Brisbane City Council v Group Projects Pty Ltd

[1979] HCA 54

HIGH COURT OF AUSTRALIA

Gibbs, Stephen, Mason, Murphy and Wilson JJ.

BRISBANE CITY COUNCIL v. GROUP PROJECTS PTY. LTD.

(1979) 145 CLR 143

1 November 1979

Town Planning (Q.)—Statute—Contract

Town Planning (Q.)—Zoning—Crown land—Whether affected—City of Brisbane Town Planning Act, 1964-1977 (Q.), s. 4—Acts Interpretation Act, 1954-1977 (Q) s. 13. Statute—Crown—Whether bound—Implication—Town plan having force of law—Effect on Crown land. Contract—Discharge by frustration—Rezoning deed—Resumption of land before rezoning gazetted.

Decisions

November 1.
The following written judgments were delivered: -
GIBBS J. I have had the advantage of reading the reasons for judgment prepared by my brother Wilson and am in agreement with them. I would accordingly dismiss the appeal. I only add that, in reaching my conclusion, I do not find it necessary to express any view on the question whether, if Crown land which purported to be zoned under the Town Plan is thereafter sold or leased, the purported zoning will then automatically become effective and bind the purchaser or lessee. (at p152)

STEPHEN J. In 1975 Group Projects Pty. Ltd. was the owner of almost nineteen acres of land in an outlying Brisbane suburb. This was land which it wished to develop in subdivisional allotments. The zoning of the land as "Future Urban" prevented that development. If it were to take place, the zoning required to be changed to "Residential 'A'". (at p153)

2. With re-zoning in view, Group Projects entered into negotiations with the Brisbane City Council. The outcome was a deed dated 30th October 1975. By it the Council agreed to make application to the Minister for Local Government and Electricity to have the land appropriately re-zoned. In return Group Projects agreed that, should the Governor-in-Council approve the Council's application for re-zoning, it would do a number of things. At a cost of $30,000 it would pave two existing roads, bounding frontages of the land, and provide kerbs, channels and footpaths: it would contribute almost $15,000 to the cost of providing a sewerage system to the land (but excluding reticulation) and almost $13,000 to the cost of providing water mains to the land (but again excluding reticulation), would construct water mains to, and along two frontages of, the land at a cost of some $9,500, would contribute over $23,000 to the cost of paving footpaths beside roads abutting allotments to be created on the land, and a further $38,000 to the cost of "undergrounding" the electricity reticulation of the land, as well as providing substantial sums towards the provision of parks, tree planting and the construction of a bridge. It also agreed that on the execution of the deed it would invest $122,600 in the Council's issue of inscribed stock. (at p153)

3. In addition to these obligations, all detailed in the second schedule to the deed, Group Projects also agreed that when it came to subdivide the land it would not only comply with all applicable laws affecting development of the proposed sub-division but would also undertake the work and make the payments specified in the third schedule. That work included the reticulation of water and sewerage to each allotment and drainage and road construction work within the subdivision. The Council itself assumed certain obligations in relation to water, sewerage and footpath paving construction, as specified in the fifth schedule. (at p153)

4. The deed is lengthy and further reference to its terms will be necessary later. It required Group Projects to furnish a bond in the sum of almost $200,000 as security for the performance of its obligations. This it furnished, A.G.C. (Advances) Ltd. being the obligor. It also mortgaged the land to A.G.C. (Advances) Ltd. to secure the latter's potential liability should the Council have recourse to the bond. (at p153)

5. Some nine months later, and before any re-zoning, both Group Projects and the Council were advised that the whole of the land was to be resumed by the Crown for school purposes. The Council inquired of Group Projects in August 1976 whether the latter nevertheless intended "to proceed with the proposed rezoning". Group Projects replied that it did, that it had lodged an objection to the resumption and wished the Council to proceed with "the rezoning process", as agreed upon in the deed. This the Council did, with the consequence that on 23rd December 1976 an Order in Council was made, approving of the Council's application for re-zoning. This Order in Council was gazetted on 25th December 1976. By s. 6(7) of the Act this gazettal operated to amend the Town Plan, the land thenceforth being zoned Residential "A". (at p154)

6. However, in the meantime, the proposed resumption had taken its course, apparently despite Group Projects' objection, so that on 13th November 1976, more than a month before the re-zoning took effect, the land had vested in the Crown: at the time of re-zoning, it was Crown land. Group Projects no longer owned it and could no longer develop it subdivisionally; but the deed, the bond and the mortgage remained, purporting to involve Group Projects in onerous obligations concerning land in which it no longer had any interest. (at p154)

7. To free itself of these obligations, Group Projects sought and obtained in the Supreme Court of Queensland (Dunn J.) a declaration that the deed, bond and mortgage had each ceased to be binding upon the parties, the obligations they contained being discharged as and from 13th November 1976. An appeal to the Full Court was dismissed and the Council now appeals to this Court. (at p154)

