs.

The documents

  1. The agreement for lease document was entitled, on its cover, “Agreement” and also “Agreement for Lease”. Not until page 50 of the document, which was headed “Signing page”, was there any indication that the document was to be a deed.  Behind the cover sheet was a table of contents followed by the first numbered page which, again, was headed “The agreement” and “Agreement for Lease”.  There was then a blank space for the insertion of the date of the agreement.  This was not completed by BG:  it returned the executed document as still undated.  Indeed it remained undated even after execution by each of the plaintiffs.  As I will discuss, there were terms of the agreement for lease which expressed obligations according to “the date of this Agreement”.
  1. The first and second plaintiffs were described in the document as the Landlord and the third and fourth plaintiffs as the Developer.  There were promises by the Developer to complete the construction of the building and to do certain works in the area to be leased to BG.  The costs of fitting out of the premises, broadly speaking, were to be borne by the Developer.  There was an agreement by the Landlord to grant a lease to BG and by BG to accept that lease.  The proposed instrument of lease was incorporated within the agreement for lease. 
  1. The agreement for lease set out some matters as “Background” (rather than describing them as recitals), as follows:

“1.The Landlord is or is entitled to be the registered proprietor of the Land.

  1. The Landlord has engaged the Developer as the developer of the Building on the Land.
  1. The Developer agrees to carry out or procure the carrying out of the Base Building Works in accordance with this Agreement.
  1. The Developer agrees to pay the Fitout Works Cost to a maximum of the Incentive Amount in accordance with this Agreement.
  1. In accordance with this Agreement, the Landlord will grant the Lease to the Lessee and the Lessee agrees to take the Lease.”
  1. On the next page was this:

The agreement

The parties agreeas set out in the Operative part of this agreement, in consideration of, among other things, the mutual promises contained in this agreement.”

  1. The commencement date of the lease was to be the day following that which was 56 days from the date of practical completion of (in effect) the construction of the building, provided that the commencement date was to be not before 1 November 2009.
  1. By cl 4.3 of the agreement for lease, there was a term which required BG, if it wished to carry out fitout works requiring an alteration to certain services in the building, to submit details to the Developer of its proposal by 15 October 2008, thereby providing some indication of an intention that the parties should be bound by that date.  But this is not inconsistent with BG’s case, because that would have allowed for a week for the various parties to execute the document, which need not have appeared to BG as unrealistic. 
  1. By cl 9.3, the Developer was to prepare the proposed instrument of lease in the form which was attached “amended and completed in accordance with this clause”.  This was a reference to cl 9.3(b), by which the Developer was authorised by BG “to complete and deliver the Lease” by inserting certain particulars such as the commencement date and other things which were not then known.  Clause 9.4 was as follows:

“9.4Execution of Lease

The Lessee must execute the three copies of the Lease simultaneously with the execution of this Agreement and submit the signed Leases to the Developer’s solicitor.  The Leases will be held in escrow by the Developer’s solicitor until the Commencement Date whereupon they may be released from escrow, completed in accordance with clause 9.3 and the Developer will cause them to be executed by the Landlord.”

  1. Clause 14 provided for an unconditional bank bond to be provided by BG.  This was to secure “the Guaranteed Sum” which was specified elsewhere[1] as $5,225,332.  Clause 14.1(a) provided that BG was to obtain and deliver to the Developer such a bond “on or by the date of this Agreement”.  No such bond was obtained and delivered when BG’s solicitors sent the documents which it had executed to the plaintiffs’ solicitors, as they did on 10 October 2008.  And as already mentioned, they returned the agreement for lease without dating it. 
  1. There were other provisions of the agreement for lease which operated according to “the date of this Agreement”. One of those dealt with the right of first refusal being given to BG over an additional floor. Clause 5.8 of the agreement for lease provided that “clause 15 of the Lease applies to this Agreement”.  Clause 15.3 of the attached form of lease provided that if at any time after “the date of the Agreement for Lease” the Landlord wished to let the relevant area, the Landlord was to first offer to let that area to BG.
  1. Another such provision was cl 19 of the agreement for lease which made the agreement conditional on the Treasurer not objecting to the Lease under the Foreign Acquisitions and Takeovers Act 1975 (Cth).  Clause 19.2 required BG, if it had not already done so, to give the Treasurer notice under s 26A of that Act “within one week after the date of this Agreement”. 
  1. The attached form of lease was in the form required for registration under the Land Title Act 1994 (Qld).  This document was more clearly intended to be a deed.  In particular cl 1.13 of the instrument of lease was in these terms:

“1.13Effect of execution

Each Tenant and Covenantor is bound by this Lease even though:

(a)any other Tenant or Covenantor has not executed or may never execute this Lease or the execution of this Lease by any other Tenant or Covenantor is or may become void or voidable; or

(b)this Lease has not been registered.

This Lease is a deed, even if it is not registered.”

And the lease referred to its terms as covenants.

  1. As requested, each of the three copies of the agreement for lease and the lease instrument was executed for BG and returned to Freehills. They were executed by BG’s duly appointed attorney, Mr Maxwell, on 9 October 2008.  He was the managing director of the Australian office of BG.  He had extensive background in mining and industrial management and engineering.  He was not a lawyer and had no understanding of the law relating to obligations under deeds.  He signed the agreement for lease on a page at the end of the document.  It was there typed that the document was “signed, sealed and delivered” by him.  And below his signature appeared these words:  “by executing this deed the attorney states that the attorney has received no notice of revocation of the power of attorney”.  This was two pages after that referred to already as the so called “Signing page”, where there appeared the words “Executed as a deed”. 
  1. In the signing pages, there were provisions for the application of the common seals of the third and fourth plaintiffs.  As to the first plaintiff, the document was to be executed by it against these typed words:

“Signed by

400 George Street (Qld) Pty Limited

in accordance with its constitution and section 127 of the Corporations Act 2001 in the presence of”.

