C G Maloney Pty Ltd v Noon
[2011] NSWSC 242
•25 March 2011
Supreme Court
New South Wales
Medium Neutral Citation: C G Maloney Pty Ltd v Noon [2011] NSWSC 242 Hearing dates: 22-23 February 2011 Decision date: 25 March 2011 Before: Rein J Decision: Proceedings dismissed
Catchwords: CONTRACTS - contract of sale of property which includes a buyback option - construction of contract - whether as a matter of construction the buyback option to a third party was a promise made to the plaintiff - whether the plaintiff can enforce a promise for the benefit of a third party - absence of mutuality
ESTOPPEL - Anshun estoppel - whether the plaintiff is precluded from bringing its claim - whether it was unreasonable for the plaintiff not to have pursued its current claim in previous proceedings
ASSIGNMENT - assignment of contractual rights - whether the plaintiff has standing to bring its claim - whether the plaintiff has assigned all of its rights to a third party who is not a party to these proceedings - whether the subject matter of the assignment is capable of being assigned at all - whether the notice given to the defendants was effectiveLegislation Cited: Civil Procedure Act 2005 (NSW) Cases Cited: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475
Benecke v National Australia Bank (1993) 35 NSWLR 110
Beswick v Beswick [1968] AC 58
Bondi Beach Astra Retirement Village Pty Ltd v Gora [2010] NSWSC 81
Bondi Beach Astra Retirement Village Pty Ltd v Noon [2009] NSWSC 461
Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386
Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245
Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423
Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460
Dennis v Australian Broadcasting Corporation [2008] NSWCA 37
Glegg v Bromley [1912] 3 KB 474
Henderson v Henderson (1843) 3 Hare 100; 67 ER 313
Johnson v Gore Wood & Co [2002] 2 AC 1
Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202
Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589
Prosser v Edmonds (1835) 160 ER 196
Saffron Walden Second Benefit Buildings Society v Rayner (1880) 14 Ch.D. 406Texts Cited: I C F Spry, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 6th ed (2001), Law Book Co
R Meagher, D Heydon & M Leeming, Meagher, Gummow & Lehane's Equity Doctrines & Remedies, 4th ed (2002), LexisNexis ButterworthsCategory: Principal judgment Parties: C G Maloney Pty Ltd CAN 000 449 374 (plaintiff)
Gregory Brian Noon (first defendant)
Matthew Jack Noon (second defendant)Representation: Counsel:
B Coles QC; B DeBuse (plaintiff)
A S Bell SC (defendants)
Solicitors:
McCooe Raves & Poole (plaintiff)
Gilbert + Tobin (defendants)
File Number(s): SC 2010/423568
Judgment
The plaintiff, C G Maloney Pty Ltd ( "CGM" ) was the developer of a retirement village at 34 Campbell Parade, Bondi Beach, known as the Bondi Beach Astra Retirement Village ( "the Retirement Village" ).
In 1996, the late Mr Brian Noon and his wife, the late Mrs Jennifer Noon, purchased unit 42 in the Retirement Village ( "the Property" ) for $197,000 by an Agreement for Sale of Land ( "the Agreement" ) between themselves as purchasers and CGM as the vendor, dated 11 October 1996: see pages 16-97 of Exhibit A1.
The Agreement contained a clause in the following terms:
"Termination of Residence Contract by the Resident/Sale of the Unit by the Purchaser
15. (1) If:-
(i) the resident wishes to terminate the Residence Contract;
(ii) the resident dies (in which case the Service Company may at any time thereafter deem the resident to have served upon the Service Company the notice referred to in paragraph (a));
(iii) the resident abandons the unit (in which case the Service Company may at any later time deem the resident to have served upon the Service Company the notice referred to in paragraph (a));
(iv) the purchaser wishes to sell, or dispose of the unit;
(v) the resident dies; or
(vi) the Tribunal makes an order terminating the Residence Contract (in which case the resident shall be taken to have served upon the Service Company the notice referred to in paragraph (a));
the following procedure shall apply:-
(a) the resident or the resident's executors or administrators as the case may be shall immediately or as soon as possible thereafter, give to the Service Company one (1) months' written notice of termination of the residence contract or as appropriate the purchaser or her/his legal personal representative shall give to the Service Company one (1) month's notice of intention to sell or dispose of the unit. Each such notice once given shall not be withdrawn or revoked without the consent in writing of the Service Company (any notice or deemed notice by the resident or the resident's executors or administrators as the case may be to terminate the Residence Contract shall itself be taken as notice by the purchaser of intention to sell or dispose of the unit and any notice by the purchaser of her/his intention to sell the unit shall itself be taken as notice by the resident of termination of the Residence Contract);
..."
The words "Service Company" were defined to mean Bondi Beach Astra Retirement Village Pty Ltd and I shall refer to that company as " Astra".
Mrs Noon died on 20 October 2001 and Mr Noon died on 28 October 2007. On Mrs Noon's death, her interest as joint tenant passed to Mr Noon. Mr Noon's interest in the Property passed to his executors ( "the Executors" ), although as yet no transmission of the interest has been noted on title.