8. Dunn J. held that on resumption the land became Crown land to which the relevant town planning legislation, and in consequence the City of Brisbane Town Plan, became inapplicable: the legislation did not bind the Crown and the subsequent purported re-zoning was ineffectual. His Honour said that the "essential point in the case is that the applicant's land became Crown land and so ceased to be susceptible of re-zoning on 13th November 1976". Thereupon the deed, bond and mortgage became "insusceptible of application to the new situation" and this without default of any party. It followed that the contracts contained in all three instruments had been frustrated since 13th November 1976. His Honour cited Davis Contractors Ltd. v. Fareham Urban District Council (1956) AC 696 as authority for that proposition. (at p154)

9. Before proceeding further, the position of the parties immediately following the gazettal of the Order in Council should be looked at. As at that date the Council had performed the primary obligation which the deed imposed upon it. It had, in terms of cl. 1 of the deed, duly made application for amendment of the Town Plan "by excluding the said land from the Future Urban Zone and including it in a Residential 'A' Zone". The Council had not contracted either to re-zone the land or even to procure its re-zoning, neither of which was within its powers. Its contractual obligation was confined to what did lie within its powers, the making of an appropriate application to the Minister for amendment of the Plan. This it had done. (at p155)

10. Since the Council assumed no contractual obligation to re-zone the land, Group Projects no doubt required protection against the possibility that the Council's application to the Minister might be unsuccessful. This the deed provided; not, however, by making Group Projects' obligations under the deed conditional upon the land being re-zoned as Residential "A" but instead by selecting as the appropriate condition precedent the approval of the Council's application. Accordingly, the opening words of cl. 2 read as follows:

"In the event of the Governor-in-Council approving the application referred to in clause 1 hereof the Applicant (i.e. Group Projects) will . . . ".

The condition precedent so selected was, of course, satisfied; the Governor-in-Council did approve the Council's application. This occurred when the Order in Council was made on 23rd December, two days before it was gazetted. It follows that the obligations which cl. 2 of the deed imposed upon Group Projects, onerous obligations whose details were specified in schedules to the deed, thereupon became operative in terms of the deed. The unambiguous terms of cl. 2 appear to me to make this conclusion inescapable; to treat effective re-zoning, as distinct from approval of the Council's application, as necessary to satisfy the condition precedent to Group Projects' obligations under cl. 2 would involve an impermissible re-writing of the parties' contract. (at p155)

11. Since effective re-zoning of the land was neither contracted for by the Council nor made a condition precedent to the active assumption of obligations by Group Projects, the effectiveness or otherwise of the re-zoning which gazettal of the Order-in-Council purportedly brought about is, I think, irrelevant to the obligations of the parties in terms of the deed. Moreover, I do not regard the question of the effectiveness of the re-zoning as having much to do with questions of the frustration of the contract. The frustrating event, if one there was, was the actual acquisition of the land by the Crown, not any effect which that acquisition might have had upon the applicability of any purported re-zoning. It was that acquisition which abruptly brought to an end all prospect of the land being developed as a subdivisional estate, whether or not the land's original zoning was changed. (at p156)

12. It follows that, on the view which I take, I am little concerned with the question whether Queensland's town planning legislation or Brisbane's Town Plan binds the Crown and, if it does not, whether that means that zoning ceases for all purposes to have any application to land once it becomes Crown land. The question for me is, rather, whether Group Projects will be in breach of its obligations under the deed if it fails to perform them or whether it may instead invoke the doctrine of frustration so as to bring the deed, and no doubt the bond also, to an end. (at p156)

13. Before turning to consider the question of frustration I should explain my earlier description of the Council's obligation to make application for rezoning as its "principal obligation". The Council does have other obligations; they are imposed by cl. 3 of the deed and their content is specified in detail in the fifth schedule. However they only require performance at earliest after final approval of a plan of subdivision of the land. (at p156)

14. In any consideration of the claim that this is a case of frustration, two features of the case should be noted at the outset. The first is that this is not the common case of two contracting parties, both interested in a commercial venture, one of them supplying to the other, in return for a money payment, goods or land or services. The Council is a public body and the principal obligation which the deed imposes upon it is performance of an act, the making of an application for re-zoning, which is of a kind which the statute contemplates that it will from time to time have occasion to perform in carrying out its public functions. The inducement offered to the Council is not in essence monetary gain. Its relevant primary concern is, no doubt, that areas destined for residential development should be provided with proper amenities, with electric light, water, a sewerage system, good roads, parks and the like. To induce it to apply for re-zoning, Group Projects undertakes materially to assist in the provision of these amenities. No doubt the Council has in mind that its own funds should not unnecessarily be expended in providing those amenities; instead the subdivider and, ultimately, purchasers of subdivided allotments should, so far as possible, be made to bear the financial burden. However, essentially the advantages which the Council seeks are not its own financial or commercial advancement but the attainment in a new subdivisional area of appropriate standards of amenity. This distinguishes the present case from those in which questions of frustration usually arise. (at p157)

