Collector Quarries Pty Ltd v J.J. and L.L. Reardon Pty Ltd
[2014] NSWSC 1175
•26 August 2014
Supreme Court
New South Wales
Medium Neutral Citation: Collector Quarries Pty Ltd v J.J. & L.L. Reardon Pty Ltd [2014] NSWSC 1175 Hearing dates: 16 & 17 July 2014 Decision date: 26 August 2014 Jurisdiction: Equity Division Before: Kunc J Decision: Amended Statement of Claim dismissed
Catchwords: CONTRACTS - Construction and interpretation - What land subject to Extraction Agreement - No issue of principle
ESTOPPEL - Estoppel by convention - Whether defendant estopped from denying certain land subject to Extraction Agreement - No issue of principleLegislation Cited: Conveyancing Act 1919 (NSW)
Real Property Act 1900 (NSW)Cases Cited: Electricity Generation Corporation (trading as Verve Energy) v Woodside Energy Ltd [2014] HCA 7; (2014) 306 ALR 25; (2014) 88 ALJR 447
M K & J A Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39
Moratic Pty Ltd v Lawrence James Gordon and Anor [2007] NSWSC 5; (2007) 13 BPR 24,713
Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603Category: Principal judgment Parties: Collector Quarries Pty Ltd ACN 115 782 413 (Plaintiff)
J.J. & L.L. Reardon Pty Ltd ACN 071 134 042 (Defendant)Representation: Counsel: G.R. Waugh (Plaintiff)
D. Klineberg (Defendant)
Solicitors: Philip Goldman & Co (Plaintiff)
Simpson Partners Lawyers Pty Ltd (Defendant)
File Number(s): 2013/287770 Publication restriction: No
Judgment
Summary
The Barina Quarry (the "Quarry") is located approximately two kilometres south-east of Collector in New South Wales. The plaintiff ("Collector Quarries") operates the Quarry under an extraction agreement dated 1 September 1997 (the "Extraction Agreement") with the defendant J.J. & L.L. Reardon Pty Ltd (the "Owner"). The Owner is the registered proprietor of the land on which the Quarry is located.
Some of the land the subject of the Extraction Agreement was, at the time that agreement was entered into, bisected by the boundary between Gunning Shire to the west and Mulwaree Shire to the east. The principal relief which Collector Quarries seeks by its amended statement of claim is a declaration that it has a caveatable interest over the real property which Collector Quarries says is the land the subject of the Extraction Agreement. The issue before the Court is whether that land includes the land that was within Mulwaree Shire.
The dispute between the parties requires two questions to be answered. Those questions and the Court's answers are:
(1) On the proper construction of the Extraction Agreement, does the land which is the subject of that agreement include the land which, as at the date of the Extraction Agreement, fell within Mulwaree Shire? No.
(2) If the answer to question (1) is "No", is the Owner estopped by convention from denying that the land which, as at the date of the Extraction Agreement, fell within Mulwaree Shire is part of the land which is the subject of the Extraction Agreement? No.
The facts
With the exception of certain conclusions which Collector Quarries submitted that the Court should draw in relation to the alleged estoppel by convention (considered in paragraphs [68] to [69] below), the facts were uncontroversial. I find them to be as follows.
Mr John Reardon is the sole director and shareholder of the Owner. His family has lived and farmed in the Collector area for five generations. The Owner is the company through which Mr Reardon owns various pieces of land in the Collector area which he uses predominantly for farming purposes.
In 1995 Mr Reardon caused the Owner to purchase a property in the Collector area called "Barina". It comprised a number of parcels of land on separate titles. Those parcels included:
(1) Lot A in DP XXXX, which had formerly been part of a larger lot called Portion 32 that had been subdivided into Lot A and Lot B ("Lot A").
(2) Lot 33 in DP XXXX, which had previously been known as Portion 33 ("Lot 33").
(3) Lot 204 in DP XXXX, which had previously been known as Portion 204 ("Lot 204").
Schedule One to these reasons is a copy of the original Crown plan of Portion 204 (the "Plan"). The Plan refers to Gunning Shire and Mulwaree Shire and includes a broken vertical line (+ + + - - - + + +) which represents the shire boundary. The Plan also shows Portions 32 and 33 (the latter now Lot 33). What is now Lot A is the north-eastern corner of the old Portion 32, its boundary being a road which now bisects it running north-west to south-east.
All of the land referred to in paragraph [6] above was in the Parish of Collector and the County of Argyle. As is clear from the Plan, Lot A and Lot 33 were both entirely within Gunning Shire. However, Lot 204 was partly in Gunning Shire and partly in Mulwaree Shire, with the shire boundary bisecting Lot 204 in a north-south direction. In these reasons I shall refer to those parts of Lot 204 that were in Gunning Shire and Mulwaree Shire as the "Gunning Land" and the "Mulwaree Land" respectively.
Also in about 1995, Mr Reardon was approached by Mr Daryl Knowles of Knowles Haulage Pty Ltd ("Knowles Haulage") to develop the Quarry.
In late 1995 Knowles Haulage, with the Owner's consent, submitted a development application for the construction of a hardrock quarry to Gunning Shire Council.
By development consent dated 19 February 1996 (the "1996 Consent"), Gunning Shire Council approved Knowles Haulage's application to operate a quarry in respect of land described in the consent as "Lot A, DP XXXX and Part Lot 204, Parish of Collector". In other words, Knowles Haulage had consent to operate the Quarry on Lot A and the Gunning Land. No written Extraction Agreement was entered into between the Owner and Knowles Haulage. Quarrying commenced.
The following year Knowles Haulage submitted a further development application to Gunning Shire Council in relation to the Quarry. By development consent dated 27 August 1997 (the "1997 Consent"), Gunning Shire Council approved Knowles Haulage's further development application in relation to the Quarry to increase the annual permitted maximum extraction volume. The 1997 Consent referred to the land to be developed as "Lot A, DP XXXX and Portion 204, Parish of Collector".
Tiocliff Pty Ltd ("Tiocliff") took over the Quarry on 1 September 1997 after the 1997 Consent had been received. It did so by entering into the Extraction Agreement with the Owner on 1 September 1997. It was executed on behalf of the Owner by Mr Reardon and on behalf of Tiocliff by Mr G. Morcom. Tiocliff was part of the White Industries group of companies.
