Legune Land Pty Ltd v Northern Territory Land Corporation & Anor

[2012] NTSC 83

 

PARTIES:                                         Legune Land Pty Ltd

 

                                                         v

 

                                                         Northern Territory Land Corporation

 

                                                         And

 

                                                         Northern Territory of Australia

 

TITLE OF COURT:                           SUPREME COURT OF THE NORTHERN TERRITORY

 

JURISDICTION:                               SUPREME COURT OF THE TERRITORY EXERCISING TERRITORY JURISDICTION

 

FILE NO:                                          1 of 2011 (21103427)

 

DELIVERED:                                   18 October 2012

 

HEARING DATES:                           15 to 22 AUGUST 2012

 

JUDGMENT OF:                              KELLY J

 

CATCHWORDS:

 

CIVIL LAW – Claim by plaintiff to an equitable lease over land owned by the Northern Territory Land Corporation (“NTLC”) – whether agreement reached between the plaintiff and the Northern Territory of Australia (“the Territory”) – whether estoppel by convention applies to prevent the Territory from denying the existence of the agreement –whether asserted agreement conferred an option to lease or profit a prendre – whether “assignment” of rights under earlier agreement with predecessor in title – whether any rights in plaintiff binding on NTLC – whether NTLC acknowledged existence of rights and undertook to hold registered interest subject to those rights – no agreement – no assignment – no estoppel – agreement propounded not such as to confer option or other interest in land – no equitable lease or profit a prendre – no acknowledgement by NTLC of rights in plaintiff   

 

Pastoral Land Act

 

Law of Property Act

 

Woodroffe v Box (1954) 92 CLR 245 at 257; followed

 

400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 425; ANZ v Widin (1990) 102 ALR 289; Bahr v Nicolay (1988) 164 CLR 604; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1985-86) 160 CLR 226; Maddison v Alderson (1883) 8 AC 467; Olsson v Dyson (1969) 120 CLR 365; Penrith RSL Club Ltd v Cameron (2002) NSW ConvR 56-008; [2001] NSWSC 413; Regent v Millett [1976] HCA 40; (1976) 133 CLR 6; Walsh v Lonsdale (1882) LR 21 Ch D 9; referred to

 

REPRESENTATION:

 

Counsel:

    Plaintiff:                                      P Dunning SC with S Williams

    First Defendant:                           D Robinson SC

    Second Defendant:                        M Grant QC with R Bruxner

 

Solicitors:

    Plaintiff:                                      Povey Stirk

    First Defendant:                           Clayton Utz

    Second Defendant:                        Solicitor for the Northern Territory

 

Judgment category classification:    B

Judgment ID Number:                       KEL12023

Number of pages:                             33


IN THE SUPREME COURT

OF THE NORTHERN TERRITORY

OF AUSTRALIA

AT ALICE SPRINGS

 

Legune Land Pty Ltd v Northern Territory Land Corporation & Anor

[2012] NTSC 83

No. 1 of 2011 (21103427)

 

 

                                                     BETWEEN:

 

                                                     LEGUNE LAND PTY LTD

                                                         Plaintiff

 

                                                     AND:

 

                                                     NORTHERN TERRITORY LAND CORPORATION

                                                         First Defendant

 

                                                     AND:

 

NORTHERN TERRITORY OF AUSTRALIA

                                                            Second Defendant

 

CORAM:     KELLY J

 

REASONS FOR JUDGMENT

 

(Delivered 18 October 2012)

 

 

 

[1]       In this proceeding, the plaintiff Legune Land Pty Ltd (“LL”) is claiming a leasehold interest in land known as “Areas 1 and 2” excised from Legune Station (“the Land”).  The claim is made against the registered proprietor of the Land, the Northern Territory Land Corporation (“NTLC”) pursuant to an alleged agreement between LL and the Territory, which is said to be binding on NTLC, as NTLC “acknowledged” LL’s interest before becoming the registered proprietor of the Land.   

[2]       The plaintiff’s claim fails on all points.  LL does not have an agreement with the Territory; the agreement which it asserts would not in any case have given it an interest in the Land (leasehold or otherwise) and there is no evidence that, when it acquired its registered interest in the Land, NTLC acknowledged that LL had any rights in the Land or undertook to hold its interest in the land subject to any rights in the Land LL might have possessed.  There is no evidence that when NTLC acquired its registered title, it was even aware that LL claimed an interest in the Land; indeed it is far from clear that at that time LL did in fact claim any interest in the Land.

Background

 

[3]       Legune Station is a cattle station in the extreme north west of the Northern Territory.  In 1999 Legune Station was owned by a company named Legune Station Pty Ltd (“LS”).  In August 1999 the Territory acquired three areas of Legune Station from LS for a consideration of $900,000.00.  Areas 1 and 2 are contiguous to each other and consist of the eastern portion of Legune Station abutting the Western Australian border.  Area 3 is to the south east of the Station. (The map annexed to this judgment, taken from the 1999 deed of agreement referred to below, shows Areas 1, 2 and 3 and the balance of Legune Station.)

[4]       Area 3 was acquired for the purpose of eventual incorporation into the Keep River National Park.  Areas 1 and 2 were acquired for the primary purpose of a possible extension of the Ord River Scheme. 

[5]       The acquisition was effected by a deed of agreement dated 13 August 1999 (“the 1999 deed of agreement”).  The 1999 deed of agreement contained the following recitals:

“A.     The Lessee is the registered proprietor of those parcels of land being NT Portions 798 and 3222, as contained in Perpetual Pastoral Lease No. 1062 and entered in the Register Book Volume 588 Folio 080 and known as Legune Station (“the Pastoral Lease”).