15. The second feature calling for mention is that in principle this is not a case in which performance of contractual obligations has either been rendered impossible or more onerous by the frustrating event. I use the qualifying expression "in principle" because, as it happens, some of Group Projects' obligations would in fact have involved the carrying out of work on the land itself, which has now become Crown land to which it no longer has access, let alone the right to carry out engineering works on it. But the bulk of the work contracted for, or towards the cost of which it has promised to contribute, was to be done off the acquired land, so that its acquisition by the Crown in no way prevents the doing of that work or alters its nature or cost. That this is not so in relation to all the work to be done is in a sense fortuitous and the great bulk of the work can still be performed with no greater difficulty or expense than before. If frustration is to apply its application cannot, in these circumstances, be accommodated very comfortably within any theory of frustration which is said to be based upon such a "change in the significance of the obligation that the thing undertaken would, if performed, be a different thing from that contracted for" (Davis Contractors Case per Lord Radcliffe (1956) AC, at p 729 ). (at p157)

16. There is, I suppose, no doubt but that the acquisition of the land by the Crown for use as the site of a school has deprived Group Projects of all desire to now proceed with the work and expenditure which it has contracted for under the deed. To do that work and incur that expenditure would be to provide, at great cost to itself, facilities for land in which it no longer has the remotest interest. Even the Council's interest in having some at least of that work performed may, one speculates, be now diminished: schools no doubt benefit from ready access to suitable facilities and services, but the scale of the facilities here in question were clearly dictated by the expectation that the land would be developed for use as suburban residential building blocks. The scale contracted for seems unlikely to be that which the Council would have regarded as entirely appropriate for a school site. Be that as it may, it is clear that, although Group Projects no doubt remains able to peform the bulk of the obligations which it has undertaken, being that part of the work which is not to be undertaken on the acquired land, and although that work will have neither changed in character nor become more onerous, yet the acquisition of the land for a school site has wholly destroyed Group Projects' purpose in undertaking any obligations at all. (at p158)

17. Whichever of the competing theories, said to underlie and give conceptual validity to the doctrine of frustration, is to be preferred, and the truth may, indeed, not lie in a choice of one and the rejection of all others, there is no doubt that an examination of the parties' agreement and of the surrounding circumstances provides an appropriate starting point. (at p158)

18. I have already spoken of the role of the Council, a public body performing public duties, and of the complete aborting of Group Projects' plans as a result of the acquisition of the land for a school site. The terms of the deed both reflect this role of the Council and also emphasize that it was upon the basis of development of the land as a residential subdivision that the parties entered into it. (at p158)

19. The deed recites that Group Projects has applied to the Council to have the Town Plan appropriately amended so that Group Projects may use the land for a use permitted in a Residential "A" Zone. Then, after providing in cl. 1 for the Council to apply for re-zoning, the deed proceeds, in cl. 2, to impose obligations on Group Projects, subject to satisfaction of the condition precedent which I have already discussed. These obligations, so far as they relate to the substantial works specified in the second schedule, expressly contemplate subdivision of the land. They refer to the Council's consent to a plan of subdivision as an element in the formula prescribing when the obligations are to be performed. Performance of other obligations imposed by cl. 2, those specified in the third and fourth schedule, are expressed to follow upon the Council's approval of an application to sub-divide. Moreover, in the case of a number of the scheduled obligations, their monetary quantum is expressly made to depend upon the number of allotments into which the land is ultimately subdivided. Again, in the case of a few of the obligations, the very works to be performed are themselves dependent upon subdivision, e.g. the construction of subdivisional roads. In short, the obligations accepted by Group Projects under cl. 2 may not only be seen to be imposed by the Council and accepted by Group Projects in the expectation that the land will be developed as a residential subdivision, those obligations owe their very existence to proposed subdivision. But for the proposed sub-division it cannot be conceived that the Council would seek to impose them; certainly Group Projects would not have agreed to undertake them. (at p159)

20. Without labouring the point, it is enough to say that this is also apparent from the content of cll. 4, 5 (i) (b), 5 (ii), 9 and 21 of the deed. Many of the other clauses, particularly those concerned with the provision of security by way of a bond, are colourless machinery provisions, of their nature incapable of casting any light upon the present inquiry. However, three cll. 7, 9 and 19 do call for some further mention. (at p159)

21. Clause 7 provides (inter alia) that Group Projects' obligations are to remain in force although (subject to cl. 9) it ceases to be the registered proprietor of the land or is for any reason "precluded from benefiting either wholly or partly" from re-zoning, including inability to use the land for a purpose for which it may be used only with the Council's consent. Its reference to cl. 9 is explained by the latter's provision that, upon any sale of the land other than in approved allotments before any of Group Projects' obligations have been performed, the purchaser shall bind itself to the Council to perform them and shall provide security for that performance. While the operation of cl. 7 certainly contemplates that Group Projects' obligations will persist despite any inability to benefit from the re-zoning of the land, it should not, I think, be understood as governing, or even disclosing any advertence to, a situation such as the present. It looks rather, I think, to a quite different situation, one in which, while Group Projects remains the owner of the land and the land is duly re-zoned, nevertheless, for quite other reasons, Group Projects cannot benefit to the full extent it would wish to from that re-zoning. The clause expressly provides one example of this intended operation, therby offering some confirmation that this is the true meaning of the clause, when it refers to "the inability to use the said land or any part thereof for a purpose for which it may be used only with consent of the Council or its delegate". (at p159)