CGM and Astra, before Mr Noon's death, had lodged caveats on the title of the Property. The CGM caveat is found at pages 201-203 of Exhibit A1 and the interest claimed was in the following terms:
"A specifically enforceable right to compel the sale of the property by the registered proprietor to Bondi Beach Astra Retirement Village Pty Ltd arising from the terms of the instruments and facts referred to below. Alternatively an estoppel preventing the registered proprietor from denying the interest claimed. Alternatively an equitable interest in the land to secure a claim for unjust enrichment in connection with the denial of the alleged right"
A similar caveat was lodged by Astra at around the same time: see pages 199-200 of Exhibit A1.
Mr Noon served a lapsing notice on CGM and Astra which led to proceedings in this Court ( Bondi Beach Astra Retirement Village Pty Ltd v Noon [2009] NSWSC 461 ).
Following Mr Noon's death, a letter of 6 November 2007 was sent by solicitors acting on behalf of CGM and Astra to the Executors in the following terms (see Exhibit B):
"Re: Estate of the late BRIAN NOON
We are the solicitors who act on behalf of of the Bondi Beach Astra Retirement Village Pty Limited and CG Maloney Pty Ltd.
We are instructed by our client that Mr Brian Noon passed away on or about 28th October 2007 and both our clients and our office wish to express our sympathy at this time.
At the time of the deceased purchasing the property known as Unit 42 Bondi Beach Astra Retirement Village, the deceased entered into an Agreement with our client which provided that our client had the right to buy-back the unit for the original sale price from Mr Noon upon a number of events happening, one being upon the death of Mr Brian Noon.
We are instructed by our client that Mr Brian Noon purchased the property from our client CG Maloney Pty Ltd for $197,000.00 and we hereby advise that our client Bondi Beach Astra Retirement Village Pty Ltd exercises its rights in respect of its Buy-Back Agreement with the deceased to purchase the unit for the sum of $197,000.00. As previously advised to Pike Pike & Fenwick, this notice is being given for the purpose of satisfying the machinery provisions of the Retirement Villages Act 1999.
Should you have any queries in respect of this matter then please do not hesitate to contact Stephen Wawn from our office."
(emphasis added)
The Executors resisted the claims of Astra and CGM and took over defence of the proceedings. The matter was heard by Smart AJ who determined in favour of CGM that it was entitled to require sale of the Property to it in accordance with Clause 15 of Disclosure Statement B of the Agreement (referred to in [3] above), and that notice (ie Exhibit B) had been given by CGM, not Astra.
The Executors then brought an appeal to the Court of Appeal ( Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202 ) and were successful. The ambit of the case before Smart AJ and the Court of Appeal, which I shall refer to as "t he First Proceedings", is of importance in this matter and I shall return to the details shortly.
Within a few weeks of the Court of Appeal's decision in the First Proceedings, CGM lodged a fresh caveat (see pages 343-345 of Exhibit A2) claiming the following interest in the Property:
" Nature of the estate or interest
1 An equitable interest in the Land arising from the right to require the registered proprietor and his or her executors, administrators and successors in title, should he or she or they wish to sell or dispose of the Land, to give to the Service Company a month's notice of that intention, pursuant to the terms of clause 15(1)(iv) and 15 (1)(a) of Disclosure Statement B of the Agreement for Sale of Land entered into between the Registered Proprietor and CGM dated 11 th October 1996 ("the Agreement for Sale of Land")
And/Or
2 An equitable interest in the land arising from the right, should no Buyback Notice be served following the giving of the notice referred to in paragraph 1 above, to require the registered proprietor and his or her executors, administrators and successors in title to require any transferee from him her or them to enter into an agreement with the Service Company, incorporating the special conditions of the Agreement for Sale of Land with any necessary alteration to suit the circumstances, pursuant to Clause 15(1)(c) of Disclosure Statement B of the Agreement for Sale of Land;"
The Executors again served a lapsing notice which led CGM to commence proceedings in this Court seeking a declaration that it has the interest described in the caveat referred to in [12] above and seeking ancillary relief designed to protect that interest. Astra is not a party to these proceedings.
The Executors dispute that CGM has any interest in the Property and dispute CGM's entitlement to propound such claims given the context and outcome of the First Proceedings.
Mr B Coles QC appears with Mr B DeBuse for the plaintiff and Dr A S Bell SC appears for the Executors.
The relief sought in the First Proceedings went through several iterations. The form of final relief sought was relevantly contained in the Further Amended Statement of Claim ( "FASOC" ) found at pages 209-210 of Exhibit A1:
"1 A declaration that there exists a specifically enforceable agreement between the Plaintiffs, or one of them , and the Defendants entitling the Plaintiffs or one of them to repurchase the property known as Unit 42/34 Campbell Parade, Bondi Beach ("the Unit") for a consideration equal to the price at which the late Brian and Jennifer Noon purchased the unit.
2 Alternatively a declaration that the Defendants are estopped from denying the existence of the Agreement for Sale of Land incorporating the terms of the Disclosure Statements annexed thereto.
2B Alternatively, a declaration that the Defendants are bound by the terms set out in the Disclosure Statements as to the rights of repurchase and the obligation to pay recurrent and deferred fees.
