Bradto Pty Ltd v State of Victoria; Palais de Danse Pty Ltd v State of Victoria
[2007] VSCA 100
•11 May 2007
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 9933 of 2006
| BRADTO PTY LTD |
| v |
| STATE OF VICTORIA |
| No. 9935 of 2006 |
| PALAIS DE DANSE PTY LTD v STATE OF VICTORIA |
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JUDGES: | BUCHANAN and CHERNOV JJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 11 May 2007 | |
DATE OF JUDGMENT: | 11 May 2007 | |
MEDIUM NEUTRAL CITATION: | [2007] VSCA 100 | |
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APPLICATION ON SUMMONS
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Dr C L Pannam, QC with Mr R Hay | Mitrakas Savas and Co |
| For the Respondent | Mr G Garde, QC with Mr P Fox | Mr John Cain, Victorian Government Solicitor |
BUCHANAN JA:
In 1956, the respondent leased a triangle of land in St Kilda, bounded by the Esplanade, Jacka Boulevard and Marine Parade, to Palais de Danse Pty Ltd ("Palais"), for a term of 50 years expiring on 31 March 2006. The applicant is the successor to Palais.
In proceedings in the Victorian Civil and Administrative Tribunal launched in 2006, the respondent claimed possession of the land. The applicant resisted the proceedings on the basis that Palais had entered into a new lease of the land for 60 years from at least August 1982. There were two buildings on the land: a ballroom called the Palais de Danse and a reception centre called the Stardust Room. The lessee had the right to remove the Stardust Room building, but the ballroom was to revert to the landlord on the expiration of the lease. On 27 December 1968, a fire destroyed the ballroom and damaged the Stardust Room. The buildings were insured under one policy of insurance in the name of the Secretary for Lands. The sum insured was $440,000.
In 1969, Palais sought a new lease for a term of 60 years. The Department of Crown Lands and Survey were sympathetic, but pointed out that the area to be leased might alter, for it was proposed that Marine Parade be widened and adjacent land used as a miniature railway might be required for car parking, and accordingly it would be necessary to agree upon a new rent.
On 15 April 1969, the Governor-in-Council approved a recommendation put to him by the Department in the following terms:
"Pursuant to the provisions of s.134 of the Land Act 1958, recommended that in respect of the Crown lease held by Palais de Danse Pty Ltd of Allotment 103 at St Kilda, Parish of Melbourne South, for a term of 50 years from 1 April 1956, the Governor-in-Council consents to the grant of a new lease for a term of 60 years from a date to be determined on the condition that such new lease shall not be executed until such time as -
(1) The lessee has expended not less than $400,000 on the erection of a new building on the demised premises;
(2) The lessee has reinstated the reception room and kitchen erected on the demised premises and recently damaged by fire;
(3) The boundaries of the demised premises have been redefined having regard to the widening of Marine Parade at St Kilda;
(4) The lessee has complied with the statutory requirements of the Land Act 1959."
The parties referred to the document embodying the recommendation as “the Order-in-Council”.
Palais contended in the Tribunal that the Order-in-Council constituted a bilateral agreement for a new lease. There were substantial obstacles in the path of this contention, including doubt whether Palais had earlier promised to spend $400,000 on rebuilding, no new rent was agreed, and the question of the land on which the miniature railway was conducted was not resolved. After April 1969, both Palais and the Department appeared to ignore the existence of the Order-in-Council. None of the steps required by the Land Act in respect of the grant of a lease were taken. Instead, Palais explored other proposals for a new lease. In the early 1970s, Palais spent more than $400,000 rebuilding the ballroom, but did not then call for a new lease. Nor did it call for a new lease when the boundaries of a new Marine Parade were fixed in August 1982. The first intimation from the applicant that there was a new lease or agreement for a new lease emerged nearly forty years after the lease or agreement was said to have been made.
The Tribunal held that the Order-in-Council constituted a unilateral offer. The Deputy President constituting the Tribunal said:
"If there was a contract, it was a unilateral one, which would come into existence, if at all, upon the expenditure of not less than $400,000 in the reinstatement of buildings on the premises."
The Tribunal held that the decision to rebuild the ballroom was not based upon the belief that Palais was contractually bound to adopt that course, but rather because otherwise the proceeds of the insurance policy would revert to the state. Accordingly, so it was held, the respondent's offer had not been accepted.
The appellant sought leave to appeal on a question of law from the Tribunal's decision. A judge in the Trial Division refused leave. His Honour analysed at length the evidence before the Tribunal and said:
"It therefore seems to me that the Deputy President was right to conclude that the Order-in-Council did not effect a contract between the state and Palais de Danse to the grant of a new 60-year lease. If there was no agreement, there is not now any basis for Bradto's continued possession of the land."
The applicant now seeks leave to appeal from that decision, pursuant to the provisions of s.17A(3) of the Supreme Court Act 1986. The applicant also seeks an order staying the Tribunal's order giving possession of the land to the respondent in the event that it is granted leave to appeal. The criteria for obtaining leave were stated by Phillips JA in Department of Premier and Cabinet v Hulls[1], in the following terms:
"When leave is sought to appeal under s.148, it will be necessary for the applicant to identify a question of law which is relevant to the granting of the relief sought on appeal. The importance of the question, either generally or to the would-be appellant in the particular case, will probably be relevant. The applicant must show that there is a real or significant argument to be put on that question of law, at least to this extent, that there is sufficient doubt about it to justify the grant of leave."
[1][1993] 3 VR 331.