22. Clause 19 provides for the possibility of part only of the land being re-zoned. If that happens, the obligations under the deed are to be correspondingly reduced. This clause serves to emphasize the extent to which re-zoning of the land for residential development was regarded by the parties as fundamental to the incurring of obligations on the part of Group Projects. (at p159)

23. So much for what may be gleaned from the surrounding circumstances and the parties' contract. The task is to set this alongside the doctrine of frustration and to see whether the result is that the law will regard the contract as frustrated or will, instead, regard non-performance by Group Projects as actionable at the suit of the Council. (at p160)

24. In Port Line Ltd. v. Ben Line Steamers Ltd. (1958) 2 QB 146, at p 162 Diplock J. said:

"It would appear to be the fate of frustration cases when they reach the highest tribunals that either there should be agreement as to the principle but differences as to its application, or differences as to the principle but agreement as to its application."

This was said despite, or perhaps in the light of, what is the leading modern authority in the field, the decision of their Lordships in the Davis Contractors Case, pronounced in 1956. Such divergency of principle as commentators have extracted from their Lordships' speeches do not, I think, affect the present case. In the Davis Contractors Case (1956) AC 696 Viscount Simonds and Lord Morton offer no guide to principle, although they do reflect the general disinclination to allow much scope to the operation of frustration. Lord Somervell (1956) AC, at p 733 agrees with Lord Reid's conclusion upon "the proper basis of frustration". It is in the speeches of Lord Reid and Lord Radcliffe that extensive discussion of principle occurs. (at p160)

25. Lord Reid rejected the notion of the implied term as the basis of the doctrine. He says (1956) AC, at pp 720-721 that the task for a court, confronted with the parties' contract, is to determine, on the true construction of the terms of the contract, read in the light of the nature of the contract and of the relevant surrounding circumstances when the parties made it, "whether the contract which they did make is, on its true construction, wide enough to apply to the new situation: if it is not, then it is at an end." Frustration he describes as "the termination of the contract by operation of law on the emergence of a fundamentally different situation" (1956) AC, at p 723 . What I understand his Lordship's approach to involve is, then, a comparison between the contemplated situation, as revealed by the terms of the contract on its true construction, and the situation in fact resulting from the frustrating event. If they be "fundamentally different" the contract is frustrated subject, of course, to the frustrating event not being the fault of the party seeking to rely upon the doctrine. (at p160)

26. Lord Radcliffe (1956) AC, at pp 727-729 considers those cases which treat frustration as involving an implied term, cases which involved diverse approaches, sometimes subjective and sometimes objective, in ascertaining the content of the term to be implied. His Lordship suggests (1956) AC, at p 729 that "frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do." This is close to the views of Lord Reid and together they represent the approach which I would apply in the present case. It should, however, be noted that Lord Radcliffe tends rather to concentrate on a change in obligation. Thus he says (1956) AC, at p 729 : "it is not hardship or inconvenience or material loss itself which calls the principle of frustration into play. There must be as well such a change in the significance of the obligation that the thing undertaken would, if performed, be a different thing from that contracted for." Lord Radcliffe also introduces the limitation that the frustrating event must not be one which the parties could "reasonably be thought to have foreseen" (1956) AC, at p 731 . As already mentioned, the "change in obligation" test proposed by Lord Radcliffe, no doubt apt enough in most frustration situations, seems to be inapplicable here, as it was in the so-called Coronation cases, of which Krell v. Henry (1903) 2 KB 740 is the leading example. But I do not understand his Lordship to say that without change in obligation there can be no frustration: it is "the occurrence of any unexpected event that, as it were, changes the face of things" (1903) 2 KB 740 , that give rise to frustration. His Lordship's emphasis upon change in obligation is, I think, to be understood in the context of the factural situation under discussion in the Davis Contractors Case (1956) AC 696 . (at p161)