3 Alternatively, damages or equitable compensation.
4 An order in the nature of specific performance of the Agreement between the second plaintiff [CGM] or its nominee and the late Brian and Jennifer Noon requiring the defendants to sell and convey the title of the Unit to the first plaintiff [Astra] or its nominee for the price of $197,000.
...."
(emphasis added)
The FASOC did not contain a pleading that reflected the basis for the order sought in paragraph 4 and paragraph 1 as set out in [16] above insofar as it concerns CGM.
The Court of Appeal's decision in the First Proceedings that the appeal should be allowed was unanimous. Giles JA, with whom MacFarlan JA concurred, noted that there were four issues on appeal and set out his findings at [3]:
"(a) the cl 15 option was not exercisable by Maloney;
(b) had it been exercisable, the cl 15 option was not exercised by Maloney;
(c) the cl 15 option was not void pursuant to s 66ZG; I decline to decide whether it was void as a restraint on alienation; and
(d) the respondents' estoppel case as put on appeal should not be permitted, and in any event would fail."
So far as the first issue is concerned, Giles JA held that the Agreement did not give CGM the right to call for the sale of the Property to it, but rather, gave or purported to give it to Astra, which was not a party to the Agreement. The notice which was given was given by Astra, but since it was not a party to the Agreement, no rights were conferred on it upon giving such a notice. His Honour held at [70] that the Agreement was not a residence contract and that there was no other residence contract. As noted, Giles JA did not deal with the alienation point. Giles JA's reason for rejecting the estoppel claim by CGM and Astra was that the estoppel relied on was not that which had been pleaded. His Honour expressed the view at [124] that in any event, the new estoppel argument would inevitably fail.
In his reasons, Giles JA did make some observations that are pertinent to the issues which now arise:
"42 The respondents sought to uphold the judge's decision. They had not claimed rectification of the sale contract. They did not submit that, if the grantee was Astra, it could exercise the cl 15 option as third party beneficiary of a contractual promise or as offeree notwithstanding that it was not a party to the sale contract. As the appeal was conducted, and subject to the respondents' estoppel case to which I will come, the first sub-issue turned upon the identity of the grantee of the cl 15 option as a matter of construction of the sale contract.
43 It had been disputed at trial whether, for the triggering events listed at the commencement of cl 15(1) operative on the death of Mr Noon, it was necessary that he was a resident and so, by the imported definition, an occupier under a residence contract. The judge held that it was necessary, and there was no notice of contention. The judge held that the sale contract was (also) a residence contract. The appellants submitted that the judge was in error in holding that the sale contract was a residence contract. The respondents sought to uphold his decision.
44 The first step in the procedure initiated upon one of the triggering events was giving a month's notice to the Service Company. There could be deemed notice. The complexities of cl 15(1) in relation to giving notice were not raised. However, the cl 15 option arose or was exercisable upon the expiration of the notice period, and giving notice could be important: see [71] below. We were not referred to notice given by the appellants, and it seems unlikely that they gave notice. Nor were we referred to a deeming by the Service Company, whichever of Maloney or Astra that may have been. Subject to the grantee being Maloney and there being a residence contract, as the appeal was conducted the option was exercisable by Maloney.
...
53 The fact that Astra was not a party to the sale contract is not an indication that the cl 15 option was granted in favour of Maloney as the opposite party to the sale contract. Astra was plainly intended as the Service Company in a host of references to the Service Company in DSB, many purporting to impose obligations or confer benefits on the Service Company notwithstanding that it was not a party to the sale contract. There was fine disregard of privity of contract, and if that was a mistake it was not one to be remedied by construction of the sale contract.
54 Against the reference to Astra as the seller of the unit in para (j) of DSA is the comprehensive use of the defined term "the Service Company". The term "the vendor" or Maloney's name was not used in relation to the option in cl 15 and its consequences in para 16 of DSB. There is no commercial incongruity in an option in favour of Astra, see Mr Jaeger's brochure. The more likely mistake is in para (j) of DSA, uncorrected from a pro-forma used in the mid 1990's after Astra had acquired and was reselling units so as to refer to Maloney. In my opinion, on the proper construction of the sale contract the Service Company in the cl 15 option should be understood as Astra, according to the defined meaning.
(b) A residence contract?
55 The defined terms "resident" and "residence contract" are wide, and encompass more than a formal contract or a separate contract in the nature of a lease. It is important, however, that for a residence contract the contract etc must be one "by which a person obtains the right to occupy residential premises in a retirement village". It is not enough that it regulates the occupation of residential premises in a retirement village."
(emphasis added)
In his judgement at [71], [81] and [124], Young JA agreed with the conclusions of Giles JA on the first two matters and on the fourth as set out in [18] above, but his Honour also expressed a view on the alienation point, holding that Clause 15 did not infringe the principle that there should be no restraint on the alienation of land.