Section 127 of the Corporations Act 2001 (Cth) provides for the execution by a company of a document without the use of a common seal and by s 127(3), a company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in one of the ways specified in the section.  Thus this proposed execution by the first plaintiff would have sufficed for the purposes of the document being its deed.  But s 127 serves a wider purpose than providing for the execution of deeds and this reference to the section was not consistent only with this document being a deed. 

  1. There was a further page on which Trinkaus was to sign next to these words:

“Signed sealed and delivered by

Trinkaus Australien Immobilien-Fonds Nr 1 Treuhand GmbH by its attorney”.

The letter from Freehills of 7 October 2008 had requested provision of a power of attorney.  This was the authority by which Mr Maxwell was to execute the documents.  It was emailed by Mallesons to Freehills on 8 October 2008.

  1. Whilst the documents were with BG, there were emails passing between Freehills and Baker & McKenzie.  That firm was retained by Trinkaus to advise it in relation to the transaction although Freehills represented Trinkaus and the other plaintiffs in the dealings with BG’s solicitors.  Late on 7 October 2008, Freehills emailed Baker & McKenzie saying that some “minor amendments” had been made to a previous draft of the documents and summarising them.  On 8 October Baker & McKenzie replied with an enquiry as to the effect of one of those amendments.  This and subsequent correspondence involving Baker & McKenzie shows that after 10 October 2008, Trinkaus was taking its own advice before executing the documents. 
  1. On 15 October 2008, Freehills delivered the documents to the first and fourth plaintiffs under cover of a letter which included this:

“We confirm that the documents:

  1. are based on the pro forma Agreement for Lease and Lease for the building previously settled with you;
  1. the pro forma documents have been amended to reflect the commercial terms agreed with the Tenant and otherwise amended in accordance with your instructions;
  1. contain no unusual terms and are appropriate for a transaction of this nature; and
  1. are in order for execution by 400 George Street (QLD) Pty Limited as Landlord and Grosvenor Australia Investments Pty Ltd as Developer.

Please contact us should you have any queries, otherwise we look forward to receipt of the executed documents in due course.”

  1. The documents were executed by the first and fourth plaintiffs on or about 21 October 2008 and by the third plaintiff on a subsequent day in October.  Still at this stage the agreement for lease remained undated.  On 29 October 2008, Freehills sent to Baker & McKenzie the agreement for lease and lease executed by all parties other than Trinkaus.
  1. In the first week of November 2008, real estate agents acting for BG enquired of Jones Lang LaSalle, agents acting for the plaintiffs, about the possibility of BG taking a lease of two further floors.
  1. By the beginning of the last week in November 2008, the documents had still not been executed and returned by Trinkaus.  They had been sent to Trinkaus in Germany
  1. The plaintiffs’ evidence is that Trinkaus executed the documents on 25 November 2008.  That evidence is open to doubt, and Trinkaus may not have executed them until after BG purported to withdraw on 27 November 2008.  But it is unnecessary to resolve that question because clearly BG’s withdrawal preceded any notification to BG that all of the plaintiffs, Trinkaus included, had executed the documents.  So for the contract case, if there was no contract concluded by BG’s returning the documents executed by it, BG was entitled to withdraw its offer before notification of any acceptance. 
  1. At least by the evening of 27 November, the documents had been executed by Trinkaus and the pages on which it had executed were emailed to Freehills and Baker & McKenzie.
  1. On 27 November, Mallesons for BG wrote to Freehills purporting to withdraw BG’s offer to enter into the agreement.  On the same day Freehills replied contending, as the plaintiffs do in these proceedings, that there had been a concluded agreement from 10 October 2008.
  1. The reason for BG’s withdrawal was not to do with some predicament caused by the delay in the plaintiffs’ execution of the documents. It was that BG had acquired or was in the process of acquiring the interests of Queensland Gas Company Limited, effectively resulting in the merger of those companies and a substantial increase in the amount of office space which BG would require.

The contract case

  1. The plaintiffs’ case is that they became contractually bound, not by their executing the agreement for lease, but by their solicitors’ letter of 7 October 2008 being accepted by BG.  That is an unusual way for such a contract to be made for several reasons.  The first is that whilst the execution of the contract document by one side of the transaction (BG) would have a contractual effect, the execution by the other side would be of no effect.  Yet this document was apparently intended for the execution by each of the plaintiffs.  Of course, if the intention was that the document was to operate as a deed, the document had to be executed by the plaintiffs.  But if that were the case, the intention would have been that the plaintiffs would be bound only from their execution and not from the unexecuted documents being sent to BG by their solicitors.
  1. Secondly, the notion that an agreement such as this would be made by solicitors for their clients is inconsistent with the well established limitation upon the authority of solicitors, absent some specific retainer, to contract on their clients’ behalf. In the context of a proposed sale or lease of land, in general the solicitor is retained to settle the written terms and to that end to negotiate and agree with the other party’s representatives the terms which that party could be expected to accept. This does not confer authority to contract on behalf of the solicitor’s client; such an authority must be given expressly or by necessary implication from the particular circumstances of the case: Pianta v National Finance & Trustees Limited[2]; Rymark Australia Development Consultants Pty Ltd v Draper[3]; Summit Properties Pty Ltd v Comserv (No. 784) Pty Ltd[4]; Nowrani Pty Ltd v Brown[5] . There was apparently nothing in the circumstances of this case to indicate to BG that Freehills had specific authority to contract on their clients’ behalf.  Indeed had that been the case, it would have been expected that Freehills would have themselves signed the agreement for lease. 
  1. Freehills did not ask that the document be dated when it was executed by BG. As discussed, this date was essential for the operation of certain terms and in particular, for the provision of the bank bond. And it is also significant that when Mallesons returned the documents as executed by BG, Freehills did not then call for the provision of the bank bond, indicating that the plaintiffs did not consider that BG was then bound.
  1. The plaintiffs put some faith in the fact that correspondence passed between BG and the Developer as to the design of the fit-out. But correspondence about that matter had been underway prior to 10 October 2008.
  1. Further, there is the April 2008 letter.  This did not make it impossible for the parties to agree in the way now alleged by the plaintiffs; but it is a circumstance indicating that, on an objective view, there was not a mutual intention to be bound as from BG’s execution of the documents.  BG had made it clear that there should be no contract until the formal document had been executed.  It should not be thought that this referred only to BG’s own execution.  On any realistic view, BG had said that there would be no agreement until a formal document had been executed by all parties.  Nothing had passed between the solicitors, or between the parties, to suggest that BG’s position had altered from the April letter.
  1. For these reasons it must be concluded that Freehills’ letter of 7 October 2008 was not an offer capable of immediate acceptance.  There was no contract made on 10 October 2008. 