B.      The Territory wishes to acquire from the Lessee an area of approximately ONE THOUSAND ONE HUNDRED (1,100) square kilometres, the precise boundaries of which are to be surveyed, but generally including those parts of the Pastoral Lease shown on the plan which is Attachment “A” hereto (“the Land”) for the purposes of the Ord River Extension Scheme and/or such other purposes as the Territory may require.

C.      The Lessee and the Territory wish to document the terms and conditions upon which the Land shall be surrendered by the Lessee to the Territory.”

It contained (inter alia) the following operative provisions:

“2.     Surrender and Compensation

2.1     The Lessee hereby surrenders the Land from the Pastoral Lease in favour of the Territory upon and subject to the following conditions:

2.1.1  The Territory grants the Lessee a licence (“the Licence”) to remain in possession of Area 1 and Area 2 (“the Licensed Areas”) on the following terms:

[There follow a list of conditions to the grant of the Licence over Areas 1 and 2 including condition (d): “that the Lessee shall not transfer sell lease licence mortgage charge dispose of or in any way or manner part with possession of the Licensed Areas or any part thereof during the Term;”.]

…..

2.3     If at the expiry of the Term the Territory desires that the Licensed Areas be used for grazing stock and for no other purpose, then the Territory will grant to the Lessee a first right of refusal to lease the Licensed Areas from the Territory at a rental and upon and subject to such terms and conditions as the Territory may in its absolute discretion impose PROVIDED that such rental and terms and conditions shall not be less favourable than the terms and conditions upon which the Territory would be prepared to offer a lease of the Licensed Areas to any third party for the same purpose.

……..

4.       Registration of Surrender

4.1     The Lessee shall upon payment of the Compensation Sum hand to the Territory an executed surrender of the Land from the Pastoral Lease in the form annexed hereto and marked “B” (“the Panel Form”) which shall be held in escrow by the Territory.  The Lessee hereby authorises the Territory to lodge the Panel Form for registration at the Land Titles Office in Darwin at any time after the expiration of the Term or the sooner lawful termination of the Licence but not before.”

[6]       Clause 2.1.2 contained a first right of refusal to be granted a licence to conduct a tourist operation from Area 3, a matter which was not in issue in the present proceeding.  Clause 2.2 set out the consideration payable by the Territory, namely $900,000.

[7]       In August 2000 LS sold Legune Station to LL.  The contract of sale contained a number of provisions which would ensure that LL thereafter became responsible to the Territory for the performance of LS’s obligations under the 1999 deed of agreement between LS and the Territory.

(a)      The land being sold was defined as the portions contained in the relevant pastoral lease “but specifically excluding that area ... surrendered by the vendor to the Northern Territory of Australia pursuant to deed of agreement between the vendor and the Northern Territory of Australia dated 13 August 1999”.  A copy of the deed of agreement was annexed to the contract. 

(b)     The contract of sale also contained the following special conditions in clause 6:

“6.  DEED OF AGREEMENT – NORTHERN TERRITORY

6.1   The Vendors disclose the existence of an agreement dated 13 August 1999 between the Northern Territory of Australia (“the Territory”) and Legune Station with respect to the surrender of approximately 1,100 square kilometres of land;

6.2   If registration of the surrender has not been effected prior to the Completion Date, the Purchaser will accept the title to the Land and will assume the obligations of Legune Station under the Deed of Agreement and will, if requested by the Territory, execute a further surrender to be registered following Completion by the Territory of the necessary surveys of the land being surrendered;

6.3   The Purchaser agrees to indemnify and keep indemnified Legune Station for any liability imposed upon it, or loss or damage suffered by it, as a consequence of the Purchaser’s failure to observe the obligations of Legune Station under the Deed of Agreement after Completion;

6.4   Subject to the consent of the Territory being obtained, Legune Station will assign any continuing benefits it has under the Deed of Agreement to the Purchaser with effect from the Completion Date; and

6.5   If the consent of the Territory is not obtained to the assignment referred to in the immediately preceding subparagraph, Legune Station will execute a Deed of Surrender of any remaining interests it has in such Deed of Agreement and in particular will not permit any other party to occupy or depasture stock on the land the subject of the surrender.”

[8]       The contract of sale was conditional upon the consent of the Minister to the transfer of the pastoral lease pursuant to the Pastoral Land Act.

[9]       The relevant government department at the time was divided into various branches including the Lands Acquisition Branch and the Pastoral Land Management Branch. 

[10]     The solicitors for LL were dealing with Mr Tony Fowlestone, the manager of the Pastoral Land Management Branch, in arranging for the consent of the Minister to the transfer of the station from LS to LL.  As part of that process, on 1 September 2000 the solicitors for LL submitted an application for the Minister to consent to the transfer which set out a range of information required by the department and which for some reason was known as “an undertaking”.  On 4 September 2000 Mr Fowlestone sent a memo to the Minister’s delegate advising that settlement was to occur on Wednesday 6 September and that the pre-requisites for consent to transfer had been met, and recommending that the delegate consent to the transfer.  The recommendation was approved and the consent signed by the Minister’s delegate, Mr John Pinney, on 5 September 2000.