In the current proceedings, CGM seeks to enforce the promise given to it (on its case) for the benefit of Astra. It contends that the case fits within the style of case recognised by Beswick v Beswick [1968] AC 58 and Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 , namely that when B promises A that it will confer a benefit on C, A can enforce that promise (given to A) by obtaining a decree of specific performance against B. Mr Coles, in his submissions, argued that CGM cannot at present seek an order for specific performance because, he submits, the conditions for specific performance have not yet arisen. Rather, he submits, what is sought is an injunction to prevent the erosion or removal of rights that would lead in due course to an order for specific performance. In Coulls, Barwick CJ said:
"I would myself, with great respect, agree with the conclusion that where A promises B for a consideration supplied by B to pay C then B may obtain specific performance of A's promise, at least where the nature of the consideration given would have allowed the debtor to have obtained specific performance. I can see no reason whatever why A in those circumstances should not be bound to perform his promise. That C provided no part of the consideration seems to me irrelevant."
On CGM's case, as now propounded, the Executors, on becoming the registered proprietors of the Property, will be required to give to CGM one month's notice of intention to sell the Property, which notice would then permit Astra to have the option to buy the Property from the Executors. The Executors have not yet become the registered proprietors and no notice of the kind described has been given, and hence on CGM's argument it is not yet in a position to require the Executors to specifically perform the Agreement.
The defendant's response to CGM's claims are:
(1) The principles enunciated by the High Court in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 preclude the claims from being brought.
(2) Clause 15 does not confer any rights upon CGM but rather purports to confer rights on Astra, which is not a party to the Agreement.
(3) Clause 15 depends, for its proper construction, on the existence of a "residence contract" but there is no such contract as found by the Court of Appeal in the First Proceedings.
(4) The interest asserted is a mere contractual right and does not give CGM a caveatable interest.
(5) Clause 15, if it does confer on CGM an interest, is void and against public policy because it constitutes a restraint on alienation. Reliance in this regard is placed on Bondi Beach Astra Retirement Village Pty Ltd v Gora [2010] NSWSC 81 per Bryson AJ.
In oral submissions, it was accepted by Dr Bell that even if the Court were to conclude that the caveat lodged by CGM was not well founded (because CGM had no interest in the Property), that would not resolve the claim advanced by CGM in this proceeding so that point has fallen to the wayside.
I have already set out Clause 15(1)(a) of the Agreement. I set out some other relevant or potentially relevant clauses of the Agreement:
" Definitions
...
'Purchaser' means and includes:-
i) the purchaser named in this Agreement her/his executors, administrators and successors in title to the Unit;
ii) where the purchaser is to be the resident the word 'purchaser' shall be taken to incorporate the words 'the purchaser (as defined in i)) and resident'.
...
Termination of Residence Contract by the Resident/Sale of the Unit by the Purchaser
15. (1) If:-
...
the following procedure shall apply:
...
(b) upon the expiration of the period of one (1) month referred to in paragraph (a), the purchaser or the Service Company shall have the option by notice in writing (the "Buyback Notice") served upon the other no later than a further twenty eight (28) days thereafter to require the transfer by the purchaser of the unit to the Service Company or its nominee for the price at which the purchaser bought the unit and the following conditions shall apply;
..."
In his judgment at [34], Giles JA noted:
"'Resident' was not directly defined, but cl 1 included that terms defined or used in the Act or the Code "shall have the same meanings when used herein except to the extent that the context otherwise requires", and the definitions so imported included-
'"resident" in relation to a retirement village, means a person who occupies residential premises in a retirement village under a residence contract, and includes a person who occupies such premises and who is or was the spouse or de facto partner [in the Code but not Act, (within the meaning of the De Facto Relationships Act 1984)] of such a person. (Act, s 3(1); Code, cl 2)
"residence contract" means a contract, agreement, scheme or arrangement by which a person obtains the right to occupy residential premises in a retirement village, and may take the form of a lease or licence.' (Act, s 3(1); Code, cl 2)'"
I should note that Mr Coles' argument is based on reading Clause 15(1)(a) as: "if the purchaser wishes to sell, the following procedures shall apply: the purchaser or his/her legal personal representative shall give to the Service Company one month's notice of their intention to sell or dispose of the Property". This is a filleted form of the clause and deletes all references to "resident", "death of resident" and "deemed notice".
Only the Service Company is mentioned in Clause 15, and there is set out a procedure by which the Service Company (Astra) is to be notified and by which provision it has the right to require a sale to it. No right is given to CGM to compel a sale to it or to Astra. Further, Clause 15(2) provides that:
"The purchaser acknowledges and agrees that the rights conferred on the Service Company or its nominee pursuant to sub-clause (1) entitle the Service Company to register a caveat against the folio of the Register in the Land Titles Office relating to the unit."
(emphasis added)
I have noted that the Court of Appeal in the First Proceedings held that no rights were conferred on Astra because it was not a party to the Agreement, but I have also set out what was said at [53] in the judgment of Giles JA. Giles JA was dealing in that paragraph with the argument that Clause 15 gave to CGM the right to exercise the option as opposed to its present argument which is that Clause 15 gave it the right to require the Noons to give an option to Astra, but his Honour's comments that Astra was intended as the Service Company and that numerous obligations and benefits were purportedly imposed or conferred on Astra in "fine disregard of privity of contract" are equally pertinent to the present issue and I respectfully adopt them.
Mr Coles argued that since CGM was in fact the only other party to the Agreement, the promises contained in Clause 15 should be viewed as promises to CGM, but in my view the promises in Clause 15 were made to the Service Company and not to CGM, and the fact that Astra did not sign the Agreement does not lead to the conclusion that the promises should be construed as having been made to CGM.