The deed case

  1. The first and critical question is whether the agreement for lease was a deed. According to the definition of a deed in Norton on Deeds:[6]

“A deed is a writing (i) on paper, vellum or parchment, (ii) sealed and (iii) delivered, whereby an interest, right, or property passes, or an obligation binding on some person is created, or which is in affirmance of some act whereby an interest, right, or property has passed.”

But as several judgments and commentators[7] have noted, it is also necessary that there be an intention on the part of the party executing the document that it should take effect as a deed.

  1. This requirement was considered by the Court of Appeal of this Court in Interchase Corporation Ltd (in liq) v Commissioner of Stamp Duties (Qld)[8].  In that case the appellant had executed a document guaranteeing the performance by the purchaser under a contract for the sale of land.  It had executed the document under its corporate seal.  The sole question was whether the instrument was a deed.  The Court (Davies JA, Ambrose and White JJ) said:[9]

“The question whether an instrument under seal is a deed depends on whether it was intended to operate as the deed of the person executing it, that is whether it was intended to be immediately binding on that person in the sense that, whether it was intended to operate immediately or subject to a condition, it could not be recalled by that person.  A deed, even one “delivered” conditionally, that is, as an escrow, is in this respect different from a contract.  A contract is not binding on an offeror until acceptance by the offeree.  A deed is binding on its maker, in the sense in which we have indicated, immediately upon its delivery:  Alan Estates Ltd v WG Stores Ltd [1982] 1 Ch 511 at 520-1, 523, 526-7; Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps [1985] VR 70 at 75; Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310 at 357.  Formerly “delivery” meant an act done evincing an intention to be bound.  Now by s 47(3) of the Property Law Act 1974 delivery is defined to mean the intention to be legally bound either immediately or subject to fulfilment of a condition; and subs (2) provides that delivery may be inferred from any fact or circumstance, including words or conduct, indicative of delivery.  Section 47(1) displaces a common law presumption that execution of an instrument in the form of a deed imports delivery:  Ex parte Ryrie [1983] 2 Qd R 194 at 197.  Nevertheless the section contemplates that a document may evince an intention that delivery should be inferred from execution.”

That document was held not to be a deed.  There was nothing within the document itself which referred to it as a deed, although it was described as such on a back sheet to which the court attributed no significance.  The most important consideration, in the court’s view, was that the opening clause of the document provided that the guarantee was given in consideration of the vendor agreeing to enter into the contract of sale.  The court said:[10]

“The execution of the contract of sale by [the vendor] is intended by [the purchaser] to provide the consideration for its obligation stated in the instrument.  Of course, if the instrument were intended to operate as a deed no such consideration would be necessary.”

The same observation should be made about the present document.  It begins with the statement that the parties agree “in consideration of, among other things, the mutual promises contained in this agreement”.

  1. The essential difference between BG’s executing the document as a deed, rather than as a mere agreement for lease, was that if it was a deed, BG was unable to withdraw from the transaction whilst waiting for the other parties to execute the document. In Vincent v Premo Enterprises (Voucher Sales) Ltd[11], Lord Denning MR said:

“A deed is very different from a contract.  On a contract for the sale of land, the contract is not binding on the parties until they have exchanged their parts.  But with a deed it is different.  A deed is binding on the maker of it, even though the parts have not been exchanged, as long as it has been signed, sealed and delivered.”

  1. A document may be executed as a deed but be delivered as an escrow, that is to say upon the condition that the obligations of the maker of the document are not to be performed until some condition is satisfied. In that event the document becomes a deed which that party is bound to perform once the condition is satisfied, without the need for any further delivery.[12]  But even in such a case, the party which has executed the instrument cannot withdraw pending the satisfaction of the condition.  In Beesly v Hallwood Estates Ltd[13], Harman LJ said:

“[I]f you do deliver a document as an escrow it is your act and deed and it is not recallable by you.  If, of course, the condition be never performed, it never becomes binding, and I suppose there must come a time, if there be unreasonable delay in the performance of the condition, when, in these days at any rate where equitable principles govern the actions of the court, the person or firm that has executed the escrow would be released from its obligation.”

In the same case, Lord Evershed MR said:[14]

“[T]here is an important distinction in this respect between an instrument in writing, which may be executed conditionally, and a deed.  For in the case of the former, until the condition is performed, there is nothing at all.  The position is not the same in the case of an instrument under seal executed and delivered, for in the latter case ... when the time has arrived or the condition has been performed the delivery becomes absolute and the maker of the deed is absolutely bound by it whether he has parted with its possession or not.”