[11]     On the morning that settlement of the sale of the station was due, namely 6 September 2000, the manager of the Lands Acquisition Branch, Ms Noreen Blackley, became aware of the existence of the contract for sale of the station between LS and LL.  Ms Blackley is the person who had negotiated the 1999 deed of agreement between LS and the Territory.  When Ms Blackley became aware of the sale agreement which was about to settle she became alarmed because she knew that the Territory had paid $900,000.00 for the surrendered area but that the surrender had not been registered.  She also believed that LS had agreed not to deal with the surrendered areas during the time the two year grazing licence conferred by the 1999 deed of agreement was in place.  She believed that if the sale proceeded the Territory’s rights in respect of the surrendered areas would be in jeopardy.  She was not aware at that stage of the provisions in the contract of sale designed to ensure that the obligations of LS to the Territory under the 1999 deed of agreement were to be assumed by LL.  Nor was she aware that the land being sold by LS to LL did not include the surrendered areas.

[12]     Ms Blackley had telephone discussions with Ms Menz the solicitor who was acting for LL in relation to the contract of sale.  Ms Blackley told Ms Menz that the Territory would require a signed surrender relating to the surrendered areas and words to the effect that the Territory would require a new agreement with LL in the same terms as the existing agreement with LS before the Minister would consent to the transfer.

[13]     Settlement was deferred until 7 September 2000.  The solicitors for LL prepared, and LL executed, a form of surrender to be delivered at settlement and also a deed of agreement in identical terms to the 1999 deed of agreement between LS and the Territory with the omission of references to Area 3.  The deed of agreement signed by LL (“the 2000 deed of agreement”) even included the same recitals and an operative term whereby LL purported to surrender Areas 1, 2 and 3 to the Territory, although these were clearly inapplicable in the circumstances as LS had already by deed surrendered these areas to the Territory and was not purporting to transfer them to LL under the contract of sale.

[14]     Settlement was duly effected on 7 September 2000.  The documents exchanged included the signed surrender document required by the Territory and one copy of the deed of agreement executed by LL, but not by the Territory.

[15]     In the meantime, the solicitors for LS and LL were directing their minds to whether special clause 6.4 or 6.5 of the contract of sale (set out above) would apply.  Clause 6.4 provided that subject to the consent of the Territory being obtained, LS would assign to LL any continuing benefits it had under the 1999 deed of agreement with the Territory.  Clause 6.5 provided that if the Territory did not consent to the assignment of those benefits from LS to LL, LS would execute a deed of surrender of any remaining interests it had in the 1999 deed of agreement and would not permit any other party to occupy or de-pasture stock on the land that had been surrendered to the Territory.  In the end, they decided to prepare documents which would cover both eventualities.  LS signed a deed dated 7 September 2000 assigning, or purporting to assign, to LL, “the full benefits held by [LS] pursuant to the [1999 deed of agreement]”, said to be “conditional upon the consent being obtained of the Northern Territory of Australia” “to the extent necessary”.  On the same date LS also signed a deed of surrender, surrendering “any remaining interest it has in or under the [1999 deed of agreement]”.  In return, LL signed a document directed to the Northern Territory of Australia in which it undertook to be bound by the terms of the 1999 deed of agreement and “to execute all documents …. and do all things as may be required by the Northern Territory of Australia, and in particular the execution of any further form of surrender as may be required by the Northern Territory of Australia to give effect of the terms of [the 1999 deed of agreement].”  This too, it appears, was delivered at settlement.

Issues in the Proceeding

 

[16]     The plaintiff’s claim is made pursuant to clause 2.2 of the 2000 deed of agreement, which is in identical terms to clause 2.3 of the 1999 deed of agreement. The 2000 deed of agreement was signed by LL and delivered to the Territory at settlement.  Clause 2.2 is as follows:

“2.2   If at the expiry of the Term the Territory desires that the Licensed Areas be used for grazing stock and for no other purpose, then the Territory will grant to the Lessee a first right of refusal to lease the Licensed Areas from the Territory at a rental and upon and subject to such terms and conditions as the Territory may in its absolute discretion impose PROVIDED that such rental and terms and conditions shall not be less favourable than the terms and conditions upon which the Territory would be prepared to offer a lease of the Licensed Areas to any third party for the same purpose.”

[17]     The plaintiff’s first contention is that the 2000 deed of agreement was in fact signed by the Northern Territory and hence binding upon the Territory.

[18]     The plaintiff’s second contention is that even if the document was not signed by the Territory, an agreement between the Territory and LL came into existence as a result of the conduct of the parties. 

[19]     The third alternative contention is that the 1999 deed of agreement was validly assigned from LS to LL and that, accordingly, LL has the rights conferred on LS by clause 2.3 of the 1999 deed of agreement.

[20]     Finally, the plaintiff contends that the Territory is estopped from denying that LL has the rights set out in clause 2.2 (or 2.3 of the 1999 deed of agreement as the case may be) by reason of an estoppel by convention.  The plaintiff contends that the rights set out in that clause formed the conventional basis upon which the relationship between the parties was conducted from the time LL acquired Legune Station in 2000 until the time NTLC became the registered proprietors of Areas 1 and 2.

[21]     As to the nature of those asserted rights, the plaintiff contends that clause 2.2 (or 2.3 of the 1999 deed of agreement) conferred upon LL an interest in the licensed areas in the nature of an option to lease areas 1 and 2. It is not entirely clear how, but it appeared to be contended that the option had been exercised so that what the plaintiff had at the date of the trial, was an equitable lease over those areas. Alternatively, it was contended that “at the very least” the plaintiff had a profit a prendre over those Areas 1 and 2 entitling it to graze cattle over those areas by reason of clause 2.2 (or 2.3).  