In my view, Clause 15 gave no rights to CGM and therefore its claim against the Executors must fail.
There is another aspect, which is that Mr and Mrs Noon were the residents of the Property. Under the definition of "Purchaser" the word "purchaser" was taken to mean "purchaser and resident". Mr Noon, as the surviving resident as at October 2007, died, and by virtue of Clause 15(1)(ii), the Service Company was entitled to treat the death of the resident as having thereby served upon the Service Company the notice referred to in Clause 15(1)(a), namely, a notice of intention to sell or dispose of the Property. Astra did treat the death of Mr Noon as a notice: see Exhibit B.
Mr Coles' argument proceeded on the basis that since the Court of Appeal in the First Proceedings had determined that the notice given by Astra was invalid and that the "residence contract" did not exist, Astra could start again. The Court of Appeal did not decide that the "trigger" event for the notice given by Astra had not occurred. Rather, it noted that there had been no point taken by the Executors as to that: see [44].
I think that there is a real difficulty with CGM's argument that it is now entitled to disregard the death of Mr Noon as a trigger event. However, in view of the conclusion I have come to on other matters, it is not necessary to determine this question.
Dr Bell also argued that the preconditions for a Beswick v Beswick claim by CGM were not met, not only because rights were not conferred on CGM but only purportedly on Astra, but also because it is necessary, for such a claim to succeed, that there be a mutuality of burden and benefit imposed on the contracting party. The qualification was framed by Barwick CJ in Coulls as "at least where the nature of the consideration given would have allowed the debtor to have obtained specific performance." This aspect of mutuality is discussed in R Meagher, D Heydon & M Leeming , Meagher, Gummow & Lehane's Equity Doctrines & Remedies , 4 th ed (2002), LexisNexis Butterworths at [20-150]-[20-160]. The learned authors cite as "probably the most accurate statement" of the law on this point the words of I C F Spry in The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 6 th ed (2001), Law Book Co at 91:
"The defence of lack of mutuality arises in proceedings for specific performance where, if the defendant were ordered to perform specifically his contractual obligations, he would not be himself sufficiently protected in view of such unperformed obligations of the plaintiff as might not be susceptible of subsequent specific enforcement and an order of specific performance would be unjust in all the circumstances."
Dr Bell submitted that there are clauses of the Agreement which required Astra to take steps which cannot be enforced against CGM, for example, Clause (4)(a) by which the Service Company is to maintain true and proper books of account, Clause (9)(b) which requires the Service Company to provide a statement of expenses, and by Clause 13 the Service Company must convene residents committee meetings. Also relevant in this connection is Clause 12(b) which requires the Service Company to grant rights to the purchaser to use communal areas. The Court of Appeal's conclusion that no residence contract exists and the lack of reciprocal obligations placed on Astra and CGM lead me to conclude that an order compelling the Executors to comply with the obligations claimed by CGM would be unjust in all the circumstances, even if, contrary to the view I have taken, they otherwise had content, because a significant part of what was purportedly promised by the Agreement had no content as Astra was not a party to the Agreement and no residence contract existed.
Assignment
Although it is not strictly necessary to deal with the assignment issue in light of my conclusions on other matters, given the time spent on this issue (leave was sought by both parties to provide additional written submissions on the topic), I will do so. The Executors contend that CGM has no standing to bring the claim it brings because it assigned all of its rights to Astra by deed dated 28 October 2008 ( "the Deed of Assignment" ). The Deed of Assignment is found at pages 347-350 of Exhibit A2 in the form in which it was sent to the Executors' solicitors and at pages 586-589 of Exhibit A2 in its unexpurgated form.
On 17 December 2008, CGM's solicitors wrote, on behalf of CGM and Astra, to lawyers acting on behalf of the Executors giving notice to the Executors that CGM "has assigned its right, title and interest in the proceedings to [Astra] and notice is hereby given" (see Exhibit 3). The letter also sought the Executors' consent to the filing of a Second Further Amended Statement of Claim.
The solicitors for the Executors wrote advising that their clients would consent to the filing of the Second Further Amended Statement of Claim subject to being provided with a copy of the Deed of Assignment. The proposed Second Further Amended Statement of Claim was not proceeded with. CGM and Astra's solicitors wrote back enclosing a copy of the Deed of Assignment with portions relating to other matters deleted. The correspondence from CGM's solicitors was sent to the Executors by the Executor's solicitors (see Exhibit 4).
The following issues arose:
(1) whether CGM has assigned to Astra the right of CGM to force the Noons and their Executors to sell the Property back to Astra;
(2) whether the assignment is effective; and
(3) the question of privilege.
I will deal with the privilege question first, which arose in the context of whether the provision of the Deed of Assignment to the Executors' solicitors constituted notice. CGM asserted that in order to determine the effect of the notice of the assignment given by CGM (and Astra), it would be necessary to consider the advice that the Executors received concerning the Deed of Assignment. The Executors, in answer to a Notice to Produce, produced a letter containing advice communicated by the solicitors for the Executors but claimed privilege. The parties agreed that the Court should examine the document and determine if it is privileged and whether the contents of the letter should be taken into account in accordance with the principles discussed in Attorney-General (NT) v Maurice [1986] HCA 80; (1986) 161 CLR 475 and Benecke v National Australia Bank (1993) 35 NSWLR 110 .