  1. In Xenos v Wickham[15], in a passage frequently cited, Blackburn J said:

“I can, on this part of the case, do little more than state to your Lordships my opinion, that no particular technical form of words or acts is necessary to render an instrument the deed of the party sealing it.  The mere affixing the seal does not render it a deed; but as soon as there are acts or words sufficient to shew that it is intended by the party to be executed as his deed presently binding on him, it is sufficient.  The most apt and expressive mode of indicating such an intention is to hand it over, saying:  “I deliver this as my deed;” but any other words or acts that sufficiently shew that it was intended to be finally executed will do as well.”

  1. The fact that the parties have described the document in some part of it as a deed is not decisive. Thus in Meredith Projects Pty Ltd v Fletcher Construction Australia Ltd[16], Rolfe J held that an agreement for building construction which was executed in terms of “signed, sealed and delivered” and with a statement that the document was a deed, in all the circumstances did not constitute a deed.  Those circumstances included firstly the fact that the document was described as “Articles of Agreement”, indicating that it was not a deed but rather a document to take effect or otherwise according to the law of contract.  Secondly, there was no need for the document to have been a deed to overcome any want of consideration.  Thirdly, the operative clauses were not consistent with the document being a deed.  As in the present case, the argument for its being a deed came only from where the document was executed.  There were also the circumstances that it was “quite usual for a building contract to be in the form of an agreement under hand”, the absence of any legal requirement or reason why the document should be in the form of a deed and the “continued reference throughout to its being a Contract and to matters having been agreed”.[17]  Against those circumstances, Rolfe J weighed the terms of the attestation clause and its reference to a deed but said that:[18]

“In my opinion, these indicia are insufficient to lead to the view that the intent to be construed from the document is that it is a deed.  If the defendant had such an intention, it seems to me that the high probability is that it would have required the document to be stated to be a deed and executed unequivocally by all parties as such.  I rather think, and there is surmise in this, that its form of attestation arose because it was being executed pursuant to a power of attorney.”

Many of those observations can be made in the present case.  As to that last matter, an earlier draft of the agreement for lease, sent by Freehills to Mallesons on 6 May 2008, had provided for BG to execute next to words which simply recorded that its common seal had been affixed in the presence of two relevant persons, without reference to “delivery” of the document. 

  1. Similarly, in FJ Richards Pty Ltd v Mills Pty Ltd[19], Kelly SPJ held that a document recording the appointment of a real estate agent, which described itself both as an agreement and as a deed (and which was under the common seal of each party), was not a deed.
  1. In Rose v Commissioner of Stamps[20], it was held that a document which described itself as an agreement, but which was signed by each party alongside the words “signed, sealed and delivered …”, was not a deed.  The document recorded an agreement for a loan of money and it was held to be assessable for stamp duty not as a deed but as an “agreement” not under seal, the words “sealed and delivered” being described by Zelling J as “surplusage”.  He noted that throughout the document it described itself as an agreement and not a deed and that it was not a document which needed to be executed under seal.  Zelling J also admitted evidence from the parties as to what, at the time of execution, each party thought was the effect of the document, which was inconsistent with its being a deed. 
  1. As to that last matter, in Dean and Westham Holdings Pty Ltd v Lloyd[21], Ipp J (with whom Malcolm CJ agreed) said that “[t]he intent of the parties in this respect may, in appropriate cases, be discerned from extrinsic evidence concerning the words or acts of the parties, or from an examination of the words contained in the document itself.”[22]  Wallace J said that in determining whether, upon a proper construction, a document was intended to be a deed, “regard may be had to the object thereof as that appears in the instrument itself”.[23]
  1. With one possible exception, the effect of the authorities, in my view, is well summarised in Butt, Land Law[24] as follows:

“Although all deeds must comply with the relevant statutory and (to the extent that they survive) common law formalities, not all instruments that comply with those formalities are deeds.  Whether an instrument is a deed depends on whether the parties intended it to be a deed.  That intention is gleaned from considering the instrument’s form, substance and object as a whole.  Important factors include whether the instrument reflects the phraseology and structure commonly found in deeds, and whether it is cast in the most solemn form of documentation appropriate for that particular transaction.  Generally, an unregistered Torrens title dealing is not a deed (although nothing prevents the parties from amending its form to make it one), but it becomes one on registration.

For this purpose, extrinsic evidence is admissible in determining the parties’ intention when executing the instrument.  The parties’ subjective intention is relevant – the court is not restricted to deducing their intention solely from the instrument itself.  The instrument’s self-description as a “deed” or as a mere “agreement” is also relevant, but not decisive:  for the cases show that an instrument calling itself an agreement may be a deed and that an instrument calling itself a deed may be a mere agreement.”