[22]     If it were to be found that the Territory did not sign the 2000 deed of agreement, the plaintiff contended that no memorandum in writing was required to satisfy the statute of frauds provisions in the Law of Property Act.  The first reason advanced for this proposition was that the 2000 deed of agreement essentially amounted to the conferral by LL of an interest in land on the Territory (by the surrender of areas 1, 2 and 3) subject to certain conditions of which clause 2.2 was one.  Therefore all that was necessary was a memorandum in writing signed by LL which was in existence. 

[23]     Secondly and alternatively, the plaintiff argued that there had been sufficient acts of part performance to evidence an agreement in the terms set out in the 2000 deed of agreement. 

[24]     I reject each and every one of those contentions.  I agree with the contention by the defendants that the only “interest” which the plaintiff had in Areas 1 and 2 was a bare licence to graze cattle on those lands, terminable at will, to be inferred from the Territory’s acquiescence in the grazing of the plaintiff’s cattle on the land.

Was the Deed of Agreement signed by the Territory?

 

[25]     There is absolutely no evidence at all that the 2000 deed of agreement was signed by the Territory and plenty of evidence to the contrary.  The only person who had a delegation authorising him to enter into a contract on behalf of the Northern Territory in relation to matters falling within the department’s portfolio was the secretary at the time, John Pinney.  He deposes that shortly after settlement of the sale of the station on 7 September 2000 he was advised that the solicitors for LL had sent the department a contract signed by LL which purported to give them rights in terms similar to clauses 2.1.1 and 2.3 of the 1999 deed of agreement. In his affidavit he states that he advised that the Territory would not be entering into such agreement and for that reason he would not be signing it.  I accept that evidence of Mr Pinney.

[26]     As indicated above it appears that one copy of the signed agreement was given to the Territory at settlement.  On 13 September 2000 the solicitors for LL sent a letter to Ms Noreen Blackley of the Department of Lands, Planning and Environment in the following terms:

“Please find enclosed a further copy of the deed of agreement provided to you on 7 August 2000, executed by Legune Land Pty Ltd.

Once the deed of agreement is executed on behalf of the Northern Territory, could you please return one copy to this office, for our client’s records.”

It was contended by counsel for the plaintiff that I should conclude that this letter enclosed not “a further copy of the deed of agreement” as it clearly states, but more than one.  There is no evidence whatsoever upon which such a finding could be based.

[27]     On discovery the Territory produced two copies of the 2000 deed of agreement both executed by LL and neither executed by the Territory.  There was no evidence from any of the directors or solicitors for LL to the effect that more than two copies of the deed of agreement had been executed by LL and given to the department.

[28]     There does not appear to have been any further communication between LL and the Territory in relation to that document.  Certainly there is no correspondence, and no affidavit from any of the directors or shareholders of the plaintiff, suggesting that a copy of the 2000 deed of agreement executed by the Territory was ever delivered to LL.[1] 

Was there an Agreement by Conduct?

[29]     The words and conduct relied upon by the plaintiff as giving rise to an agreement by conduct are said by senior counsel for the plaintiff to have taken place on 7 September 2000, the date when settlement of the sale from LS to LL occurred. The “actors” are said to have been Ms Menz, the then solicitor for LL, and Ms Blackley on behalf of the Territory. The words and conduct relied upon as constituting the agreement are as follows.

 

(a)          Ms Blackley intervened and said that consent to the transfer of Legune Station would not be given unless three things were provided, an undertaking, a signed partial surrender form, and a new deed of agreement in the same terms as had been provided by LS.

 

(b)         Those documents were provided by LL, and the Territory provided its consent to the transfer.

 

[30]     That, it is said, gave rise to an immediately binding agreement between LL and the Territory containing all of the rights and obligations set out in the 2000 deed of agreement proffered by LL at settlement.  I cannot agree. 

 

[31]     The document which Ms Menz and Ms Blackley negotiated as meeting the requirements of the department to enable settlement of the sale of Legune Station to proceed was one which was to be signed by LL and which contained clear provision for it to be executed by the Territory.  I cannot see how this conduct could possibly be construed as evincing an intention that the Territory be bound immediately to an agreement with LL on the terms set out in the document it had not executed.

 

[32]     There is nothing in the context of the very hurried discussions between Ms Menz and Ms Blackley on 6 and 7 September 2000 to suggest that there was any intention to immediately bind the Territory to give LL a right of first refusal to take a lease over the surrendered areas.  The whole focus of the parties’ discussions was (on Ms Blackely’s part) to obtain from LL signed documents which Ms Blackley believed to be necessary to protect the Territory’s interests over the surrendered areas, and (on Ms Menz’s part) to satisfy the Territory’s requirements so consent could be obtained and settlement of the sale of the station proceed.

 

[33]     Counsel for LL made a great deal in cross examination out of the words in a ministerial briefing signed by Mr Fowlestone to the effect that the Territory had reached “an agreement” with LL.  No terms of the “agreement” were specified in the briefing.  It seems to me that the words and conduct of Ms Menz and Ms Blackley on 6 and 7 September 2000 did give rise to an agreement in very simple terms: if LL provided the signed documents, the Territory would consent to the transfer of the station from LS to LL.  That agreement was executed on 7 September 2000: the signed documents were provided, and consent was given. 

Was the 1999 deed of agreement validly assigned from LS to LL?