I have examined the letter and it certainly is privileged since it communicates to the defendants the advice of counsel for the defendants retained in the First Proceedings. I do not think the advice is at all relevant to the issue of notice however, and therefore I do not think that there is any implied waiver of privilege by the Executors.
In framing the case of the Executors, it is important to note that this argument assumes, contrary to the Executors' principal submission, that the Noons did promise CGM that they would comply with the notice provision, and the provisions for sale to Astra. The defendants' argument can be framed as thus:
(1) The Noons agreed with CGM that they would give notice to Astra, and if Astra required, they agreed with CGM that they would sell the Property to Astra.
(2) The rights agreed to be granted were therefore "Buy Back Rights".
(3) The legal or equitable rights of CGM to require the Noons and their Executors to give the notice and comply with a buyback notice were rights of CGM "associated with the Buy Back Rights".
(4) CGM, by the Deed of Assignment, assigned to Astra "any legal or equitable right" of CGM associated with those rights.
(5) The assignment was effective on execution of the Deed of Assignment.
(6) Notice to the Noons (or the Executors):
(a) was given by the letter of 27 April 2009 or
(b) was given by the provision of a copy of the Deed of Assignment to the Executors' solicitors sent on 27 April 2009.
(7) Acknowledgment by the defendants of the notice of assignment was not a precondition of the notice being effective.
Mr Coles' response to this argument can be summarised as follows:
(1) What was assigned was a bare right of action not assignable at law. He relied on Prosser v Edmonds (1835) 160 ER 196, Glegg v Bromley [1912] 3 KB 474 per Parker J at 489-490 and Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386.
(2) CGM did not assign its right to force the Noons and their Executors to sell the Property back to Astra but only the non-existent right of CGM to require the transfer to itself (since CGM claimed that it was the Service Company and it had given the notice both of which arguments had been rejected by the Court of Appeal in the First Proceedings).
(3) The right of CGM to compel the Noons to fulfil obligations to Astra was not a "Buy Back Right", and hence was not assigned.
(4) The right to require the Noons to give the notice and to sell the Property to Astra was not one associated with the buyback right.
(5) The assignment was conditional and not effective.
(6) Notice given to the Executors' solicitors was not effective. Mr Coles relied on Saffron Walden Second Benefit Buildings Society v Rayner (1880) 14 Ch.D. 406.
(7) Acknowledgement by the Executors of the notice of assignment was not provided so the assignment was never effective.
In my view, the letter of 17 December 2008, by referring to the right, title and interest in the proceedings, whilst a clear notice of an assignment (and unconditional notice at that), was framed in different terms from the assignment actually set out in the Deed of Assignment. The actual terms of the assignment, so far as concerns the Executors, were however, provided by the letter of 27 April 2009. I do not accept the contention that notice given to the solicitor acting for the Executors was not effective or was somehow limited to the First Proceedings or conditional in nature: see Consolidated Trust Co Ltd v Naylor (1936) 55 CLR 423 at 438-439 per Dixon and Evatt JJ. Saffron was quite a different situation from that which pertains here, where the solicitors had no authority to receive the notice that was given and the Court was not satisfied that they had advised their client of the notice that was received.
The real problem with the assignment lies in the nature of what was being assigned. Mr Coles sought to characterise it as an assignment of a bare right of action. Dr Bell's reply to this contention was that what was being assigned was "not a 'bare right to litigate' but rather a set of such contractual and proprietary rights as C G Maloney Pty Ltd enjoyed under the Sale Agreement": see paragraph 5 of Dr Bell's submissions of 3 March 2011 (provided in accordance with a regime for written submissions on the issue of assignment agreed to at the close of the hearing).
In Meagher, Gummow & Lehane's Equity Doctrines & Remedies at [4-140], the learned authors noted:
"The term "personal equity" may be used to describe the right of access to a court of equity of a plaintiff seeking the remedies thereof; in this sense it indicates the claim of the plaintiff to be insusceptible of assignment and incapable of attachment to any asset of the defendant so as to be enforceable against it in the hands of third parties."
This is a statement of principle which I accept and which exhibits a similar approach to that taken to bare rights of action in the cases to which Mr Coles has referred.
I do not accept Dr Bell's contention that what were assigned were the contractual and proprietary rights of CGM enjoyed under the Agreement. By the Deed of Assignment at page 348 of Exhibit A2, what were assigned were:
"any legal or equitable rights of C G Maloney Pty Ltd associated with the [rights granted or agreed to be granted to the Company [Astra] by the owners of certain units at the Astra as described in the Schedule pursuant to the agreements described in the Schedule to buy back those units for the price described in the Schedule] and the obligations of the owners to sell to the Company [Astra] the units..."
The italicised portion is taken from the definition of "Buy Back Rights" in the Deed of Assignment. The only legal or equitable right which CGM had or might have had associated with the grant of rights to Astra was the right to compel specific performance of the Agreement or the right to injunctive relief in connection therewith. Each of those rights is an equity personal to CGM.