The Extraction Agreement was entitled "Barina" and had been prepared by Tiocliff's solicitors, Mallesons Stephen Jaques (as that firm was then known). The Extraction Agreement included these terms (emphases added):
Date: 1 September 1997
Parties: JJ & LL REARDON PTY LIMITED (A.C.N. 071 134 042) C/- Bird Cameron, Level 16, 55 Hunter Street, Sydney 2000 ("Owner")
TIOCLIFF PTY LIMITED (A.C.N. 003571 248) of Level 7, 60 Miller Street, North Sydney, 2060 ("Licensee")
Recitals:
A. The Owner is the registered proprietor of certain land called "Barina", being Portions 32, 33 and 204 in the Parish of Collector, County of Argyle, Shire of Gunning ("Land").
B. The Licensee wishes to extract and haul hardrock products from the Land.
C. The Owner has agreed to grant a licence on the terms and conditions contained in this licence.
...
2. Exclusive Licence
2.1 The Owner grants to the Licensee exclusive licence to extract and haul hardrock products from the Land.
2.2 The Licence will commence on the date of this licence and will terminate on 13 October 2014.
2.3 The Licensee has the option to extend the term for a further period of five years on the same terms and conditions as this Licence but excluding clause 2.2. The option must be exercised by notice in writing no later than 3 months prior to the expiration of the term referred to in clause 2.2.
2.4 The Licensee agrees, at its own expense, to provide, properly maintain and keep in good repair all plant and equipment currently existing or installed during this Licence on the Land.
2.5 The Licensee agrees, at its own expense, to push off such topsoil and vegetation as is required to excavate the hardrock product on the Land. The Licensee also agrees to replace the topsoil at the expiration of the Licence and comply with any such rehabilitation measures which the Gunning Shire Council may require by virtue of its acceptance of any development applications.
...
3. Fee
...
3.6 The Owner and the Licensee agree that the Royalties are a payment for raw materials sold in accordance with clause 3.1 and clause 3.2 and not a payment for the conveyance of any property or a profit a prendre.
4. Continuing obligations
4.1 The Licensee must at its own expense repair any fences and gateways on the Land which have been damaged by the activities of the Licensee.
4.2 The Licensee must at its own expense install, maintain and repair fencing (comprising of steel posts every 5 metres, 7 plain wires and one barb) around the perimeter of the quarry site on the Land.
4.3 The Licensee must permit the Owner and its agent at all reasonable times and for all purposes (other than for the purpose of extracting hardrock products) to enter the Land under the direction of the Licensee.
4.4 The Owner may graze stock on the Land at the Owner's sole risk.
4.5 The Licensee is responsible, at its own expense, for obtaining all necessary consents from the Gunning Shire Council, including, but not limited to, development applications and statement of environmental effects in relation to this Licence.
4.6 The Licensee will address all reasonable directions of the Owner and the Gunning Shire Council as to the manner in which the work is to be carried out on the Land. If the Licensee refuses to comply with the reasonable directions of the Owner and the Gunning Shire Council the Owner may terminate this Licence by giving 30 days written notice to the Licensee.
4.7 The Licensee agrees to give to the Owner copies of all development applications and statement of environmental effects prepared by it for the purposes of this Licence and the rights granted hereunder.
...
7. Indemnity
7.1 The Licensee indemnifies the Owner against all demands, claims, actions, proceedings, judgments, damages, loss, expenses and costs or liabilities whatsoever incurred or suffered or brought or made or recovered against the Licensee or the Owner by Gunning Shire Council or any other relevant party in relation to the Licence.
8. General
Assignment
8.1 This agreement may be assigned by the Licensee to any party who elects to assume obligations and responsibilities under this agreement only with the consent of the Owner, which consent is not to be unreasonably withheld.
8.2 The Owner agrees that it will not sell, transfer or otherwise assign the Land or the land comprising the right of access granted to the Licensee without ensuring that any such contract of sale is subject to this Licence.
8.3 If the Licensee disposes of its sandpit operation on "Roseglen", "Windermere" or "Winderadeen" then the new owner of the sandpit operation will require the Owner's approval to enter, and use, the weighbridge on the Land, such Owner's consent to be granted, or refused, as the Owner deems appropriate.
Lodgment of Caveat
8.4 The Owner acknowledges and agrees that the rights conferred on the Licensee by this agreement entitle the Licensee to lodge a caveat against the title to the Land to protect those interests.
...
While Recital A of the Extraction Agreement referred to what is now Lot 33, neither the 1996 Consent nor the 1997 Consent concerned Lot 33. It was included because Tiocliff wanted to ensure it had adequate space for stockpiling. However, in the events which have happened, no activity associated with the Quarry, including stockpiling, has ever occurred on Lot 33.
The Extraction Agreement also contained an error insofar as it referred to "Portion 32". By the date of the Extraction Agreement, Portion 32 had ceased to exist and the Owner only owned Lot A.
Tiocliff commenced developing the Quarry and extracting hardrock. As it came to be developed, and remains, the Quarry was and is located in the Gunning Land and not on any part of the Mulwaree Land.
In December 1998 Gunning Shire Council refused a further development application by Tiocliff in relation to the Quarry.
On 25 November 1999 the Owner gave its consent under seal to the development application referred to in paragraph [20] below. That consent was given as "owner of the above property" which described the land to be developed as being within the Local Government Area "Gunning Shire" and "Lot A DP XXXX and Portions 32, 33 and 204 Parish Collector, County Argyle".
On 6 January 2000 Tiocliff submitted another development application (the "2000 Application") in relation to the Quarry. As a result of legislative changes, the 2000 Application was made to the Minister for Urban Affairs and Planning (the "Minister") as involving a state significant development. The 2000 Application involved completing extraction within the existing area of the Quarry and its extension to a new quarry, all still within the Gunning Land.
The 2000 Application was accompanied by an environmental impact statement dated 23 December 1999 prepared on behalf of Tiocliff by Mr Robert Corkery of RW Corkery & Co Pty Ltd (the "EIS"). The EIS drew a distinction between the "Project Site" (all within Gunning Shire) and the "Lease Area", the latter being described as "the entire area of land leased by [Tiocliff]". The plan in the EIS of the "Lease Area" included all of Lot 204, i.e. including the Mulwaree Land. Mr Corkery obviously thought that the Mulwaree Land fell within the Extraction Agreement. There is no evidence that he came to that view as a result of anything he was told by Tiocliff or the Owner.
Apart from providing its consent under seal (see paragraph [19] above), the Owner was not involved in the preparation or was consulted about the contents of the 2000 Application or the EIS.