[34]     The 1999 deed of agreement was not a simple chose in action assignable by notice in writing to the obligor.  It was a contract containing mutual rights and obligations which could not be unilaterally transferred.  To substitute LL for LS as the “beneficiary” of rights under that agreement would have required a novation of the contract.[2]  None has been asserted.  If the Territory had consented to the purported “assignment”, that might have constituted a novation of the contract.  However, there is no evidence that the Territory ever consented to the assignment of the 1999 deed of agreement, in fact no evidence that it was ever even asked by the solicitors for LL (or anyone else for that matter) for its consent.[3]

[35]     As there was no agreement between LL and the Territory in the terms asserted by LL, and (for the reasons set out below) even if there had been, the asserted agreement would not have conferred on LL either an option or a lease, there is no need for me to deal with the plaintiff’s contentions in relation to the statute of frauds provisions.  However, I propose disposing of both contentions briefly.

Is the 2000 deed of agreement properly characterised as the grant of an interest in land to the Territory by LL, subject to certain conditions?

 

[36]     The answer to this question is clearly and obviously, no.   The plaintiff contends that the 2000 deed of agreement amounted to a surrender by LL of areas 1, 2 and 3 subject to the condition set out in (inter alia) clause 2.2.  The simple answer is that at no stage did LL ever have any interest in areas 1, 2 and 3.  It did not purchase those areas from LS: they were specifically excluded from the contract of sale.  LS had already surrendered those areas to the Territory in 1999.

Were there sufficient acts of part performance to evidence an agreement in the terms set out in the 2000 deed of agreement?

 

[37]     The answer to this question would likewise be no.   The 1999 deed of agreement conferred two (relevant) rights on LS which were duplicated in their entirety in the 2000 deed of agreement.  The first, in clause 2.1 was a licence to graze cattle on areas 1 and 2 until 1 September 2001, subject to certain conditions, for a licence fee of $1.00 per annum (if demanded).  The second was clause 2.3 (reproduced as clause 2.2 of the 2000 deed of agreement) set out above. 

[38]     The acts of part performance relied upon by the plaintiff are that the Territory acquiesced in LL continuing to graze cattle on areas 1 and 2, as LS had; and that the Territory charged, and LL paid rent under the Pastoral Land Act based on the total area of the pastoral lease (including areas 1, 2 and 3) until the surrender of those areas to the NTLC was registered in 2010. Those acts are not “unequivocally and in their own nature referrable to some such agreement as that alleged”.[4]  First, the licence to graze cattle on Areas 1 and 2 set out in clause 2.1 of the 2000 deed of agreement would have expired on 1 September 2001.  The acts of LL in grazing cattle on areas 1 and 2 after 1 September 2001, and of the Territory in permitting that to occur, could not be referrable to the 2000 deed of agreement.  Further, the rent specified in the 2000 deed of agreement for the grazing of cattle on Areas 1 and 2 was $1.00 per annum if demanded – not the full amount of rent payable under the provisions of the Pastoral Land Act, so payment of that rent could likewise not be referrable to the 2000 deed of agreement. 

[39]     The plaintiff contended (in a related submission) that clause 2.2 of the 2000 deed of agreement (or clause 2.3 of the 1999 deed of agreement) was, in effect, an agreement for a lease, and that LL had entered into possession under that agreement and so had an equitable lease over areas 1 and 2.[5]   The simple answer to that is that clause 2.2 (or 2.3) is not an agreement for a lease for the reasons set out below.

Estoppel by convention

[40]     “Estoppel by convention is a form of estoppel founded not upon a representation of fact …. but the conduct of relations between the parties on the basis of an agreed or assumed set of facts, which both will be estopped from denying  …. [T]here is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship.”[6]   

[41]     In written submissions, counsel for LL asserted:  “Legune Land has a good cause of action for estoppel by convention, being that the terms of [the 2000 deed of agreement] were the legal relations adopted between the Northern Territory and Legune Land from September 2000 until the end of 2009 and cannot now be recanted on.”    However, no evidence at all was referred to in support of that proposition.  In oral submissions, senior counsel for LL identified the following evidence as supporting the proposition that from September 2000 onwards, the Territory and LL adopted the 2000 deed of agreement as the conventional basis of their relationship:

(a)      the fact that LL “remained in possession” of  areas 1 and 2 after September 2000;

(b)     the fact that LL continued to pay the full rental under the Pastoral Lands Act based on the total area of the pastoral lease including the surrendered areas;

(c)     the fact that the Territory gave serious consideration to consenting to LL subleasing the station in 2003;

(d)     the fact that on 22 February 2008, Tony Fowlestone, the manager of the Pastoral Land Management Branch, wrote to Ms Beve Griffiths, another officer in the department in the following terms:

“[Mr MacLean, one of the shareholders of Legune] and the company solicitor, Bob Weymers, have asked about the “leasing” arrangement which allows the company to run cattle on the land being acquired.  According to Mr MacLean the company pays $1 per year, any foxed improvements they put on the land becomes the property of the Territory and the Territory is able to give them one months notice.  Do you know if this is in writing?” and

 

(e)     the fact that LL signed further surrender documents when requested to do so by the Territory in 2010.

[42]     I do not consider that this evidence establishes that the Territory and LL adopted the 2000 deed of agreement as the conventional basis of their relationship.  

(a)      There is no evidence that LL “remained in possession” of Areas 1 and 2 in any sense other than that it grazed cattle on those areas with the acquiescence or tacit consent of the Territory.   That is as consistent with a bare licence terminable at will as it is with the adoption of the 2000 deed of agreement – or rather more consistent with such a bare licence: the licence over Areas 1 and 2 in the 2000 deed of agreement was expressed to last only until 1 September 2001. 