  1. The qualification is that, as already mentioned, there is a difference of judicial opinion as to the relevance of evidence of a party’s own understanding of the effect of the document which is said to be its deed. In the present case there is evidence from Mr Maxwell that he did not believe that BG would be bound by the document until “the landlord had signed”.  I accept that evidence.  There is no reason, in my view, to reject it.  It is inherently likely that he would wish the parties to become bound contemporaneously, rather than his company being the only party bound whilst the others had the document for their execution.  His evidence was not so specific as to distinguish between the effect of the document as a deed and as a written agreement.  As a non lawyer, it would have been fanciful for him to have given evidence in those terms. 
  1. However, I think the better view is that this evidence is not relevant to the present question. The relevant intention is that of BG, for it is the alleged deed of BG which is relevant. In my opinion its intention is to be ascertained from the document as a whole, read in the context of the factual matrix as known or assumed by the parties. Otherwise the result could be that an instrument, unambiguously in terms of a deed and in all the circumstances apparently intended to be such, could be denied its efficacy by the revelation that the party which had executed the document intended it to be something else. My view substantially corresponds with that of Ipp J and Malcolm CJ in Dean and Westham Holdings Pty Ltd v Lloyd.  Mr Maxwell’s evidence is relevant to the estoppel case which is discussed below.
  1. In favour of the plaintiffs’ argument is the statement at the commencement of the execution pages that the document was “executed as a deed” and the words next to Mr Maxwell’s signature that it had been signed, sealed and delivered and executed as a deed. Divorced from the balance of the document and the surrounding circumstances, those references would unambiguously prove that BG’s intention was that this should be a deed made by BG. And even when considered with those other matters these references cannot be lightly disregarded. But the balance of the document and all of the surrounding circumstances strongly indicate that this was not intended by BG to be a deed.
  1. First there is the balance of the document itself. Importantly, as in Interchase Corporation Ltd (in liq) v Commissioner of Stamp Duties (Qld), the document begins with the statement that the parties have agreed “as set out in the Operative part of this agreement, in consideration of ... the mutual promises contained in this agreement.”  This is an unambiguous statement to the effect that BG’s promises are given for those made by other parties, which is inconsistent with the notion that for at least some days, or as it happened here seven weeks or so, BG should be bound whilst other parties were not bound.
  1. It is significant that BG did not insert a date as “the date of this Agreement”. As discussed, that left undefined an element of some of the promises made or to be made by BG, such as the provision of the bank bond. This indicates that BG was not intending to be then bound.
  1. There is the fact that the operative part of the instrument did not use the language of deeds. In contrast, the proposed lease instrument consistently used the language of deeds.
  1. At no stage in the dealings between the parties or their solicitors was there any suggestion that the agreement for lease should operate as a deed. Had this been the intention of for example, the lessors, their solicitors would have been expected to refer to that matter and to have drafted the agreement for lease in terms which more closely resembled a deed. And had it been BG’s intention that it be a deed, probably BG or its solicitors would have expressly stipulated the conditions upon which it was delivered, because on no sensible view could it be thought that this was not only a deed, but one which was delivered unconditionally by BG. Now the conditions of an escrow need not be expressed, but may be inferred. But the fact that such conditions were not expressed in this case is an indication that BG did not intend this to be a deed.
  1. The April 2008 letter is relevant also in this context.  It did not prevent BG from executing and delivering the document as a deed.  But it is relevant in the proof of BG’s intention as that was disclosed to the other parties.  It indicates that BG intended that the parties would become bound contemporaneously.
  1. Nor was there any need for this document to be executed and delivered as BG’s deed. There was ample consideration for BG’s promises. And there is no indication of any circumstance which, from the plaintiffs’ perspective, would have made it important to have BG in a position where it was unable to unilaterally withdraw whilst the documents were with the plaintiffs for execution. They may have preferred BG to have been in that position; but they said nothing to BG to the effect that BG should agree to it.
  1. Counsel for the plaintiffs suggested that there was one respect in which it was necessary for this to have been a deed. Clause 9.3(b) of the agreement for lease was in the form of an authority and direction to the Developer to complete and deliver the lease in certain respects.  Clearly the lease itself was to have effect as a deed.  It was argued that cl 9.3 was effectively an authority given by BG to the Developer to deliver the lease as a deed, so that it was an authority which could only be conferred by a deed.  Clearly, a power to execute a deed on behalf of another must be conferred under a deed.[25]  However, that was not the effect of cl 9.3.  As set out above, cl 9.4 of the agreement for lease provides that the instrument of lease will be executed by BG and held in escrow by the Developer’s solicitor until the commencement date of the lease whereupon it would be completed in accordance with cl 9.3.  So the deed constituted by the instrument of lease was not to be delivered by the Developer.  It was to remain the deed of BG as executed and delivered by it, although it was to be the subject of additions according to cl 9.3.  In the case of an alteration of a deed already delivered, the rule according to Norton on Deeds[26] is that “[a]n alteration made with the consent of all parties, for the purpose of carrying out the intention of the parties at the time of the execution of the deed, does not prevent the person making such alteration from enforcing the deed.”  The reason is that it remains the deed of the party which had delivered it. 
  1. On one level of course, it can be said that BG intended to execute this instrument as a deed, because this was typed next to or near Mr Maxwell’s signature and he is presumed to have read it.  But the question is whether BG intended that it should have effect as a deed, or in other words, BG intended to place itself in a position from which it could not withdraw whilst the other parties were not so bound.  Its only means of withdrawal might have arisen on the expiry of a reasonable time for execution by the other parties, when it could have sought to obtain equitable relief discharging it from the deed.  That is unlikely to have been BG’s intended position.  And it was not asked to assume it by the other parties:  the negotiations had proceeded upon the commercially realistic and not uncommon basis that the parties would become contemporaneously bound.  In my conclusion, the references upon the execution pages to a deed and to sealing and delivery of the document should be regarded as surplusage and not representing BG’s true intention, and this should have been apparent to the other parties. 
  1. Accordingly, the plaintiffs’ alternative case upon the basis that this was a deed must be rejected.
  1. It is probably necessary that I say something about two issues which arose in this deed case. The first concerned whether Trinkaus has duly executed the agreement for lease as its deed. BG argued that the plaintiffs had not proved that one of the signatories for Trinkaus, a Mr Schütz, was authorised to execute on its behalf. And it argued that he was not a director of Trinkaus, so that s 127 of the Corporations Act 2001 (Cth) would not apply.  This was said by BG to be relevant in this way:  if the agreement for lease was to operate as a deed, it was delivered by BG as an escrow on the condition that the other parties would execute it as a deed, and Trinkaus had not done so.  Had I concluded that this was a deed, I would have inferred that it was delivered as an escrow.  But because BG’s interests would have been as well served by the agreement for lease being duly signed for Trinkaus, without its being executed as its deed, it would not have been necessary to infer an intention that the relevant condition be the execution by Trinkaus as a deed.  I would accept that it was signed by persons authorised by Trinkaus to do so.  Further, it is not the case that Trinkaus has refused to execute the document in whatever way which BG would say was necessary for it to be the deed of Trinkaus.  Thus there is no apparent relevance in any failure by Trinkaus thus far to execute the document in a way necessary for it to be its deed under Australian law.
  1. That leads to the second matter to be mentioned, which is that, in the alternative, BG applied to be relieved from performance of the deed (if that is what the agreement for lease is) upon the basis that Trinkaus did not execute the instrument within a reasonable time. The passage of almost seven weeks from 10 October (when Mallesons sent the document executed by BG) to 25 November 2008 (when Trinkaus says that it executed it), I would accept, exceeded a reasonable time.  The explanation for the delay appears to have been partly that Trinkaus was taking its own legal advice, and in truth had not decided to agree in terms of this document prior to its being sent to BG.  But in the circumstance where the precise terms of the document had been the subject of considerable drafting and redrafting between BG’s solicitors and Freehills, apparently acting for all of the plaintiffs, this delay of seven weeks was unreasonable. 
  1. That passage of time did not entitle BG to be relieved from performance.  It entitled BG to do no more than seek equitable relief.  Once Trinkaus had made it clear that it considered itself bound, as it had by the end of November 2008, the basis for such equitable relief would not have been apparent because the condition of the escrow would have been satisfied. BG did not plead or ultimately seek to prove any change of position prior to the end of November 2008, or indeed by now, whereby it would suffer a detriment if it was to be held to the agreement for lease.  So had I concluded that BG delivered the agreement for lease as a deed, albeit in escrow, I would have declined the equitable relief which BG sought. 
  1. It should be noted that there could be and is no alternative case for the plaintiffs that BG became bound by the lease instrument as a deed although it was not bound by the agreement for lease as a deed or otherwise.