On 8 September 2000, the 2000 Application was determined by the Minister giving his consent. That consent was given in respect of "Lot A DP XXXX, and Portions 32, 33 and 204 Parish of Collector, in the Gunning Local Government Area".
By a written agreement made in or around January 2001, Tiocliff and the Owner varied the royalty provision of the Extraction Agreement for a period of three years. That variation agreement referred to the EIS. By the time of the execution of the variation agreement Mr Reardon was aware of the contents of the EIS, including the distinction it drew between "Project Site" and "Lease Area".
The Minister's determination was the subject of an appeal to the Land and Environment Court by an objector. The respondents to the appeal were the Minister and Tiocliff. The Owner was not a party. That court granted a development consent by order made on 28 March 2001 in respect of "Lot A DP XXXX, and Portions 32, 33 and 204 Parish of Collector, in the Gunning Local Government Area".
On 11 February 2004 Gunning Shire and Mulwaree Shire ceased to exist and were amalgamated into Palerang Local Government Area.
On 31 October 2005 the Owner consented in writing to the transfer of the Extraction Agreement from Tiocliff to Collector Quarries.
By a Deed of Assignment of Licence dated 4 November 2005 Tiocliff assigned the whole of its right, title and interest in the Extraction Agreement to Collector Quarries. In that deed "Licence" was defined to mean the "Barina Extraction Agreement dated 1 September 1997" and the "Property" was defined to mean "the land called "Barina" being Lot A/DPXXXX and Portions 32, 33 and 204 in the Parish of Collector, County of Argyle".
On 14 November 2005, Collector Quarries completed the purchase of a business comprising three quarries located in Collector, including the Quarry, and the assignment referred to in paragraph [28] above took effect.
On 15 December 2005, Mr Roy Sergi (a director of Collector Quarries) completed a caveat on behalf of Collector Quarries which I infer was registered shortly after that date (the "Caveat"). The Caveat affected the land within titles A/XXXX, 33/XXXX and 204/XXXX (i.e. Lot A, Lot 33 and Lot 204). The Caveat described the estate or interest claimed as an "equitable interest in the land as licensee under an extraction licence agreement for the extraction and haulage of hardrock products from the land" by virtue of "Extraction Agreement, 1 September 1997, JJ & LL Reardon Pty Ltd and Tiocliff Pty Ltd (assigned to Collector Quarries Pty Ltd)."
The Caveat prohibited these actions:
(1) The recording in the Register of any dealing other than a plan affecting the estate or interest claimed by Collector Quarries.
(2) The registration or recording of any plan other than the delimitation plan affecting the estate or interest claimed by Collector Quarries.
In or about March 2008, Collector Quarries made a commercial decision to suspend the operation of the Quarry, based upon supply, demand and price considerations. Since then the Quarry has continued under a "care and maintenance mode". Collector Quarries may in the future resume the quarrying activities or decide to sell the business or the extraction rights.
In 2012 the Owner wished to sub-divide and sell some parts of "Barina", including an area in the southern part of Lot 204 that was totally within the Mulwaree Land. Negotiations ensued between the Owner and Collector Quarries in the course of which Collector Quarries made clear its view that the Mulwaree Land fell within the Extraction Agreement.
On 14 March 2012 a paralegal employed by the Owner's solicitors sent an email to Mr Tony Zappia. Mr Zappia was dealing with the matter on behalf of Collector Quarries and Mr Sergi. The paralegal's email said:
We enclose copy [a] plan of sub-division for lot 204 and [a] copy plan of subdivision for lots A & 33 which as we understand are the areas that the extraction agreement refer to. Please note Lot 32 is incorrectly referred to in the extraction agreement as that area is now known as Lot A.
We note that you already hold a copy of a proposed plan of subdivision by Southern Cross Consulting Surveyors. Please note that Lot 3 (being the area that the Quarry is within) is now the proposed area for the extraction agreement. Effectively this means that Lot A and Lot 33 will no longer be part of the agreement and a portion of lot 204 (on the bottom right hand side) will no longer be part of the agreement.
On 11 April 2012 Mr Reardon sent this email to Mr Zappia raising matters which the latter was asked to clarify with Mr Sergi:
Just recapping our conversation yesterday, I thought I would put down a summary and some points to clarify with Roy.
1) As you are aware I am subdividing the property that includes Lot 204 on which the quarry site is located.
2) You have a copy of the plan of subdivision
3) I plan to sell the subdivided land
4) I am selling lots 2 & 3 in the new plan of subdivision, the rest I am keeping for farming
5) I have 2 different buyers for both of these lots. I have an offer on the new lot 3 in excess of $2 million. (the person is aware of the extraction license and its terms) Lot 3 is a large lot which wholly contains the quarry site. The quarry is only on approx 50% of the lot.
6) Lot 2 for which I also have a buyer is made up of part of the old lot 204 (well away from quarry) and a neighbouring lot.
7) Your extraction licence expires in 2014. there is a 5 yr option
8) I will not agree to extend the license beyond this period. I will also enforce the full royalty value of the extraction license.
9) You are welcome to make an offer to purchase the land
10) the closer to expiration of the license the more the value of the land increases
11) You have a caveat on the title of the property that prevents any transfer of land or registration of subdivision
12) The caveat is currently on the title of Lot 32, Lot A and Lot 204 ( lot 204 will become new lot 3 and part of new lot 2)
13) The license agreement only provides that a caveat can be lodged to protect your interest in the Extraction Agreement.
14) You do not have the right to a caveat that would prevent any transfer of land or registration of subdivision
15) You could be compelled to consent to any transfer of land and registration of subdivision plan or face the loss of caveat.
16) Under the current license agreement, if I sell the land any contract for sale is to be subject to the license. There is technically no requirement for me to assign the license to a new buyer. This could force issues for you in enforcing the license after I sell the land.
In order to move forward and avoid a legal dispute in relation to the caveat and to ensure that your license is effective to any new owner of lot 3 I propose the following;
○ We terminate the old license agreement and enter into a replacement license agreement which is over the new Lot 3. I also note that new lot 3 will have a right of way over lot A, however, I would be happy to enter into a separate agreement in relation to lots A and 33 (that I am going to keep), if necessary but this only needs to be for access as the quarry site itself is not on this land.
○ In the new license agreement, we clarify: Collector's fencing obligations (which is now only maintenance) to avoid future disputes; use of the land; and include provisions in relation to transfer of the license to a new owner to ensure the license will transfer to the new owner.
○ Collector then withdraws the old caveats, we register the subdivision of the land and then Collector lodges a new caveat under the new license agreement. You will also need to sign a consent to a transfer to any new owners of this land.