(b)     Payment of full rental over the whole of the station is not consistent with adopting the 2000 deed of agreement which provided for payment of $1 per annum (if demanded) for the right to graze cattle on Areas 1 and 2.  [LL contended that this was consistent with the 2000 deed of agreement if clause 2.2 were to be construed as an agreement for a lease: it is not.]

(c)     The fact that the Territory “gave serious consideration” to consenting to a sub-lease is neither here nor there.  There is no evidence that any of the 2003 negotiations on either side made any reference to the 2000 deed of agreement or asserted any rights which might be referrable to the existence of such an agreement.

(d)     The fact that Mr Fowlestone wrote to Ms Griffiths in the above terms does not support the contention that at that time the parties had adopted the 2000 deed of agreement as the basis of their relationship.

·    It shows that Mr Fowlestone – the manager of the relevant section of the Department was not aware of the existence of any such agreement.

·    If the email accurately reports the assertions by Mr MacLean on behalf of LL, then the rights he asserts are different from those set out in the 2000 deed of agreement.

·    It is noteworthy that Mr Fowlestone’s query to Ms Griffith was answered by an email in which she said, unequivocally:

“Basically – What leasing agreement? Legune Land Pty Ltd signed a Deed on 7 September 2000 but the Territory did not execute the same. There was a clause in the unexecuted Deed:” [emphasis in original] [She then sets out clause 2.1.1 which purported to grant a licence to graze on Areas 1 and 2 until 1 September 2001].

 

(e)     There is no need to assume that the parties adopted the 2000 deed of agreement as the basis of their relationship to explain why LL executed the fresh form of surrender when requested to do so. LL had an obligation (not to the Territory but to LS) under the contract for sale of Legune Station, “if requested by the Territory, [to] execute a further surrender to be registered following completion by the Territory of the necessary surveys of the land being surrendered”. Moreover, as part of the settlement process, LL had signed a document by which it undertook to be bound by the terms of the 1999 deed of agreement and purported to bind itself to the Territory “to execute all documents, Deeds and papers and do all things as may be required by the Northern Territory and in particular the execution of any further form of surrender as may be required by the Territory to give effect to the [1999] Deed of Agreement”. [7]

Would clause 2.2 of the 2000 deed of agreement have granted to LL an interest in the Land?

 

 

[43]     The whole point of all of the arguments dealt with above was to establish that LL had the rights purported to be conferred on it by clause 2.2 of the 2000 deed of agreement (or alternatively clause 2.3 of the 1999 deed of agreement which is in identical terms).  Those rights were described by counsel for LL as either an option for a lease or an agreement for a lease.  That clause plainly creates neither.

[44]     Clause 2.2 provides:

“If at the expiry of the Term the Territory desires that the Licensed Areas be used for grazing stock and for no other purpose, then the Territory will grant to the Lessee a first right of refusal to lease the Licensed Areas from the Territory at a rental and upon and subject to such terms and conditions as the Territory may in its absolute discretion impose PROVIDED that such rental and terms and conditions shall not be less favourable than the terms and conditions upon which the Territory would be prepared to offer a lease of the Licensed Areas to any third party for the same purpose.”

 

 

[45]     Counsel for LL submitted that the term “first right of refusal” was not a term of art and pointed to Penrith RSL Club Ltd v Cameron[8] as a case in which a clause described as a first right of refusal was determined to be an option to purchase, unsurprisingly, as the clause set out the exact circumstances in which the grantor would be obliged “to offer the said land for sale to [the grantee]” and set out a mechanism for determining the purchase price.

[46]     That does not mean that anything described as a first right of refusal should automatically be construed as an option. As Fullager and Kitto JJ said in  Woodroffe v Box[9]:

“It seems clear that a mere promise to give the first refusal should be taken prima facie as conferring no more than a pre-emptive right.  If I promise to give you the first refusal of my property, I am making prima facie only a negative promise: I am saying: “I will not sell my property unless and until I have offered it to you and you have refused it.”

 

 

[47]     This clause contains none of the indicia of an option.  For there to be an option to lease, there must be some defined circumstance under which the grantee has a right to require the grantor to grant him a lease for a term, at a rental, and on conditions which are all ascertainable.  That is the nature of an option.  This clause contains none of those things.   It simply provides that in circumstances knowable only to the Territory (ie that after 1 September 2001 “the Territory desires that the Licensed Areas be used for grazing stock and for no other purpose”) “the Territory will grant to [LL] a first right of refusal to lease the Licensed Areas from the Territory at a rental and upon and subject to such terms and conditions as the Territory may in its absolute discretion impose”.  The only proviso to that absolute discretion is that “such rental and terms and conditions shall not be less favourable than the terms and conditions upon which the Territory would be prepared to offer a lease of the Licensed Areas to any third party for the same purpose”.  That is to say that, if and when the Territory forms the requisite state of mind in relation to the land in question, the Territory will not grant a lease over that land to a third party without first offering to lease it to LL on terms and conditions that are not less favourable than those it is prepared to offer the third party.   This does not amount to an option to lease; nor is it an agreement to lease; nor is it the grant of a profit a prendre.[10]

[48]     The solicitor general, Mr Michael Grant QC, contended that if the clause had been binding on the Territory (which it is not), then, whatever the nature of the “interest” conferred by the clause, in order to show that it had acquired a leasehold (or other) interest in the Land, LL would still need to show that:

(a)      the circumstances for the grant of the “right of first refusal” had been triggered;

(b)     the Territory had offered (or must be taken to have offered) a lease of the Land to LL; and

(c)     LL had accepted or agreed to such a lease.