Estoppel

  1. The plaintiffs allege that BG is estopped in two respects.  They plead that BG is estopped from denying that the plaintiffs and BG entered into a binding agreement in the terms of the agreement for lease.[27]  And they plead that BG is estopped from denying that upon the occurrence of the agreed commencement date, “the Lease will become binding upon” BG.[28]  There is no difference in substance between those two cases and a discussion of one for the most part applies to the other. 
  1. The first of the alleged estoppels is said to be the consequence of these facts:

(a)the plaintiffs assumed an agreement was in place between the parties;

(b)BG induced the plaintiffs to adopt that assumption;

(c)the plaintiffs acted in reliance upon the assumption;

(d)BG knew and intended that the plaintiffs would so act;

(e)BG has failed to act in a way to prevent or avoid detriment to the plaintiffs; and

(f)the plaintiffs have suffered detriment and will suffer further detriment if the assumption is not fulfilled.

The case is thereby put according to the elements of an equitable estoppel as defined by Brennan J in Waltons Stores (Interstate) Limited v Maher.[29]

  1. I am not satisfied that the plaintiffs held the alleged assumption. Several witnesses for the plaintiffs gave evidence of a belief or assumption that BG was bound although the pleaded assumption is that the parties had entered into an agreement for lease binding on all of them. But in some places, witnesses did give evidence to the effect of a belief that there was an agreement which was in place. For example, Mr Livingstone, a director of the first and fourth plaintiffs, said at one point that he believed that there was a binding agreement between all parties once BG had signed and returned the document upon the basis, as the plaintiffs here argue, that this constituted an acceptance of an offer by the plaintiffs.[30]  There is, in my view, a fair amount of reconstruction in such evidence.  I accept that these witnesses[31] believed that BG would take the lease once it had executed and returned the documents.  But I am not satisfied that any of them turned his mind to the particular legal question of whether there was then an agreement binding all parties or that if he did, he came to assume that there was such a concluded agreement.  The reasons why I am not persuaded by that evidence are that there is no apparent reason why they would have assumed that this was the legal position and that it is inconsistent with the steps taken on the plaintiffs’ side to press Trinkaus to execute the documents, once the proposal for BG to acquire the assets of Queensland Gas Company became known. 
  1. As to that first matter, the plaintiffs’ contract case here might be arguable, but it would be another thing to assume its correctness. As to the second matter, there is the following correspondence in November 2008 after all parties but Trinkaus had signed. On 24 November, Mr Kerr, the CEO of the fourth plaintiff (who was not called as a witness), emailed Mr Livingstone as follows:

“Did you meet Rob Farrell of Cushman Wakefield [estate agents which had been retained by BG] on Friday night?

He was suggesting that we should return an executed AFL [agreement for lease] to BG ASAP due to his concern of a slight legal technicality that that [they] may be able to rescind the agreement.”

Mr Livingstone then emailed Mr Willcock (who worked for the fourth plaintiff) as follows:

“Can you enquire tomorrow where the BG afl is and insist that we get it back ASAP.  Let me know the response from LPPL [the third plaintiff] and Freehills.”

At the same time Mr Livingstone replied to Mr Kerr as follows:

“I did speak to him ... but he did not mention the issue with BG.  I will enquire thro’ Freehills where the documents are.  Suspect with Andy in Germany.  Is it worth sending Andy a note to encourage him to send back ASAP?”

  1. Mr Willcock emailed Mr Livingstone on the morning of 25 November that he was informed that the documents were with Trinkaus for signing and that he would:

“... bring up with LPPL today to get them to hurry along Trinkaus if possible.”

On the same day, Mr Kerr emailed “Andy” (Mr Schütz of Trinkaus):

“We need the British Gas lease signed asap.  Is it with you?