By notice dated 11 May 2012, Collector Quarries validly exercised its option to renew the Extraction Agreement:
TAKE NOTICE that COLLECTOR QUARRIES PTY LIMITED (ACN 115 782 413) hereby exercises its option to renew the term of the written Extraction Agreement dated 1 September 1997 ("Extraction Agreement") between TIOCLIFF PTY LIMITED (ACN 003 571 248) (subsequently assigned to Collector Quarries Pty Limited (ACN 115 782 413) and JJ & LL REARDON PTY LIMITED (ACN 071 134 042) in respect of the property called "Barina" being Portions 32, 33 & 204 in the Parish of Collector, County of Argyle, Shire of Gunning as described in the Extraction Agreement for a further term of five (5) years commencing 14 October 2014 and terminating on 13 October 2019 pursuant to Clause 2.3 of the Extraction Agreement.
On 17 August 2012 the Owner's solicitors forwarded to Collector Quarries' solicitors a plan of subdivision and instrument under s 88B of the Conveyancing Act 1919 (NSW) and invited Collector Quarries' consent to the registration of those documents. They also enclosed a withdrawal of caveat for registration after the plan of subdivision had been registered. The withdrawal of caveat was over Lots 1 and 2 in the proposed new deposited plan (Lot 2 being in the southern part of the former Lot 204 and entirely within the Mulwaree Land). The Quarry was contained within Lot 3 in the proposed new deposited plan, all within the Gunning Land.
On 27 August 2012 Collector Quarries' solicitors responded that their client did not consent to the registration of the proposed new deposited plan and s 88B instrument.
Further correspondence ensued between the parties' solicitors. The parties were unable to come to an agreement.
On 17 September 2013 the Owner's solicitors served a lapsing notice on Collector Quarries in relation to the Caveat.
On 24 September 2013 Collector Quarries commenced these proceedings by summons seeking an extension of the Caveat.
On 27 September 2013 the Court made orders by consent extending the Caveat until delivery of judgment in these proceedings or further order. However, as a result of a mistake on the part of Collector Quarries' solicitors, a copy of those orders was not served on the Registrar-General. The Caveat therefore lapsed.
With the lapsing of the Caveat, the Owner's new plan of subdivision was registered.
Collector Quarries currently enjoys the benefit of the following consents and licences in respect of the Quarry:
(1) Development consent issued by the former Gunning Shire Council (now being Palarang Council) effective till October 2020. That consent requires development to be carried out in accordance with the EIS.
(2) Collector Quarries' rights under the Extraction Agreement effective until 13 October 2019.
(3) A licence issued by the NSW Environmental Protection Authority.
Construction of the Extraction Agreement - legal principles
The parties (correctly) accepted that the legal principles which the Court should apply in construing the Extraction Agreement are conveniently summarised in the joint judgment of French CJ, Hayne, Crennan and Kiefel JJ in Electricity Generation Corporation (trading as Verve Energy) v Woodside Energy Ltd [2014] HCA 7; (2014) 306 ALR 25; (2014) 88 ALJR 447 at [35] (citations omitted):
35. Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties ... intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience".
Construction of the Extraction Agreement - Collector Quarries' submissions
Although set out in paragraph [14] above, for convenience I again reproduce Recital A of the Extraction Agreement:
A. The Owner is the registered proprietor of certain land called "Barina", being Portions 32, 33 and 204 in the Parish of Collector, County of Argyle, Shire of Gunning ("Land").
Mr G R Waugh of Counsel appeared for Collector Quarries. His primary submission on the construction of the definition of "Land" in Recital A of the Extraction Agreement may be summarised as follows. In construing the Extraction Agreement's definition of "Land" it is necessary first to look at the whole of the agreement and how the definition works in the context of that agreement. The references to "portions" were descriptions of land that could readily be related to the land described as folios kept in the register maintained by the Registrar-General. The use of the word "portion" was not significant because it is a word picked up in the folios in the register. Those folios directed an inquirer to descriptions of land that did not take account of council boundaries, which were subject to change from time to time. The Owner's construction put too much emphasis on the words "Shire of Gunning" in the definition. The reference to Portion 204 was intended to be a reference to the whole of that portion as identified in the relevant folio of the register.
That primary submission was developed by reference to the following:
(1) The land the subject of the Extraction Agreement was at the time of that agreement held under the provisions of the Real Property Act 1900 (NSW) (the "Act").
(2) It is clear that the author of the Extraction Agreement knew that the parties were dealing with land held under the Act.
(3) The references to the portions were descriptions of land that could readily be related to land described in folios of the register kept by the Registrar-General under the Act.
(4) Land held under the Act is identified by reference to plans prepared by surveyors and is not described by reference to local government boundaries, which are subject to change.
(5) Because the land was only identified by reference to portions, it would always be necessary to look at the plans held by the Registrar-General in order to identify the land being referred to in the Extraction Agreement.
(6) Looking at the Plan, Portion 204 is outlined in red on the plan. While many other features of the land and surrounding area are noted on the Plan (including what Collector Quarries ultimately did not dispute was the boundary between Gunning Shire and Mulwaree Shire), those features serve no role in identifying the land for the purposes of the Act.
(7) The Extraction Agreement did not say that it referred to only "part of" any particular portion. It would have been simple for that to be done.
(8) There was no plan attached to the Extraction Agreement identifying that it applied only to part of one of the portions. It would have been simple for that to be done.
By reason of all of the matters referred to in the preceding paragraph, Collector Quarries submitted that "upon its proper construction the description of the land in Recital A was no more than a convenient description of the land by reference to its registered title, or more accurately titles. It did not have the effect of limiting the operation of the agreement to any particular part of any particular lot of the registered title".
Finally, Mr Waugh did not dispute (and the Court finds) that the original parties to the Extraction Agreement were aware of the 1997 Consent and that they knew that Lot 204 was bisected by the boundary between the two shires.
Construction of the Extraction Agreement - the Owner's submissions
Mr D. Klineberg of Counsel appeared for the Owner. He submitted that the plain, express meaning of the words used in the definition of the "Land" was that the land the subject of the Extraction Agreement was solely in the Gunning Shire, so to the extent that any of the portions referred to included land outside of that shire, such land was not included within the definition. Any doubt about this conclusion could be resolved without going outside the terms of the Extraction Agreement by having regard to clauses 2.5, 4.5, 4.6 and 7.1 (set out in paragraph [14] above), all of which made it clear that the land which was the subject of the Extraction Agreement was confined to land within the Gunning Shire. While the Owner accepted that the land described in Recital A could, to use Collector Quarries' expression, be readily related to the land described in the folios of the titles in the register, the parties to the Extraction Agreement had chosen to describe the land by reference to portions in a specified parish, county and shire.