27. Later cases in which frustration was discussed, many of them arising following the sudden closure of the Suez Canal, appear to me to throw little further light upon the principle of the doctrine so far as relevant to the present case. In Albert D. Gaon &Co. v. Societe Interprofessionelle des Oleagineux Fluides Alimentaires (1960) 2 QB 318, at p 347 Ashworth J. referred to the need for a "fundamental commercial difference" between contemplated and actual performance, a view echoed on appeal by Sellers L.J. (1960) 2 QB, at p 362 . In Tsakiroglou &Co Ltd. v. Noblee Thorl (1962) AC 93 (which at first instance and in the Court of Appeal is reported with Gaon's Case), Viscount Simonds, referred (1962) AC, at p 115 to the criterion of whether "the nature of the contract . . . 'fundamentally' altered", as did Lord Reid (1962) AC, at p 119 . Lord Guest (1962) AC, at p 131 , referred to the "juridical basis" of the doctrine of frustration as discussed by Lord Reid and Lord Radcliffe in Davis Contractors. In The Eugenia (1964) 2 QB 226, at p 238 Lord Denning spoke of "a fundamentally different situtation" arising for which the parties made no provision, "so much so that it would not be just in the new situation to hold them bound to its terms". He appears to reject (1964) 2 QB, at p 239 the relevance of foreseeability, to which Lord Radcliffe had attached importance in the Davis Contractors Case (1956) AC, at p 731 . In Roberts v. Independent Publishers Ltd. (1974) 1 NZLR 459 in the New Zealand Court of Appeal the leading judgement of Beattie J. follows the recent English authorities, from the Davis Contractors Case onwards, accompanied by detailed reference to earlier authorities. (at p162)

28. Whether Lord Loreburn's theory of the implied term - F. A. Tamplin Steamship Co. Ltd v. Anglo-Mexican Petroleum Products Co. Ltd. (1916) 2 AC 397 or that of the disappearance of the basis of the contract - Tatem Ltd. v. Gamboa (1939) 1 KB 132 per Goddard J., or Lord Wright's just and reasonable solution for reconciling the sanctity of contract with the special exceptions which justice demands - Denny Mott &Dickson Ltd. v. Fraser &Co. Ltd. (1944) AC 265 or, again, the approaches manifest in the speeches in the Davis Contractors Case, are to be preferred, the result in the present case appears to me to be the same. In saying this I echo the words of Diplock J. in the Port Line Case, who said (1958) 2 QB, at p 162 : "I think, however, that whichever of the many suggested tests are applied, the result in this case is the same." I prefer to express the matter in terms of Lord Reid's approach in the Davis Contractors Case, but, however expressed the conclusion should, I think, be that this contract has been frustrated. There has arisen, as a result of the compulsory acquisition of the land by the Crown for a school site, such a fundamentally different situation from that contemplated when the contract was entered into that it is properly to be regarded as having come to an end at the date of acquisition by the Crown. (at p162)

29. It is no doubt true, as critics complain, that the various expositions of the true basis of the doctrine of frustration leave imprecise its actual operation when applied to the facts of particular cases. How dramatic must be the impact of an allegedly frustrating event? To what degree or extent must such an event overturn expectations, or affect the foundation upon which the parties have contracted, or, again, how unjust and unreasonable a result must flow or how radically different from that originally undertaken must a contract become (to use the language of some of the various expositions), before it is to be regarded as frustrated? The cases provide little more than single instances of solutions to these questions. These difficulties of application of the doctrine of frustration were keenly appreciated both by Latham C.J. and by Williams J. in their consideration of the doctrine in Scanlan's New Neon Ltd. v. Tooheys Ltd. (1943) 67 CLR 169 . They are, perhaps, inevitable in questions of degree arising when a broad principle must be applied to infinitely variable factual situations. (at p163)

30. On this question of the application of the doctrine to the present facts I can, I think, do no more than re-state those factors which have led me to conclude that this contract should be treated as having been frustrated. Looking at the position of the parties, I take that of Group Projects first. It is straightforward enough: everything points to frustration of the contract. The Crown's acquistion of the land caused, for Group Projects, a complete overturning of its entire project for subdivisional development. The position of the Council is not that of a party to a commercial venture, concerned exclusively with the promotion of its own financial interests. If the contract be declared to be frustrated the Council will not be deprived of some commercial advantage which it sought to attain when it entered into the contract, as is usually the case of a contracting party who seeks to resist the application to his contract of the doctrine of frustration. The relevant primary concern of the Council was in the proper development of this proposed residential sub-division. Once this proposal aborts, the Council's particular concern comes to an end; whatever the needs may be for the proper development of a school site, they will certainly not be identical with those embodied in the deed. In this sense the destructive impact of the compulsory acquisition is not confined to the interests of Group Projects; it extends in a degree to those of the Council. The interests of the parties apart, to consider the nature of the actual works specified in the schedules to the deed is to appreciate the radical effect which the acquisition has had upon them: some of them have become altogether impossible of execution; many of them must surely now be impractical or unnecessary. (at p163)

31. The combination of these considerations satisfy me that this is a proper case for the application of the doctrine of frustration. If the deed was frustrated by the acquisition, so too will be the Bond and the mortgage security associated with it, as was held by Dunn J. (at p164)

32. I would accordingly dismiss this appeal. (at p164)

MASON J. I agree that this appeal should be dismissed for the reasons given by Wilson J. (at p164)