When signed, please courier back asap and send a fax or email of the execution page showing you have signed as we want to pass it on to British Gas as they are starting to ask questions about whether we have signed or not.  We can’t delay!”

Mr Schütz replied that day:

“It is with us right now.  I will liaise with Esther and discuss execution asap.”

Mr Kerr replied to Mr Schütz:

“Thanks Andy,

Please courier back ASAP.

Also can you fax or email to me the exection [sic] page so we can pass on to their lawyers showing we have all signed. ...”

That was copied to Mr Livingstone.

  1. On 27 November 2008, Mr Jones of Baker & McKenzie emailed Mr Schütz and Ms Aus dem Kahmen of Trinkaus:

“Could you please confirm if the BG Lease Documents has [sic] been signed and when we can expect them to be returned?  There is some urgency with that now as BG have recently merged with another company in Queensland who are in other premises ...  Freehills have indicated to us this morning that BG’s decision to take these premises and an additional two floors requires them to be confident that Trinkaus has signed the documentation and that everything is proceeding according to plan.  If you are able to forward through copies of the execution pages today that would be greatly appreciated.”

It was on that day that Mallesons for BG wrote to withdraw from the transaction.  Later that day Mr McGuckin emailed Mr Schütz (and copied this to Mr Livingstone):

“Please find attached correspondence received today from BG’s lawyers.

Naturally we are intent on resisting this attempt to reverse out of the signed AFL but not having had the documents returned will not have helped us to lock down this Tenant in what is becoming an increasingly volatile leasing market.

Will you please contact me as a matter or urgency and advise where the BG documents are currently.”

  1. Those communications show a level of anxiety on the plaintiffs side that BG might withdraw before Trinkaus had executed the documents. It presents quite a different picture from an assumption by each of the plaintiffs that all parties were already legally bound. Significantly, the plaintiffs’ case is limited to an alleged assumption that there was then a concluded contract, rather than an expectation that there would be a concluded contract.
  1. Further the relevant assumption by a party claiming an estoppel must be a reasonable one.[32]  This assumption could not have been reasonably held.
  1. The plaintiffs’ case relies upon the fact that BG made a claim upon the third and fourth plaintiffs for payment of a substantial amount for its fit-out costs, which was only payable if there was an agreement in terms of the document. But that is not consistent only with the then existence of a concluded agreement for lease. It is consistent also with an intention by BG to enter into such an agreement, as it had made clear by signing and returning the document, only upon the others signing and returning it. In the expectation that the other parties would promptly sign and return the document, BG was taking steps in relation to the fit-out of the premises. That should not have confused the plaintiffs as to their legal position. Mr Livingstone seemed to disavow this part of the plaintiffs’ case (that the assumption of an existing contract was induced by BG’s conduct in relation to the fit-out).  In evidence in chief he said several times that BG’s conduct in relation to the fit-out after 10 October 2008, and specifically its instructions to the contractor (Thiess) to review the plans and incorporate certain aspects of those plans into the construction of the building, as well as BG’s attendance at several meetings on that subject and the provision of information in relation to its proposed fit-out, did not affect his understanding of whether BG was “bound to proceed with the tenancy”.[33]
  1. Otherwise the plaintiffs’ case is that they were induced to make this assumption by BG’s signing and returning the documents and by applying for FIRB approval. I do not accept that that last matter could have been any inducement. BG had sought that approval prior to signing the documents and the fact that the Foreign Investment Review Board had no objections to the proposal was communicated to Mallesons and in turn to Freehills on 10 October 2008.  This could not have induced the plaintiffs to assume that there was then a concluded agreement. 
  1. It is also pleaded by the plaintiffs that they were induced to make this assumption by BG’s informing them, on or about 30 October 2008, that it was considering its right of first refusal to lease part of the extra floor and BG’s request that the plaintiffs prepare an offer to lease part of that floor to BG.  Again that should not have induced the plaintiffs to assume that there was a concluded agreement.  It was equally consistent with the true position, which was that there was no concluded agreement until all parties had signed and given notice of having done so.
  1. The plaintiffs say that on the faith of the assumption they instructed Thiess to perform design work and other works for which they have been charged $41,601.25. They also say that in reliance upon this assumption, the third and fourth plaintiffs have paid commissions to their letting agents, Jones Lang LaSalle and Knight Frank, totalling $602,178.14.  The payment of those charges and commissions is proved.  As I have said, I am unpersuaded that the plaintiffs held the alleged assumption.  But I accept that these expenses were incurred and these payments were made in the expectation that the premises would be leased to BG.
  1. The plaintiffs argue that if “the assumption is not fulfilled”, they will incur the costs of paying commission on the introduction of alternative tenants and the costs of reviewing fit-out plans and specifications provided by them, as well as the costs of the likely alteration of the building necessary to accommodate those plans and specifications, which would have been cheaper had they been built during the construction of the building itself.
  1. As to the commissions paid, BG argues that they cannot be relied upon because they were paid without an obligation to do so. So it is said that the plaintiffs are either entitled to a refund of those commissions or that the prospect of having to pay commissions twice is the result of the plaintiffs’ own choice rather than any conduct of BG. That second point could not be accepted if the plaintiffs otherwise had made out their estoppel case. If they held the alleged assumption, and reasonably, it would have been reasonable for them to have paid their agents because they would then have reasonably believed that they were obliged to do so. As to the suggested entitlement to a refund of those commissions, I am unable to decide what is the legal position between the third and fourth plaintiffs and the agents. A number of circumstances could exist which would affect that question, such as any suggestion of a change of position on the part of the agents upon the faith of the receipt of the funds. But it is not plain that the same agents would see fit to charge commission in full on the introduction of an alternative tenant. Overall, although the extent to which the plaintiffs would be worse off if BG is not estopped is not established, I would accept that there is a substantial (rather than negligible) detriment in the respects alleged.
  1. Had the plaintiffs made the alleged assumption, and acted in reliance upon it, I would be far from persuaded that BG knew or intended the plaintiffs to do so. I accept that BG knew that the plaintiffs were incurring some costs in relation to the fit-out design and any changes to the construction to accommodate BG as a tenant.  I do not accept that BG knew that the plaintiffs would pay commission to their agents prior to a binding agreement for lease being concluded.  And more generally, I do not accept that BG thought that the plaintiffs were assuming that there as a concluded agreement.  Instead I accept Mr Maxwell’s evidence that he believed that there was no binding agreement until all parties had signed.  There was no reason for him, or generally BG, to believe that the plaintiffs assumed that there was a concluded agreement.  The various discussions and communications in relation to the fit-out were equally referable to the true state of affairs, which was that there was no binding agreement but rather an expectation that such an agreement would be made.
  1. It follows that many of the alleged elements of this estoppel, based upon the alleged assumption by the plaintiffs that there was a binding agreement, are not established.
  1. The alternative estoppel which is pleaded is, in substance, the same as that already discussed. It is alleged that each of the first and second plaintiffs expected that BG would not “recall the Lease” and that upon the occurrence of the commencement date, the lease would become binding upon BG. As I have found, those expectations are not shown to have been based upon a belief that there was a binding agreement for lease in place from 10 October 2008.  The necessary expectation in this respect would have to have been more than that the owners expected there would be a lease; rather it would have to be put as high as a belief that there was no likelihood of BG withdrawing, even if there was a delay in the order of seven weeks in the execution of the agreement for lease on the plaintiffs’ side.  That is not an expectation which the plaintiffs held.  Again, the emails in the period of 25 – 27 November 2008 show otherwise.  Nor was there any reasonable basis for such an expectation or anything done by BG which could have induced it.  And it could not be concluded that BG knew that such an expectation was held.  Accordingly, this alternative formulation of the estoppel case must be rejected.
  1. There is no pleaded case or argument to the effect that the plaintiffs believed that BG was bound, whilst there was not a contract between all parties, on the basis that BG had executed and delivered a deed. Indeed there is no evidence to suggest that anyone on either side of the transactions thought about whether the agreement for lease had been executed and delivered as a deed. Notably, the argument that BG was bound on the basis of the document being a deed was not put by Freehills or their clients in the correspondence which followed immediately after BG’s withdrawal.  Rather, what was then put was the case, as was argued here, that there was a concluded agreement for lease.