The Owner then submitted that if it were necessary to consider the surrounding circumstances and commercial purpose or object of the transaction evidenced by the Extraction Agreement, those matters supported the conclusion that was obvious from the text of the Extraction Agreement. The original parties to the Extraction Agreement were aware that Lot 204 was bisected by the shire boundary. The Extraction Agreement was entered into in the context of the 1997 Consent, so that its commercial object was for the operation of a quarry entirely within Gunning Shire. There was nothing in the language of the Extraction Agreement, the surrounding circumstances or the commercial purpose that could support the conclusion that the Extraction Agreement related to or permitted activity on the Mulwaree Land.
Construction of the Extraction Agreement - resolution
The Court accepts Mr Klineberg's submissions.
Applying the approach set out in Electricity Generation Corporation (see paragraph [45] above), a reasonable business person would have understood the definition of "Land" in Recital A of the Extraction Agreement to be confined to land in Gunning Shire. This follows from considering "the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract".
The language used by the parties focuses entirely on Gunning Shire and makes no reference to Mulwaree Shire. The key to this is the specific use of the words "Shire of Gunning" as part of the definition. That specification is reaffirmed by the express references to Gunning Shire Council in Clauses 2.5, 4.5, 4.6 and 7.1 of the Extraction Agreement (see paragraph [14] above).
Insofar as surrounding circumstances known to the original parties to the Extraction Agreement are concerned, they point to the same conclusion. The parties knew about the 1997 Consent, which related to the operation of a quarry entirely within Gunning Shire. The parties knew that Lot 204 was in both shires, which provides an explanation, if one be required, for the express specification of Gunning Shire in the definition. Looking at the terms of the Extraction Agreement as a whole and taking into account the 1997 Consent, it is obvious that the commercial purpose or object of the Extraction Agreement was to set out the terms upon which Tiocliff was to extract and haul hardrock products from the quarry which was the subject of the 1997 Consent, i.e. an activity to be conducted entirely within the boundaries of Gunning Shire.
There are two complete answers to the arguments advanced on behalf of Collector Quarries.
First, those arguments give no effect to the words "Shire of Gunning". The effect of Collector Quarries' argument is that those words are, at best, imprecise or, at worst, erroneous. That cannot overcome the fact that a simple, literal reading of the definition of "Land" produces a rational, businesslike result permitting the operation of the quarry which was the subject of the 1997 Consent entirely within Gunning Shire.
Second, Collector Quarries' insistence that, in the context of land under the Act, the references to portions were intended to direct attention to the registered folios does not have the conclusive result for which Collector Quarries contends. Looking specifically at the reference to Lot 204, the title search in evidence shows that the land is contained in Folio 204/XXXX. The land contained in that folio is described as:
LOT 204 IN DEPOSITED PLAN XXXXX X
LOCAL GOVERNMENT AREA PALERANG
PARISH OF COLLECTOR COUNTY OF ARGYLE
(FORMERLY KNOWN AS PORTION 204)
TITLE DIAGRAM CROWN PLAN 4575.2121
Two observations flow from that description of the land contained in the folio. First, it does refer to the local government area. The search in evidence was made on 24 September 2013 and refers to the current edition of the folio as coming into existence on 26 March 2004, i.e. after the amalgamation of Gunning Shire and Mulwaree Shire. I was informed from the Bar table that it was not possible to obtain a search of the register as at a particular date. However, for present purposes, I do not need to go so far as to assume or infer that a search of the register as at the date of the Extraction Agreement would have described the land as being in both Gunning Shire and Mulwaree Shire. It is sufficient to meet Collector Quarries' argument that local government areas form part of the description of the land on the folio.
Second, and more importantly, the land is identified by reference to the specified Crown plan, which is the Plan. Collector Quarries' reliance on the land the subject of the Extraction Agreement being land under the Act directs attention to the Plan. This clearly shows which part of Lot 204 is in Gunning Shire and which part is in Mulwaree Shire. The Plan itself is headed "Gunning and Mulwaree Shires". Rather than resolving any difficulty of construction, the Plan only leaves the question open. The question of construction is definitively answered by the express reference in Recital A of the Extraction Agreement to Gunning Shire alone.
Conventional estoppel - legal principles
The parties referred the Court to a number of the authorities concerning conventional estoppel. The relevant dicta to which reference was made are gathered together in Ryledar Pty Ltd & Anor v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603 (per Tobias JA; Mason P and Campbell JA agreeing ("Ryledar")):
194 On the other hand estoppel by convention is a form of estoppel founded upon an assumed state of affairs by the parties whether as to a matter of fact or a matter of legal effect which both will be estopped from denying: Con-Stan Industries of Australia Pty Ltd v Norrich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 at 244-245. That assumed state of affairs takes as a given the terms of the contract as known to and understood by the parties but from which the parties have departed for the purpose of their furtherance of their relationship under the contract.
195 As Dixon J therefore observed in Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641 at 676, belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the actual state of affairs.
196 In his recent book Estoppel by Conduct and Election, Handley described estoppel by convention in the following terms (at par 8-001):
"When parties make a statement of fact or of mixed fact and law the conventional basis of their transaction ... both are estopped from questioning its truth for the purpose of that transaction. Estoppels by convention can be created ad hoc, expressly, by a course of dealing, or by other acts and declarations. In such a case 'there must be some mutually manifest conduct by the parties' with the intention of effecting their legal relationship."
197 In Amalgamated Investment & Property Co Ltd v Texas Commercial International Bank Ltd (in liq) [1982] QB 84, Lord Denning MR observed (at 121):
"To use the phrase of Latham CJ and Dixon J in [Grundt] ... the parties by their course of dealing adopted a 'conventional basis' for the governance of the relations between them ... They are bound by the 'conventional basis' in which they conducted their affairs. The reason is because it would be altogether unjust to allow either party to insist on the strict interpretation of the original terms of the contract - when it would be inequitable to do so having regard to dealings which have taken place between the parties."
His Lordship also observed that:
"[t]here is no need to enquire whether their particular interpretation is correct or not - or whether they were mistaken or not - or whether they had in mind the original terms or not. Suffice it that they have, by their course of dealing, put their own interpretation on their contract, and cannot be allowed to go back on it."