[49]     As Mr Grant pointed out, there is no evidence of any of these matters. In relation to the pre-condition for the grant of the “right of first refusal”, namely that, after 1 September 2001, the Territory desired that the Licensed Areas be used for grazing stock and for no other purpose, the only available evidence (from Mr Pinney) was to the contrary, namely that at all times during his employment with the public service, from about 1996 until he left in 2001, the Territory remained committed to the eventual expansion of the Ord Irrigation Scheme.  There was no evidence at all of the Territory’s “desires” thereafter.

Estoppel by convention: Did the NTLC acknowledge that LL had any equitable rights in the Land, and undertake to hold its registered title in the Land subject to those rights?

 

[50]     As set out above, LL had no agreement with the Territory and no proprietary rights in the Land (by way of lease or otherwise).  However, in case I am wrong about that, then I propose dealing with the plaintiff’s contention that any such interest is binding upon the NTLC.

[51]     The NTLC became the registered proprietor of Areas 1 and 2 on 29 January 2010.  Thereafter it had the benefit of indefeasibility of title, subject only to any of the exceptions to indefeasibility, such as fraud (none of which have been alleged), or to equities created by itself.

[52]     The plaintiff contends that its leasehold (or other) interest in the land is enforceable against the NTLC because the NTLC took a transfer of the Land from the Territory on the understanding that it would be bound by LL’s prior interest in the Land; the NTLC acknowledged that interest and, in effect, undertook to be bound by it.[11]  This, the plaintiff contended, gave rise to an estoppels by convention so that the NTLC held the Land subject to a trust in favour of the plaintiff for its leasehold interest.

[53]     The evidence relied upon by the plaintiff to establish the factual basis for alleging such an estoppel consists of diary notes of six telephone conversations between Mr Weimer, the then solicitor for LL, and Mr Fowlestone, the then manager of the Pastoral Land Management Branch in 2008, and Mr Weimer’s recollections of those telephone conversations aided by the diary notes, along with evidence of a telephone conversation between Mr Fowlestone and Mr Blake, the chairman of the NTLC, also in February 2008.

(a)      Mr Weimer deposed that on 18 February 2008 he had four telephone conversations with Mr Fowlestone.   His recollection, aided by his dairy notes, is that during those conversations Mr Fowlestone told him that the excised areas (Areas 1 and 2) were to be added to Spirit Hills pastoral lease (a property owned by the NTLC); that arrangements were in place to transfer the excised areas to the NTLC; that any decision regarding leasing those areas would need to be made by the NTLC; that he had spoken to someone in Acquisitions; and that he (Mr Fowlestone) felt that the current arrangements regarding LL agisting its cattle could continue on the excised areas. Mr Fowlestone did not disagree with the substance of the evidence of these conversations given by Mr Weimer.

(b)     Mr Weimer deposed that he had a further conversation with Mr Fowlestone on 21 February 2008 in which Mr Fowlestone said that the proposal of the Territory would be to take the excised areas and give a pastoral lease to LL; that part would be taken for park purposes and so may not be available to LL; and that the Territory was aware of the current arrangements that LL had with the excised areas and would endeavour to keep those arrangements in place when it transferred the excised areas to the NTLC.  Mr Fowlestone denies that he spoke of any proposal to give a pastoral lease to LL as he was aware that the Territory proposed transferring the excised areas to the NTLC. I accept Mr Fowlestone’s evidence in this regard as it accords with the other things which both he and Mr Weimers recall were said during these telephone conversations.  However even if Mr Fowlestone had spoken of such a proposal, it would not assist the plaintiff.  The plaintiff is not claiming damages from the Territory for misrepresentation; or making a claim against the Territory based on an estoppel by representation.  It is claiming an interest in the Land as against the registered proprietor, the NTLC, and nothing said by Mr Fowlestone regarding the intentions of the Territory can have any bearing on that claim.

(c)     Mr Weimers deposes that he had another telephone conversation with Mr Fowlestone on 22 February 2008 in which Mr Fowlestone said that he had been talking with the chairman of the NTLC who said that the excised lands would become part of the Spirit Hills pastoral lease; that he had been told that the NTLC had arrangements in place with another adjacent land owner regarding the agistment of cattle within Spirit Hills pastoral lease; that if the Land was held by the NTLC, LL would need to talk to the NTLC; in the mean time, until the NTLC became the owner, LL could talk to him; that approval for the excision to be completed could take 3 weeks or so; that the Territory “may have an offer” by the time the excision was complete; and, finally, that LL’s agistment of cattle on the excised areas should be able to be managed in the same way as Spirit Hills already had in place with another adjoining land owner.  Mr Fowlestone did not disagree with the bulk of what Mr Weimers said was discussed, but was adamant that he had not said anything to indicate that LL could expect to have any sort of right over the surrendered areas after they were vested in the NTLC.  His position was that after the Land was transferred to the NTLC, LL would have to deal with the NTLC.  Again, I accept this evidence, and, again, it would not assist the plaintiff if Mr Fowlestone had said all of the things deposed to by Mr Weimers.  A representation by an officer of a Northern Territory department that LL “should be able to” agist cattle on the Land after it is owned by the NTLC in the same way as another adjoining land owner does not amount to an acknowledgement by the NTLC that LL has an equitable lease over the Land (or any other property right over the Land) let alone an undertaking by the NTLC to be bound by such equitable lease (or other property right).