MURPHY J. The question of whether the City of Brisbane Town Planning Act, 1964-1976 (Q) binds the Crown is not the same as whether Crown land is subject to zoning and rezoning. In my opinion, the appellant's submission that Crown land is capable of being zoned under the Act and Town Plan for the City of Brisbane (even if the zoning does not restrict the Crown in its use of the land) is correct. This is the view taken by those who have administered the legislation. All land in the city of Brisbane, including Crown land, is zoned, except roads. Zoning is an integral part of the Town Plan. If Crown land were not zoned, the value of the Town Plan would be greatly reduced: it would no longer be truly described as a Town Plan, but only a partial Town Plan. (at p164)

2. Even if the zoning is not enforceable against the Crown, that does not mean that zoning has no consequences. The Crown would be expected to observe the zoning; departure by the Crown from the zoned use could provoke public criticism or parliamentary action. (at p164)

3. The land resumption frustrated the contract because of the consequences referred to by Stephen J. As he points out, the question whether a contract is frustrated often depends on a judgment which takes into account numerous factors of varying weight. No simple test is applicable. (at p164)

4. The appeal should be dismissed. (at p164)

WILSON J. On 30th October 1975 Group Projects Pty. Ltd. ("the first respondent") was the registered proprietor of approximately 19 acres of land ("the land") situated at Bonemill and Hill Roads, Runcorn in the State of Queensland. The land was located in the Future Urban Zone of the Town Plan of the City of Brisbane. On that day the first respondent and the Brisbane City Council ("the appellant") entered into a deed relating to the land. The appellant undertook to seek a re-zoning of the land from Future Urban to Residential "A" Zone in consideration of the first respondent undertaking to carry out various works on the land, make certain payments and contributions to the appellant, and furnish security for the performance of its obligations under the deed. The estimated total cost of the works to be performed and the payments and contributions to be made by the first respondent was $196,160. The first respondent was to carry out its obligations under the deed within a period of three years from the date on which the Governor-in-Council approved the re-zoning of the land, or prior to the date of endorsement of the consent of the appellant on any plan of survey for the subdivision of the land or any part of it, whichever was the sooner. (at p165)

2. The appellant also undertook to perform certain engineering works relating to the provision of water and sewerage services and the construction of footpaths after the land had been re-zoned and final approval had been given to a plan of subdivision. (at p165)

3. In relation to security, the first respondent arranged for a bond to be given by A.G.C. (Advances) Ltd. ("the second respondent") in favour of the appellant, in the sum of $196,160, to secure the due performance and fulfilment by the first respondent of its obligations under the deed. This bond was executed on 18th December 1975, and about the same time the second respondent secured its costs and liabilities under the bond by taking a mortgage over the land. (at p165)

4. On 21st July 1976 the first respondent was notified by the Acting Secretary of the Land Administration Commission that it was intended to resume the whole of the land for school purposes, and in due course this intention was fulfilled. On 13th November 1976 a proclamation was published in the Gazette which notified and declared that "the land described in the Schedule hereto is taken by the Crown for School purposes and shall vest in the Crown on and from the Thirteenth day of November, 1976". The land described in the Schedule included the whole of the present land. (at p165)

5. The resumption was undertaken pursuant to the provisions of the Acquisition of Land Act, 1967-1969 (Q.). The effect of a Proclamation such as I have described is set out in s. 12(5), which so far as relevant, reads as follows:

"On and from the date of the publication in the Gazette of the Proclamation . . . the land thereby taken shall be vested or become Crown land as provided by the foregoing provisions of this section absolutely freed and discharged from all trusts, obligations, mortgages, charges, rates, contracts, claims, estates, or interest of what kind soever, . . . ; and the estate and interest of every person entitled to the whole or any part of the land shall thereby be converted into a right to claim compensation under this Act . . . "

Section 12(2) reads: "Where land taken consists of the whole estate in fee-simple and vests in the Crown it shall be and remain Crown land until it is, according to the purpose for which it is taken, dealt with as prescribed by an Act other than this Act . . . " (at p166)

6. In my opinion, it follows from these provisions that upon resumption the fee simple was extinguished, and the land became Crown land subject to the Land Act, 1962-1975: cf. Attorney-General (N.S.W.) v. Brown (1847) 1 Legge 312 . It follows also that the security which the second respondent held over the land was discharged, being converted into a right to claim compensation under the Act: Sparke v. Minister for Works (1891) 12 LR (NSW) 276 . (at p166)

7. Notwithstanding the notice of intention to resume, on 24th August 1976 the first respondent requested the appellant to proceed with an application for the re-zoning of the land. On 23rd December 1976, by proclamation published in the Gazette, the Governor-in-Council purported to re-zone the land, formerly owned by the first respondent but now Crown land, from "Future Urban" to "Residential 'A". (at p166)