198 The principles were restated by Lord Steyn in delivering the principal speech in The Indian Grace (No. 2) [1997] UKHL 40; [1998] AC 878 at 913 where his Lordship said:
"... an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared ... or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption."
199 Recently the principles were restated by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5, where his Honour observed (at [30]) that the doctrine of conventional estoppel precluded either party to a contract from denying an assumption which has formed the conventional basis of the relationship between them. Accordingly, it is necessary to determine whether the parties have in fact adopted such an assumption as the conventional basis of their relationship.
200 His Honour then stated the matters necessary to establish conventional estoppel (at [32]) as being that:
(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;
(b) the defendant has adopted the same assumption;
(c) both parties have conducted their relationship on the basis of that mutual assumption;
(d) each party knew or intended that the other act on that basis; and
(e) departure from the assumption will occasion detriment to the plaintiff.
201 In noting the differences between promissory estoppel and conventional estoppel his Honour then observed with respect to the latter (at [33]) that it:
"is focussed on the consensual basis of the parties' relationship: it operates when both parties have adopted the same assumption as the basis of their relationship, often without appreciating that any departure from the strict legal position is involved so as to hold both parties to their common understanding."
202 Before dealing with the factual material, two other legal aspects of conventional estoppel need to be noted. The first is whether the parol evidence rule operates to exclude evidence of an alleged estoppel by convention arising from pre-contract negotiations. This is relevant in the present case given that Ryledar relies upon the correspondence between the parties containing their negotiations which led up to the 1999 Variation. The second concerns whether it is necessary for Ryledar to establish reliance and detriment before it can establish the relevant estoppel. This question has been answered by this Court in the affirmative in MK & JA Roche Pty Ltd v Metro Edgely Pty Ltd [2005] NSWCA 39 where Hodgson JA, with whom Beazley and Ipp JJA agreed, held (at [72]) that reliance and detriment were essential for the existence of conventional estoppel.
203 Hodgson JA referred to the statement of Dixon J in Grundt (at 674), that the relevant principle was that "the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations". That principle, he continued, involved actions such that the party relying on the estoppel would suffer a detriment if the other party were afterwards allowed to set up rights inconsistent with that assumption. After citing the Commonwealth v Verwayen (1990) 170 CLR 394 at 444, his Honour concluded that conventional estoppel required that the party relying thereon must have "placed himself in a position of significant disadvantage if departure from the assumption be permitted".
I respectfully adopt the preceding passage as a compendious statement of the principles which the Court is to apply. However, because of the importance of the issues of reliance and detriment to the outcome of this case, I will also set out in full the relevant part of the judgment of Hodgson JA in M K & J A Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39 referred to in Ryledar:
71 The first matter to be considered is whether there is still an all-or-nothing common law estoppel, distinct from the equitable estoppel under which the appropriate relief is the minimum relief required to do equity and avoid unconscionable conduct. In my opinion, having regard to the comments in Giumelli referred to by Mr. Newlinds, it is appropriate for this Court to proceed on the basis that there is still an all-or-nothing doctrine of common law estoppel by representation and conventional estoppel. I also accept that there can be such an estoppel as to rights and not merely as to facts: see Eslea and Heggies, and cases there cited.
72 However, I do not accept Mr. Newlinds' submission that reliance and detriment are not essential for the existence of conventional estoppel. The passage from Con-Stan refers inter alia to Grundt v. Great Boulder Proprietary Gold Mines Ltd. [1937] HCA 58; (1937) 59 CLR 641, in which Dixon J makes it clear that the relevant principle is that "the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations" (at 674), this involving both (1) action such that the party relying on the estoppel would suffer a detriment if the other party were afterwards allowed to set up rights inconsistent with the assumption; and also (2) that the party against whom the estoppel is asserted "must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it" (at 675). See also Thompson v. Palmer [1933] HCA 61; (1933) 49 CLR 507 at 547. In my opinion, common law estoppel by representation or conventional estoppel still requires that the party relying on the estoppel must have "placed himself in a position of significant disadvantage if departure from the assumption be permitted": see Verwayen at 444.
In what follows I shall refer to the alleged assumption that the land the subject of the Extraction Agreement included all of Lot 204 as "the Assumption".
Conventional estoppel - Collector Quarries' submissions
Collector Quarries ultimately put its case on conventional estoppel in this way:
(1) There was an estoppel by convention between Tiocliff and the Owner that the land the subject of the Extraction Agreement included all of Lot 204 (the "Tiocliff Estoppel").
(2) There was an estoppel by convention between Collector Quarries and the Owner that the land the subject of the Extraction Agreement included all of Lot 204 (the "Collector Quarries Estoppel").
(3) The fact of the Tiocliff Estoppel made the existence of the Collector Quarries Estoppel more likely.
(4) However, the existence of the Tiocliff Estoppel was not essential to a finding that the Collector Quarries Estoppel existed.
(5) The Collector Quarries Estoppel arose independently of the Tiocliff Estoppel and it was no part of Collector Quarries' case that it was entitled in some way to the benefit of the Tiocliff Estoppel (if it existed) by way of assignment or otherwise.
Collector Quarries pointed to a number of facts which it submitted satisfied the various elements for a conventional estoppel identified by Brereton J in Moratic Pty Ltd v Lawrence James Gordon and Anor [2007] NSWSC 5; (2007) 13 BPR 24,713 ("Moratic") as set out in Ryledar at [200] (see paragraph [62] above).
It was first submitted that the EIS and the Land and Environment Court orders (see paragraphs [21] and [25] above) demonstrated that each of Tiocliff and the Owner had adopted the Assumption and were conducting their relationship on the basis of the Assumption. If further evidence was required that Tiocliff had adopted the Assumption, that was provided by the fact that in the Deed of Assignment of License of 4 November 2005 between Tiocliff and Collector Quarries, there was no reference to Gunning Shire in the definition of "Property" in that deed (see paragraph [28] above.
As to the position between Collector Quarries and the Owner, Collector Quarries pointed to three pieces of evidence. First, it submitted that when Collector Quarries registered the Caveat (see paragraph [30] above) in December 2005, there was no complaint for a number of years by the Owner that the Caveat extended in its terms to all of Lot 204. The other pieces of evidence were the email from the Owner's solicitor of 14 March 2012 (see paragraph [34] above) and Mr Reardon's email to Mr Zappia of 11 April 2012 (see paragraph [35] above). It was said that each of these demonstrated that Collector Quarries and the Owner respectively had adopted the Assumption and that they were conducting their relationship on that basis.