(d)     Finally, the plaintiff relied on the fact that Mr Fowlestone spoke to Mr Blake by telephone before speaking to Mr Weimers on 22 February 2008.  However, there is no evidence whatsoever that during that telephone conversation, Mr Fowlestone advised Mr Blake that LL had claimed to have an equitable lease or other proprietary interest over the Land; no evidence that Mr Blake acknowledged the existence of any such interest; and no evidence that he agreed that the NTLC would take a transfer of the Land subject to any such prior interest.  The evidence is all to the contrary.  Mr Fowlestone gave evidence that at no time during that discussion or on any other occasion did he indicate to Mr Blake that LL made any claim of a right or entitlement in respect of the Land or that there might be circumstances giving rise to the possibility of such a claim.  Mr Blake gave evidence about the discussions he had with various Territory officials before the Land was transferred to the NTLC and he, too, says that he was not told of any claim by LL to an interest in the Land.

(e)     Indeed, it is far from clear that at the time the land was transferred to the NTLC, LL was claiming to have a leasehold or other proprietary interest in the Land.  When the NTLC wrote to LL on 12 February 2012, requiring it to remove its stock from the Land, LL’s solicitors did not respond with a letter claiming that LL had an existing equitable lease.  Rather they wrote a long letter which contained (inter alia) the following:

“It was also intimated to our clients in those meetings [ie in 2003 and 2003] and in later telephone conversations with Mr Tony  Fowlestone, a civil servant, that if the Government were to issue a formal lease or Licence over those lands it would be offered firstly to the existing Legune Lease holder.”

….

“In addition, our clients were also aware that the land being Portion 5774 was never going to be used for the Ord River Irrigation Scheme and they presumed that that area of land would have always been available for grazing purposes and that they could have negotiated a lease or licence to graze the land.”

……

“At no time has our client not wished to continue with the use of the two portions mentioned above.  They had not put in any specific request for the use of the portions following the resumption of those portions in the belief that, having regard to their past conduct with the Northern Territory Government, there would be an offer forthcoming to them in regard to the future use of the land and either a Lease or Licence to use that land.

In the circumstances and given our clients’ track record with regard to the management of the land and also the fact that the two portions have prior to their purchase by the Government been part of Legune Station for probably the last 100 years we would submit that it is only fair that your Corporation should give the first offer of a licence to use Portions 5774 and 5775 [ie Areas 1 and 2] to our client.”  [emphasis added]

 

This is not the language of a company claiming an existing lease or other proprietary right in the Land enforceable as against the NTLC.

[54]     The plaintiff’s claim is dismissed.

[55]     It follows that the counterclaim by NTLC must succeed.  The plaintiff has admitted that the NTLC is the registered proprietor of the Land; that LL is in possession of the Land; and that it has failed to yield up vacant possession of the Land. Its defence was that, by reason of the matters pleaded in the statement of claim it was entitled to refuse to give vacant possession of the Land to the NTLC.  That defence has failed.

[56]     I will hear the parties further on the appropriate form of orders and the claim by the NTLC for mesne profits.


 



[1]           In any case one wonders what could have been the effect even if the Territory had executed the document and retained an executed copy on its file (or destroyed it).  If, as seems to me to be the case on a proper legal analysis, the copy of the 2000 deed of agreement executed by LL was an offer, an acceptance of that offer would need to be communicated to LL before it took effect. The fact that it was expressed to be a deed, I do not think would assist the plaintiff, as there is no suggestion that it was delivered, and there is nothing in the draft form of execution clause (ie “signed for and on behalf of the Northern Territory”) to suggest that mere execution of the document was intended to operate also as an act of delivery so as to render the document immediately binding – as the more formal “signed sealed and delivered” might suggest.  (Law of Property Act s49(1): execution of an instrument in the form of a deed does not of itself import delivery; and delivery [of a deed] is not to be presumed from the fact of execution only unless it appears that execution of the document was intended to constitute delivery of the document.  See also discussion in 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] QCA 425 at paras [11] to [16])

[2]           Olsson v Dyson (1969) 120 CLR 365 at 388 per Windeyer J

 

[3]           All senior counsel for the plaintiff could point to in that regard was the fact that a copy of the contract of sale (which contained both conditions 6.4 and 6.5) was apparently provided to the Territory prior to settlement of the sale of the station.

[4]        Maddison v Alderson (1883) 8 AC 467; ANZ v Widin (1990) 102 ALR 289; Regent v Millett [1976] HCA 40; (1976) 133 CLR 6

 

[5]           Walsh v Lonsdale (1882) LR 21 Ch D 9

 

[6]           Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1985-86) 160 CLR 226 at 244-245

[7]           I say “purported to bind itself to the Territory” because there must be some doubt as to the legal status of this document.  It is not expressed to be a deed and it does not on its face recite any consideration.   However, that is not the point.  The point is that signing a further surrender in 2010 does not necessarily point to the adoption of the 2000 deed of agreement as the basis of the relationship between the parties.

 

[8]           (2002) NSW ConvR 56-008; [2001] NSWSC 413

 

[9]           (1954) 92 CLR 245 at 257

[10]          It does not purport to grant to LL the right to remove anything from the land or even to graze cattle upon the land.

[11]          See generally Bahr v Nicolay (1988) 164 CLR 604