8. Thereafter the first respondent initiated these proceedings by originating summons, seeking, inter alia, declarations that in the events which had occurred it was no longer bound by the deed of 30th October 1975, nor by the mortgage agreement with the second respondent, and for a further declaration that the second respondent was no longer bound by its agreement with the appellant. The summons came before Dunn J. who made the declarations sought (1978) QdR 480 , and his decision was subsequently upheld by the Full Court of the Supreme Court of Queensland (Wanstall C.J., Douglas and Sheahan JJ.). (at p166)

9. The case for the appellant, put shortly and succinctly by Mr. Fitzgerald, was that whether or not the Crown was bound by the City of Brisbane Town Plan, Crown land was in fact and in law zoned under it. That being the case and the appellant having fulfilled its obligation to have the land re-zoned, it was submitted that there was no reason why the obligations of the first and second respondents under the deed not continue. In relation to a further argument raised by the first respondent based on frustration, the appellant relied on cll. 7 and 9 of the original deed. As will become apparent, it is not necessary to deal with this latter question. (at p167)

10. The second respondent appeared on the hearing of the appeal, intimated its wish to abide by the decision on the appeal and was excused from further attendance. (at p167)

11. Although it was not argued that the Crown is bound by the City of Brisbane Town Planning Act, 1964-1976, it is expedient to examine that question in relation to the submission that whether or not the Crown is bound, Crown land is effectively zoned under the Plan and is therefore subject to it. (at p167)

12. Section 13 of the Acts Interpretation Act, 1954-1977 (Q.) provides:

"No Act hereafter passed shall be binding on the Crown or derogate from any prerogative right of the Crown unless express words are included therein for that purpose."

The learned judge of first instance (Dunn J.) accepted that this statutory prescription re-states the common law, and referred in that connexion to the observations of Williams J. in Kaye v. Attorney-General (Tas.) (1956) 94 CLR 193, at pp 204-205 in relation to a similar provision in Tasmania. With respect, I concur in that view. (at p167)

13. The common law principle is not in doubt. It is that, as a matter of construction, a statute does not bind the Crown unless an intention that the Crown be bound appears either expressly or by necessary implication from the words of the statute. The test of necessary implication is not easily satisfied. It must be manifest, from the very terms of the statute, that it was the intention of the legislature that the Crown should be bound: Province of Bombay v. Municipal Corporation of Bombay (1947) AC 58, at p 61 ; and see, generally, Bradken Consolidated Ltd. v. Broken Hill Proprietary Co. Ltd. Ante, p. 107. . (at p167)

14. The City of Brisbane Town Planning Act, 1964-1976 provides for a Town Plan for the City of Brisbane. It does not expressly bind the Crown. However, s. 4(1) provides that the Town Plan "shall have the force of law and be binding upon and be obeyed by Brisbane City Council and all persons whomsoever accordingly". Section 4(2) contains similar words with respect to amendments which may be effected from time to time. Section 4(4) provides that the Plan shall consist of a number of documents, including an Order in Council approving the Plan together with the schedules (if any) to the Order, and the scheme maps comprised in the Plan. (at p167)

15. Part II of the schedule to the Order in Council which approves the present Town Plan divides the City of Brisbane into Zones. Each Zone is described, together with any relevant restrictions on use, in a Table and is shown bearing a certain colour and/or a printed designation on the scheme maps. (at p168)

16. Several of the Zones may have a bearing on the question now under consideration. Zone 7 is described as "Special Uses", and is dealt with in two sections. Special Uses "A" is identified on the scheme maps by the colour yellow and/or a designation "Spec.U/A". The purposes for which buildings or other structures may be erected or used or for which land may be used without consent of the Council or its delegate are described as follows:

"Uses for the particular purpose indicated by scarlet lettering on the scheme maps or where the Zone is designated Spec.U/A on the relevant scheme maps, the particular purpose indicated by black lettering thereon."

The land may not be used for any other purpose without the consent of the Council or its delegate. (at p168)

17. We were told that the Supreme Court Building in George Street is shown coloured yellow on the maps and bears the designation "Supreme Court". (at p168)

18. Special Uses "B" - Railways is identified on the scheme maps by reference to the colour Blue-purple and/or the designation "Spec.U/B". Except with the consent of the Council, such land may only be used for Railway purposes. (at p168)

19. Zone 8 deals with Open Space. It is worthy of note that the purposes for which Existing Open Space may be used include "parks and recreation reserves being land owned by or under the Control of the Council or owned by the State Government". The restrictions on the use of Existing Open Space are expressed to be "Subject to the provisions of the Land Act where applicable". (at p168)

20. Before drawing a conclusion from these provisions of the Act and the Plan, I should refer to land leased from the Crown. In s. 3 of the Act "owner" is defined as:
"The person other than Her Majesty who, for the time being, is entitled to receive the rent of any land, or who, if the same were let to a tenant at a rack rent, would be entitled to receive the rent thereof: The term includes any lessee from the Crown and any lessee from the Commissioner for Railways". (at p168)