The applicant contends in this Court, as it did below, that the Order-in-Council embodied a bilateral agreement for the lease of the land. The conditions set out in the Order-in-Council, so it was said, were conditions precedent to the respondent's obligation to grant a new lease, not to the formation of an agreement. The lease was to commence on the fulfilment of the last of the conditions or within a reasonable time from that date. The rent was to be determined in accordance with s.135 of the Land Act, being the amount "the Governor-in-Council may think fit to impose". Rent reviews would occur at ten-yearly intervals in accordance with s.134(4)(a) of the Act. It was submitted that it was a term of the lease that Palais would take reasonable steps to commence and complete the erection of a new ballroom and expend in relation to it not less than $400,000, and to reinstate the reception centre. Otherwise, the lease would contain the "usual covenants", which in this case would be those stipulated by the Crown in its standard lease terms used in this type of transaction.
The applicant repudiated the Tribunal's notion that the Order-in-Council operated as a unilateral offer. It was submitted that the provisions of the Land Act did not authorise, require or permit the Governor-in-Council to make offers to enter into leases, the only power conferred by s.134 being one to grant leases. Some of the conditions in the Order-in-Council, so it was said, were beyond the control of Palais.
In my view, there is considerable force in the applicant's submission that the Order-in-Council did not amount to an offer which could ripen into a unilateral contract upon construction of a building at a cost of not less than $400,000. In addition to the matters advanced on behalf of the applicant, it appears to me that the Order-in-Council was not framed as an offer, or as a contract, but rather appeared to foreshadow the grant of a lease at a future date. That is not to say that the Tribunal made an error of law in finding as a fact that the Order-in-Council constituted an offer. Further, I doubt that the Tribunal erred in law in finding that Palais did not accept the offer by laying out the proceeds of the insurance policy in the construction of a new building, and in failing to find that a bilateral contract had been formed. But even if the Tribunal did err in law as the appellant contends, that will only avail the applicant if the Order-in-Council embodied a bilateral agreement, or at least that it is reasonably arguable that it did.
In my opinion, it is clear that there was no agreement made in 1969 in the terms of the Order-in-Council. The applicant pointed to a bundle of correspondence and notes of meetings as containing evidence of the assent of the parties to the provisions of the Order-in-Council. The documents do reveal the applicant's desire to extend the term of the lease and fear that the proceeds of the insurance policy might not be sufficient to construct the ballroom and reception centre, so that the project would not be viable unless the applicant obtained a longer lease. They do not, however, reveal any meeting of minds or exchange of promises that constituted a concluded bargain. For example, a note of a meeting held on 31 January 1969 states that the applicant "had decided to take action to reinstate the whole of the buildings" and, in order to amortise the cost, needed a longer lease. The applicant did not, however, then or later, promise to reinstate the buildings.
The subsequent conduct of the parties belies the existence of the contract the applicant now asserts. It is remarkable that for almost four decades the applicant took no step referable to the contract it now asserts, or even claimed that it existed. The applicant did not surrender the lease granted in 1956. It did not apply for a new lease. It did not seek a certificate from the Minister under s.134(4). It took no step to determine the rent it says should be fixed under s.135, or to fix the usual covenants or a commencement date. It did not make any effort to see that the respondent complied with the requirements of s.134 to advertise or issue a certificate. Indeed, no effort apparently was made to meet any of the requirements of the Act.
In my opinion, the decision of the judge below is not attended by sufficient doubt to warrant the grant of leave to appeal.
CHERNOV JA:
I agree.
BUCHANAN JA:
The order of the Court is that the application for leave to appeal is dismissed.
The same order is made in the application by Palais de Danse?
Each of the applications is dismissed with costs.
(Dr Pannam applied for a stay. Discussion ensued.)
BUCHANAN JA:
We are minded to grant the limited stay which was sought on behalf of the applicant, that is, a stay of paragraph 1 of the order made on 15 November 2006 by Deputy President McNamara in proceedings in the Victorian Civil and Administrative Tribunal, designated R191/2005, be stayed pending the hearing and determination of an application for a stay of that order by the High Court of Australia pending the hearing and determination of an application for special leave to appeal. We will make that order upon the applicant by its counsel giving the undertakings which mirror the undertakings given to Harper J on 17 April 2007. Do you give those undertakings, Dr Pannam.
DR PANNAM:
Yes, I am instructed to and do give those undertakings.
MR GARDE:
We understand that Mr Sirou would also give those undertakings in so far as they involve Maztan, if the Court pleases. Mr Sirou gave similar undertakings personally on behalf of Maztan before Harper J, your Honour.
BUCHANAN JA:
Is that so, Mr Sirou? Could you stand, please? Could you identify yourself?
MR SIROU:
Yes, Con Sirou.
BUCHANAN JA:
And you are a director of the company which is in occupation of the land the subject matter of these proceedings?
MR SIROU:
Yes.
BUCHANAN:
And you give the same undertaking which has been given on behalf of the applicant in these proceedings?
MR SIROU:
Yes.
DR PANNAM:
I think he has misunderstood that, your Honour. It is not the same undertaking, it is a limited undertaking in relation to access, as I understand it.
BUCHANAN JA:
That is the undertaking in these terms: to permit the State of Victoria and each short-listed proponent for the redevelopment of the St Kilda Triangle and the servants and agents of each of them, including consultants, to enter, upon 24 hours' notice to Palais de Danse, the Palace Entertainment Complex land and improvements, within the hours of 10 a.m. and 4 p.m. on each week day, for the purpose of inspecting the premises. Do you give that undertaking?
MR SIROU:
I do.
BUCHANAN JA:
Thank you. Are any further orders sought?
MR GARDE:
The undertakings which have been given by our learned friend I simply confirm include the undertaking relating to expedition.
DR PANNAM:
Yes.
BUCHANAN JA:
No further orders sought?
MR GARDE:
No, your Honour.
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