Collector Quarries next submitted that the Court should not accept Mr Reardon's evidence that, as the controlling mind of the Owner, he had never adopted the Assumption. The three pieces of evidence referred to in the preceding paragraph were called in aid of this submission. Furthermore, it was submitted that Mr Reardon was an unreliable witness because while in one of his affidavits he had sworn that he had not read the EIS prior to his preparation for these proceedings, he conceded in cross-examination that by the time of the variation agreement referred to in paragraph [24] above, he had at least read the EIS in a cursory or general way.
Finally, Collector Quarries submitted that its reliance and detriment were demonstrated by two things. First, Collector Quarries had paid a significant sum for the assignment of the Extraction Agreement on the assumption that, subject to obtaining development consent, it could quarry anywhere on the land subject to the Extraction Agreement including the Mulwaree Land. Second, it was suggested that there was considerable uncertainty as to what would happen to Collector Quarries' consents and licences (see paragraph [44] above) that, it was said, had been granted on the basis that all of Lot 204 fell within the Extraction Agreement, if the true position turned out to be otherwise.
Conventional estoppel - the Owner's submissions
The Owner made eight points.
First, there was no evidence for the Tiocliff Estoppel.
Second, there was no evidence that Collector Quarries ever adopted the Assumption.
Third, there was no evidence that Mr Reardon, on behalf of the Owner, ever adopted the Assumption. His evidence that he always knew that Lot 204 was bisected by the shire boundary (as was the land on which his own home was built) should be accepted.
Fourth, there was no evidence that either the Owner or Collector Quarries conducted themselves on the basis of the Assumption or that each party knew or intended that the other would act on that basis. Most importantly, there was no evidence of any dealings between the parties concerning the operation of the Extraction Agreement and no suggestion that Collector Quarries had ever done anything in reliance on the Assumption. The Quarry was and is located solely on the Gunning Land and there was no evidence Collector Quarries had ever done anything on the Mulwaree Land.
Fifth, the difference between the parties only came to light after the Owner wanted to register the new plan of subdivision. The emails from the paralegal and Mr Reardon (see paragraphs [34] and [35] above) must be read in that context. The paralegal's assertions as to what was and was not subject to the Extraction Agreement were clearly her own and, according to Mr Reardon, were mistaken. Points 13 and 14 of Mr Reardon's email made it clear that he did not think that Collector Quarries had any interest to support a caveat over the Mulwaree Land.
Sixth, the EIS had not been prepared by or on behalf of the Owner. The Owner had no input into it and did not see it before it was submitted to the Minister. The Owner's consent (see paragraph [19] above) had been given before the EIS was completed and was a consent to a development application which, in its terms, related to land only within Gunning Shire.
Seventh, Collector Quarries could not show any detriment if the Extraction Agreement did not include the Mulwaree Land. It had not operated the Quarry since 2008. It would be able to continue to operate the Quarry, if it ever chose to do so during the life of the renewed Extraction Agreement, in accordance with the 2001 Consent (which related only to land then within Gunning Shire).
Eighth, the attack on Mr Reardon's credit should be rejected. He never waivered from his fundamental contention that he well understood that Lot 204 was bisected by the shire boundary and that the Extraction Agreement did not include the Mulwaree Land.
Conventional estoppel - resolution
Collector Quarries has not proven the existence of either the Tiocliff or the Collector Quarries Estoppel. The reasons for this conclusion are generally those submitted by the Owner. I shall first consider the Tiocliff Estoppel.
The evidence does not establish that either Mr Reardon (on behalf of the Owner) or Tiocliff ever adopted the Assumption. The Court has concluded (see paragraph [50] above) that at the time of entering into the Extraction Agreement the parties were relying on the 1997 Consent - which related solely to land in Gunning Shire - and knew that Lot 204 was bisected by the shire boundary. There is no reason why either party should have adopted the Assumption and the facts which the Court has found militate against it.
There is no direct evidence from anyone on behalf of Tiocliff that Tiocliff ever adopted the Assumption.
I accept Mr Reardon's evidence that he never adopted the Assumption. He gave his evidence in a straightforward manner. His statements that he had never adopted the Assumption were inherently credible against the background of the 1997 Consent. Furthermore, the Court was left in no doubt that as a life long farmer in the area he knew exactly which parts of the land he farmed were in Gunning Shire and which were in Mulwaree Shire.
Mr Reardon properly conceded that, contrary to his affidavit, he had in fact read the EIS in a general way nearly a year after it had been prepared and submitted. That change in his evidence when considered against the inherent credibility of his other evidence is an insufficient basis not to accept him as a witness of truth. I deal below (see paragraphs [92] to [94]) with the other reasons advanced by Collector Quarries as to why Mr Reardon's evidence should not be accepted.
The Owner's consent to the 2000 Application (see paragraph [19] above) was for a development application confined to land in Gunning Shire. It says nothing about whether or not the Owner adopted the Assumption.
The EIS is also irrelevant to the question of whether the Owner adopted the Assumption. It was not the Owner's document and the Owner had no part in its preparation. Nor does the EIS form a secure basis to be satisfied on the balance of probabilities that Tiocliff adopted the Assumption. While it is clear that the author of the EIS, Mr Corkery, thought that all of Lot 204 fell within the land the subject of the Extraction Agreement, there is no evidence whether he was instructed by Tiocliff to that effect or whether it was his own conclusion from reading the relevant documents.
The subsequent Land and Environment Court appeal (see paragraph [25] above) is also of no assistance as to whether anyone adopted the Assumption. The Owner was not a party to those proceedings. While Tiocliff was a party to those proceedings, they concerned land solely in the Gunning Shire.
Collector Quarries also submitted that the definition of the "Property" in the Deed of Assignment of Licence between Tiocliff and Protector Quarries (which made no reference to Gunning Shire - see paragraph [28] above) demonstrated that Tiocliff adopted the Assumption. However, the absence of any reference to Gunning Shire is equally, if not more plausibly, explicable because by the date of that deed, Gunning Shire had ceased to exist.
Even if Tiocliff adopted the Assumption, there is no evidence of any dealing in relation to the operation of the Extraction Agreement between Tiocliff and the Owner which might have had the Assumption as its basis. Nor is there any evidence that Tiocliff ever did anything in reliance on the Assumption (e.g. that it even ever entered upon or used any part of the Mulwaree Land).