21. Furthermore, in s. 8, provision is made for the re-zoning of land in terms which make it quite clear that land which is held on lease from the Crown may be the subject of an application for re-zoning. (at p168)

22. In view of these provisions, it was not contested before us that a lessee of Crown land may be subject to the Plan in respect of such land. That conclusion is clearly correct, because the legislative intention to achieve such a result is manifest. However, it does not necessarily follow from this that Crown land which is not leased is intended to be affected by the Plan. This is the relevant question which remains to be determined. (at p169)

23. It was common ground at the hearing that the whole of the City of Brisbane, with the exception of roads and the river, is shown on the scheme maps as bearing one zone or another. There is no exclusion of Crown land from the maps. (at p169)

24. Notwithstanding that the Town Plan purports to deal generally with Crown land, that a lessee of Crown land may be bound by it, and that the Plan is expressed to have "the force of law", there is nevertheless no adequate basis for a conclusion that the City of Brisbane Town Planning Act binds the Crown. As I have said, the Act does not expressly do so, and the considerations to which I have referred do not supply a necessary implication. It cannot be said that the purposes of the Act would be wholly frustrated unless the Crown were bound: Province of Bombay v. Municipal Corporation of Bombay (1947) AC, at p 63 . (at p169)

25. The mere legislative prescription in s. 4 of the City of Brisbane Town Planning Act that a Town Plan approved by the Governor-in-Council shall have the force of law cannot result in the Crown being bound by the provisions of a Plan unless such an intention appears from the Act itself. In purporting to bind the Crown the present Plan exceeds the authority conferred on the Governor-in-Council to approve Town Plans under the Act. Subordinate legislation cannot validly extend the operation of an Act to persons or objects (in this case, the Crown) that are not within the scope of the Act itself and such legislation will be ultra vires to the extent that it purports to do so notwithstanding that it is given "the force of law": cf. England v. Penfold (1934) St R Qd 125, at p 147 ; Widgee Shire Council v. Bonney (1907) 4 CLR 977, at p 985 , per Isaacs J.; Morton v. Union Steamship Co. of New Zealand Ltd. (1951) 83 CLR 402, at p 410 . (at p169)

26. In my opinion, the effect of the provision that the Plan shall have "the force of law" is to stress the binding character of the Plan upon "the Brisbane City Council and all persons whomsoever accordingly". The reference to "all persons" is not expressive of an intention to include the Crown, and I agree with the primary judge's conclusion to this effect. I therefore conclude that the Crown is not bound by the Act or the Plan. (at p169)

27. This conclusion, however, does not dispose of the matter. Indeed, as I have already said, the appellant founded his argument on the premise, without conceding the point, that the Crown was not bound. The basis of his case was that notwithstanding that the Crown may not be bound, Crown land is validly zoned under the Plan. The argument ran that, although the Crown could not be prejudiced by a zoning and would remain free to vary the purposes for which its land was used without seeking the approval of the Brisbane City Council, the land nevertheless carried the zoning designated in the Plan so far as third persons were concerned. Applying the proposition to the present case, the appellant argued that the Council undertook to seek a re-zoning of the first respondent's land and that undertaking was fulfilled when the land was re-zoned accordingly. The obligations imposed on the first respondent under the deed have therefore been discharged, notwithstanding that in the meantime the land had been resumed and was thenceforth Crown land. (at p170)

28. The argument was forcefully put by Mr. Fitzgerald, but in my opinion it cannot succeed. The truth is that neither the Act nor the Plan gives any legal effect to the fact of zoning save in terms of the restraints upon user that are imposed by reference to that zoning. The Plan does not bind the Crown. Consequently, in my opinion, the Plan cannot validly restrain the use of Crown land, other than in relation to land which is leased from the Crown, and the mere zoning of such land is without any legal effect. To speak of Crown land being zoned under a Plan which has the force of law yet in respect of which no legal consequences arise is to speak of an abstraction, a meaningless fiction. (at p170)

29. It remains an open question whether, if Crown land which purports to be zoned under the Plan is thereafter leased, the purported zoning will automatically arise to bind the lessee. I incline to the view that in such a case the original zoning would be inoperative for all purposes, and that if Crown land is leased the land must be brought under the Plan before the lessee could be bound thereby. In any event, the purported zoning may or may not signify a relevant use of the land in the hands of the lessee. This question need not be pursued in this case. (at p170)

30. It follows then, in my opinion, that upon the resumption of the first respondent's land by the Crown for school purposes the land ceased to be subject to the Act and the Plan. Consequently the proclamation of 23rd December 1977 purporting to re-zone the land was of no effect. The parties ought therefore to be discharged from their respective obligations under the several deeds the subject of this action. The decisions of Dunn J. and of the Full Court were right. (at p171)

31. This conclusion makes it unnecessary to consider the further argument advanced by the first respondent in support of the decision of the Full Court that the effect of the resumption was to frustrate the contract. (at p171)

32. I would dismiss the appeal. (at p171)

Orders

Appeal dismissed with costs.