It follows, in my view, that the right which was the subject of the assignment was not capable of assignment. It also follows that CGM and Astra understood, contrary to the case which they advanced in the First Proceedings, that Astra was the "Service Company" and not CGM, and that Astra was the party who was supposed to benefit from the buyback clause.
Anshun
This ground was the subject of extensive argument and it is another reason why CGM's claim must fail in my view.
The High Court in Anshun stayed proceedings brought by the Port of Melbourne Authority against Anshun Pty Ltd, a crane company operating at the port, seeking indemnity pursuant to an agreement between the Authority and Anshun. In earlier proceedings brought by an injured stevedore arising out of the use of the crane at the Port of Melbourne, the Authority and Anshun had been adjudged liable as tortfeasors and the Authority had not pleaded in defence to the cross-claim brought against it by Anshun the indemnity agreement. The High Court held that the Authority was estopped from bringing fresh proceedings because the Authority had not raised the indemnity in the first proceeding and that matter was so relevant to the subject of the matter of the first action that it was unreasonable for the Authority not to have done so: see 602-603 per Gibbs CJ, Mason and Aickin JJ.
The Anshun principle has been considered in many cases and again recently at the appellate level in New South Wales in Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; (2010) 75 NSWLR 245. The Court of Appeal in Champerslife per Allsop P, Giles JA and Handley AJA agreed that the failure of Champerslife Pty Ltd to bring a claim in the Local Court did not amount to an Anshun estoppel. Champerslife, it should be noted, was not even a party to the Local Court proceedings in which it was claimed by the defendants to the Distinct Court proceedings that the claim by Champerslife should have been raised. Mr Lawrence, director and shareholder of Champerslife, was a party to the District Court proceedings.
Giles JA in the principal judgment made some observations about Anshun which were (leaving aside the question of privity which is not relevant here) as follows:
(1) The relevant test is one of unreasonableness.
(2) An Anshun estoppel can arise where a matter is not raised as a defence and where it is not brought as a claim in the earlier proceedings.
(3) An Anshun estoppel can apply to a case where the relevant matter not agitated in the earlier proceedings is one which could have been brought as a cross-claim but there is greater scope for a party to justifiably refrain from litigating a matter by way of a cross-claim.
(4) Where the cross-claim was "intimately connected" with the claim of the plaintiff, the failure to bring the cross-claim will be more likely to enliven the Anshun estoppel: see [44]
(5) The "unreasonableness" has to be of the party against whom the Anshun estoppel is sought: see [52].
Allsop P in his judgment at [4] warned against treating the fact that a "matter could have been raised" by a litigant as equating with the matter being treated as one that "should have been raised". "Rather", his Honour held, "it has to be so relevant as to make it unreasonable not to raise it."
Handley AJA agreed with the conclusion of Giles JA that it was not unreasonable for Mr Lawrence to defend the action for debt in the Local Court without raising a cross-claim by his company for breach of the agreement. There was some divergence of opinion between Giles JA and Handley AJA on the question of whether a company controlled by X was a privy of X for the purposes of Anshun estoppel. That issue does not arise here.
Mr Coles relied on the decision of Handley AJA in Champerslife in another context. He submitted that by reason of what his Honour said at [107] as set out below , the Court should not receive a copy of the defence (which became Exhibit 2) and the submissions of counsel for Astra and CGM in the First Proceedings to determine whether the new claim was so relevant to the old as to make it unreasonable for CGM not to have raised the matter in the First Proceedings it now seeks to raise.
I set out [105]-[112] of Handley AJA's judgment in Champerslife:
"105 In my opinion the test of relevance and reasonableness mandated by Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 gives content to the somewhat amorphous test of abuse of process accepted in Johnson v Gore Wood & Co [2002] 2 AC 1. In practice the former very often becomes the real test of the latter.
106 The test for an issue estoppel or a cause of action estoppel is objective. For issue estoppel it is whether the precise question of fact or law sought to be litigated in the later proceedings was decided in the earlier as a fundamental basis for the decision. For cause of action estoppel it is whether the cause of action in the later proceedings is in substance the same as that litigated to judgment in the former.
107 The principle in Henderson v Henderson (1843) 3 Hare 100 67 ER 313 at 319 widens the scope of both forms of res judicata estoppel without introducing subjective factors. The test is whether the new point "properly belonged to the subject of litigation" in the earlier proceedings. The relevant evidence is restricted to the pleadings in both proceedings and the reasons for judgment in the earlier.
108 Where the extended form of res judicata in Anshun or Johnson is in issue the enquiry is extended to include the reasonableness of the litigant's conduct in the earlier proceedings, or the existence of an abuse of process in the later.
109 In Port of Melbourne Authority v Anshun Pty Ltd Gibbs CJ, Mason J and Aickin J said (at 602-603):
'[T]here will be no estoppel unless it appears that the matter relied upon ... was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking it would be unreasonable not plead a [matter] if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why any party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of a particular issue, motives extraneous to the actual litigation, to mention but a few.'
110 The matters referred to would not be relevant if a res judicata estoppel was in issue. No question of privity arose.
111 In Johnson the second action, by Mr Johnson personally, was held not to be abusive although it could have been joined with the earlier action by his company. Lord Bingham said (at 31):
'The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied ... that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings would be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before ... while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regarded as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim.'