Turning to the Collector Quarries Estoppel, the evidence does not establish that Collector Quarries ever adopted the Assumption. Its director, Mr Sergi, gave no evidence that he ever adopted the Assumption on behalf of Collector Quarries. Nor is there anything in his evidence to suggest that Collector Quarries was ever made aware of anything in Tiocliff's conduct that supported the existence of or was dependent upon the Assumption or that Collector Quarries ever did anything (including taking the assignment of the Extraction Agreement) in reliance upon the Assumption.
Even if, contrary to the conclusion which I have reached, Collector Quarries did hold the Assumption, none of the three pieces of evidence upon which it relied to submit that the Owner adopted the Assumption, supports that conclusion (see paragraph [68] above).
The first matter was the length of time which passed between the registration of the Caveat in December 2005 and the making of any complaint by the Owner. However, there is no evidence that the Owner was aware of or concerned by the scope of the Caveat until 2012, when the Owner wished to subdivide and sell some parts of "Barina".
The Court accepts the Owner's submissions as to why the other two pieces of evidence referred to by Collector Quarries (the email from the Owner's solicitor of 14 March 2012 (see paragraph [34] above) and Mr Reardon's email to Mr Zappia of 11 April 2012 (see paragraph [35] above) do not support the conclusion that the Owner held the Assumption. The solicitors' email written by their paralegal expressly says "We enclose copy plan of subdivision for lot 204 and copy plan of subdivision for lots A and 33 which as we understand are the areas which the Extraction Agreement refer to" (emphasis added). There is no evidence that understanding was given to the solicitors by Mr Reardon. I accept his denial that he gave instructions to that effect to his solicitors. Furthermore, as was submitted on behalf of the Owner, Mr Reardon at points 14 and 15 (I would also add point 13) of Mr Reardon's own email to Mr Zappia of 11 April 2012 make it clear that Mr Reardon did not accept that Collector Quarries' entitlement to a caveat pursuant to the Extraction Agreement included the Mulwaree Land.
For the same reasons given in paragraphs [83] and [84] above, the Court also does not accept Collector Quarries' submission that those three pieces of evidence support the conclusion that Mr Reardon's own evidence that he never held the Assumption should be rejected as untruthful.
Even if, contrary to the conclusions reached above, both Collector Quarries and the Owner had adopted the Assumption, the Court is well satisfied that there is no evidence that any incident of their relationship under the Extraction Agreement was ever conducted on the basis of the Assumption. Furthermore, Collector Quarries has failed to prove any reliance on the Assumption by Collector Quarries or detriment to Collector Quarries. While each of these matters is closely conceptually and factually related, I will deal with them in turn.
There is no evidence to support the conclusion that Collector Quarries and the Owner conducted their relationship on the basis of the mutually adopted Assumption. The evidence is that until Collector Quarries decided to cease operating the Quarry, the Quarry was operated entirely within the Gunning Land. There is no suggestion in the evidence that Collector Quarries and the Owner have ever done anything in the course of their relationship under the Extraction Agreement that might be referable to the mutually adopted Assumption.
This point can be simply illustrated by an example. While a course of dealing is not the only way in which an estoppel by convention can be created, it is probably the most common. For example, in Moratic Brereton J considered a lease where rent was payable under one clause and "further rent" was payable under another clause. Over a period of years rent was demanded and paid solely by reference to the first of those two clauses. That course of conduct was the basis upon which his Honour found a conventional estoppel preventing the landlord from asserting that the "further rent" was payable.
In the present case Collector Quarries is unable to point to anything which it and the Owner have done that could amount to a course of conduct that would demonstrate a relationship conducted upon the basis of a mutually adopted assumption. There is no evidence that Collector Quarries has ever done anything in or to the Mulwaree Land. It would be quite a different situation if, for example, over a period of years the Owner had knowingly acquiesced in Collector Quarries conducting quarrying or any other activities on the Mulwaree Land.
This same deficiency of evidence means that Collector Quarries has failed to prove that it has ever done anything in reliance upon the Assumption. However, it was submitted that Collector Quarries took the assignment of the Extraction Agreement in reliance upon the Assumption. It might also have been said for Collector Quarries that it registered the Caveat in reliance upon the Assumption. Even if both of those propositions were true (and there is no evidence to support them), there is no evidence that the Owner knew or intended that Collector Quarries should act on that basis (being the fourth of the matters necessary to establish a conventional estoppel identified by Brereton J in Moratic). The only evidence is that the Owner gave its consent to the assignment of the Extraction Agreement from Tiocliff to Collector Quarries. There is no evidence that there were any other dealings between the Owner and Collector Quarries in relation to the assignment of the Extraction Agreement or the lodging of the Caveat. The latter was done by Collector Quarries purportedly pursuant to its right under clause 8.4 of the Extraction Agreement. There is no basis in the evidence to conclude that the Owner had anything to do with that process.
Finally, Collector Quarries has failed to demonstrate that it has "placed [itself] in a position of significant disadvantage if departure from the assumption be permitted" (to use the language of Hodgson JA - see paragraph [63] above). Neither of the detriments identified by Collector Quarries is made out. There is no evidence that it took the assignment of the Extraction Agreement in reliance upon the Assumption or that the price which it paid to do so would have been any different if it was clear that the Mulwaree Land was not included in the Extraction Agreement.
Nor was Collector Quarries able to develop any submission (let alone point to any evidence) to demonstrate that the current consents and licences which it has in relation to the Quarry (see paragraph [44] above) will be in any way jeopardised or diminished if its rights under the Extraction Agreement do not include the Mulwaree Land. In addition, there is no evidence that if Collector Quarries decides to operate the Quarry again, there is even the hint of a proposal that it would wish to use the Mulwaree Land. Similarly, no evidence has been adduced that, if Collector Quarries sells its rights under the Extraction Agreement, it will obtain a lesser price for those rights without the Mulwaree Land than with that land.
Conclusion
Collector Quarries has failed to demonstrate that it has any rights over the Mulwaree Land either as a matter of construction of the Extraction Agreement or by reason of an estoppel by convention. The Owner has always maintained that it has no objection to Collector Quarries registering a caveat pursuant to clause 8.4 of the Extraction Agreement over the Gunning Land. The amended statement of claim should be dismissed.
At the conclusion of the hearing, the parties came to an agreement that each should bear their own costs of the proceedings, irrespective of the outcome. The Court has already made orders giving effect to that agreement.
The Court will hear the parties before making final orders.
SCHEDULE ONE
Decision last updated: 26 August 2014
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