Conclusion

  1. The plaintiffs have failed to prove any ground for the relief which they claim. It will be ordered that the claim is dismissed. I will hear the parties as to costs.

Footnotes

[1] In Item 7 of Schedule 1 of the Agreement for Lease.

[2] (1964) 180 CLR 146.

[3] [1977] Qd R 336, 344.

[4] (1981) 2 BPR 9173.

[5] [1989] 2 Qd R 582, 586.

[6] (2nd ed, 1928) 3.

[7] See eg ‘To deed or not to deed? Or, when a deed is not a deed’ (1980) 54 Australian Law Journal 424.

[8] (1993) 27 ATR 154.

[9] 27 ATR 154 at 155-156.

[10] 27 ATR 154 at 157.

[11] [1969] 2 QB 609 at 619.

[12] Hooker Industrial Developments Pty Ltd v Trustees of the Christian Brothers [1977] 2 NSWLR 109, 116;  Xenos v Wickham (1866) LR 2 HL 296, 323;  Ex parte Ryrie [1983] 2 Qd R 194, 199.

[13] [1961] 1 Ch 105, 118.

[14] [1961] 1 Ch 105, 120.

[15] (1867) LR 2 HL 296, 312.

[16] [2000] NSWSC 493.

[17] [2000] NSWSC 493 at [175].

[18] [2000] NSWSC 493 at [176].

[19] [1995] 1 Qd R 1 at 7.

[20] (1979) 22 SASR 84.

[21] (1991) 3 WAR 235.

[22] (1991) 3 WAR 235, 252.

[23] (1991) 3 WAR 235, 248.

[24] Peter Butt, Land Law (6th ed, 2010) [19141]

[25] Halsbury’s Laws of England (5th ed) vol 1, [15].

[26] (2nd ed, 1928) 39, citing Markham v Fox; Markham v Gonaston (1599), Cro. Eliz. 626.

[27] Further Amended Statement of Claim para 52.

[28] Further Amended Statement of Claim para 59.

[29] (1988) 164 CLR 387 at 428-9.

[30] Transcript 1-39/50 to 1-41/2.

[31] Mr Livingstone, Mr McGuckin, Mr Willcock and Mr Schütz.

[32] Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 397;  Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 414;  Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 at 506 and the other cases cited in Macquarie Bank Limited v Lin [2005] QSC 221 at [258].

[33] Transcript 1-35.

Close

Editorial Notes

  • Published Case Name:

    400 George Street (Qld) Pty Limited & Ors v BG International Limited

  • Shortened Case Name:

    400 George Street (Qld) Pty Limited v BG International Limited

  • MNC:

    [2010] QSC 66

  • Court:

    QSC

  • Judge(s):

    McMurdo J

  • Date:

    16 Mar 2010

Litigation History

Event Citation or File Date Notes
Primary Judgment [2010] QSC 66 16 Mar 2010 -
Appeal Determined (QCA) [2010] QCA 245 10 Sep 2010 -
Special Leave Refused [2011] HCATrans 122 13 May 2011 -

Appeal Status

{solid} Appeal Determined - {hollow-slash} Special Leave Refused (HCA)