112 A broad merits-based judgment, which, inter alia, takes account of the matters referred to by Lord Bingham, involves a broader enquiry than that for res judicata estoppel."
I think it is clear from the paragraphs surrounding [107] that Handley AJA accepted that the evidence relevant on an Anshun estoppel is wider than that relevant to res judicata or issue estoppel. His Honour's endorsement of the approach of Lord Bingham in Johnson v Gore Wood & Co [2002] 2 AC 1, which includes reference to the potential relevance of the party's lack of funds, further demonstrates that this is so. Accordingly, I reject Mr Coles' submission. If there is evidence that shows a point was considered in the First Proceedings and not run, I think that is relevant in determining whether the point later sought to be agitated is one which it was unreasonable not to have advanced in the First Proceedings. In my view, the evidence which Dr Bell sought to rely on, ie the defence filed by the Executors to the FASOC (which FASOC is itself in evidence) and submissions of counsel in the First Proceedings, are admissible.
I agree with Mr Coles' submission that paragraph 11 of the FASOC and paragraph 15 of the Further Amended Defence (Exhibit 1) are focused upon the allegation that the Agreement was with Astra and not CGM.
I have referred earlier to the fact that CGM's case is framed as if the events which give rise to its right to enforce the claimed contractual promise have not yet arisen. If this were a correct characterisation, it would avoid the problem that time has long since passed for Astra to give a buyback notice. It was relied on as a reason why CGM could not bring these proceedings before. I think this is a very artificial construct. What occurred prior to the First Proceedings was that CGM (and Astra) lodged a caveat. I have set out in [6] the terms of that caveat by which relevantly CGM claimed that it had a specifically enforceable right to compel the sale of the Property by the registered proprietor to Astra. The service of the lapsing notice by Mr Noon, compelling CGM (and Astra) to take proceedings and the defence of those proceedings by Mr Noon and the Executors, makes it abundantly clear that the Executors challenged the claimed right of both CGM and Astra to require transfer of the Property to either of them.
Mr Coles, when dealing with the assignment point, put the following submission at T70.38-40:
"...these people had no intention at all to perform the promises that their late parents had made contractually with the vendor in 1996."
I think this submission, although put in a pejorative form, recognises the fact that the defendants have long contested the existence of any right of CGM and Astra to force them to effect a sale to CGM (or Astra).
In recent times there has been an increased awareness of the importance of efficiency and proper use of court resources in the manner in which litigation is conducted, not only by the courts themselves (see Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [96]-[102] per Gummow, Hayne, Crennan, Kiefel and Bell JJ and [133]-[134] per Heydon J) but by the legislature as well (see ss 56-61 of the Civil Procedure Act 2005 (NSW) and Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 per Spigelman CJ at [28]-[29], with whom Basten and Campbell JJA concurred at [34] and [35]). The need for parties to bring before the court all of the matters relevant to their dispute is a requirement long ago recognised in Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 and reiterated in Anshun, and is an important part of the orderly and fair administration of justice.
In my view, the claim by CGM that the Noons made an enforceable promise to CGM to grant rights to Astra (if otherwise maintainable) was one which could have been raised in the First Proceedings and it was unreasonable for CGM not to have raised it in the First Proceedings for these reasons:
(1) the new claim involves consideration of the same agreement (and indeed the same clause) over the same property;
(2) Astra, CGM and the Executors were all parties to the First Proceedings;
(3) the Executors had made clear their position that they were not bound by Clause 15 of the Agreement to transfer the Property to Astra and not compellable to do so at the suit of CGM;
(4) the case that CGM could compel the Executors to transfer the Property to Astra was not only a case that could have been raised in the First Proceedings, it was one that was in a fashion raised in the First Proceedings: see paragraph 4 of the relief sought in the FASOC as set out in [16] above. Mr M Leeming SC, counsel on behalf of CGM (and Astra) in the First Proceedings, at paragraph 22(e) of his submissions of 18 May 2009 (Exhibit 2) said "But in any event, it is plain that [CGM] can enforce the provisions. That is what it is doing in this proceeding." See also paragraph 3(b) of Exhibit 2. It appears that CGM did not pursue any such claim in the Court of Appeal (see [3] and [42] of the judgment of Giles JA as set out at [18] and [20] above). The caveat which CGM had lodged made that claim and the challenge to it one of the reasons that the matter was brought to this Court. On one view, more than Anshun estoppel is involved here but I do not need to consider that point; and
(5) the Deed of Assignment, as I have explained, appears to evidence awareness of the problem that CGM was not the party entitled to exercise the buyback option but could or might be able to call on the Noons or their Executors to do so.
Alienation
This is a matter in respect of which Young JA in the Court of Appeal in the First Proceedings and Bryson JA in Gora have reached different conclusions. I do not think it is necessary or appropriate to enter upon this controversy given the views I have expressed on the other matters.
Conclusion
It follows that in my view, for the reasons expressed in [29]-[32], [36]-[37] and [61]-[64], the proceedings should be dismissed. I will hear the parties on the appropriate form of orders and on the issue of costs.
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Decision last updated: 18 November 2013
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