Daikyo (North Queensland) Pty Ltd v H & T Trawling Co Pty Limited

[1995] HCATrans 44

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B51 of 1994

B e t w e e n -

DAIKYO (NORTH QUEENSLAND)
PTY LTD

Applicant

and

H & T TRAWLING CO PTY LIMITED

Respondent

Application for special leave to appeal

BRENNAN J
DEANE J
GAUDRON J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 10 MARCH 1995, AT 11.14 AM

Copyright in the High Court of Australia

MR F.L. HARRISON, QC:   May it please the Court, I appear for the applicant.   (instructed by Phillips Fox)

MR D.B. FRASER, QC:   If the Court pleases, I appear for the respondent.   (instructed by Miller Harris)

BRENNAN J:   Yes, Mr Harrison

MR HARRISON:   This application is an application for special leave to appeal from a decision of the Court of Appeal.  The matter relates to a sale of a lease of old system land, that is land not under the Torrens title.  In the action, the applicant purchaser was held liable in damages for breach of its contract to buy a lease of certain land near Cairns.  A number of issues were litigated below and some of these were raised in the application for special leave to appeal. 

However, the only issues that the applicant presses on today’s application are those in points 1 and 6 of part 1 of its summary of argument; that is, the issue whether the failure to requisition the removal of a doubt or defect in title within the time allowed for in a standard requisitions on title clause disentitles a purchaser to relief under section 69 of the Property Law Act or, in respect of defects only, for example, under section 55 of the NSW Conveyancing Act.  Secondly, whether the applicant should be denied the opportunity to argue the point by any possible estoppel which was not, in our submission, litigated at first instance or in the Court of Appeal below.

Section 69 is set out at pages 53 to 54 of the application book and provides that:

Where specific performance of a contract would not be enforced against the purchaser by the Court by reason of a defect in or doubt as to the vendor’s title, but such defect or doubt does not entitle the purchaser to rescind the contract, the purchaser shall nevertheless be entitled to recover his deposit and any instalments under the contract and to be relieved from all liability under the contract, unless the contract discloses such defect or doubt and contains a stipulation precluding the purchaser from objecting thereto.

The Court of Appeal rejected the argument on the basis that the section could not be relied on because the objections were not taken in requisitions on title that required by the contract to be made many months before the actual problems relating to settlement arose.  Also, possibly the judgment is not entirely clear on the basis of an estoppel against raising the section.  This appears in the application book, starting at page 27, line 47.

BRENNAN J:   Mr Harrison, these questions arise only on the hypothesis that the Minister had not given his consent, do they not?

MR HARRISON:   Not at all, your Honour.  The matters which are said to constitute the doubts as to title that existed as at the date when settlement was required are summarised at page 2 of the outline of argument.  They relate to assertions by a number of owners of boats that had previously been stored on the premises that they had rights in respect of the premises.  If I could go to paragraph 2, which sets them out.  By writ issued in the Supreme Court on 10 March, nine boat owners who had previously stored their boats on the subject premises brought proceedings against the Cairns Port Authority and the respondent to restrain the assignment of the lease to the applicant and for a declaration that notices to quit given by the respondent to those boat owners were void.

The boat owners’ solicitors asserted that those boat owners had rights in relation to the land which would continue to be claimed after any settlement.  The claims were based on the boat owners having made improvements to the land, a breach of natural justice in the Cairns Port Authority’s mode of dealing with those rights in approving the transfer to the applicant, and a conflict of interest alleged to have existed in some members of the Cairns Port Authority when the decision was made to approve the change of use permitted on the leased land.  It was also in evidence, although the trial judge ruled it inadmissible, that the relevant Minister whose approval was required had stated on or about 10 April 1994, and that had been published in the Cairns Post newspaper, that he would withhold any final approvals of the transfer of the lease pending the completion of a Criminal Justice Commission investigation into the boat owners’ allegations that had commenced shortly prior to the statement.

Then there was the fact that the day before settlement the respondent had forcibly removed the remaining boats of boat owners who had refused to leave the premises.  Two boat owners on the day before settlement had obtained an interim injunction restraining settlement and that injunction was in force until some time after 3.00 pm on the day fixed for settlement.

GAUDRON J:   Now, how do you say any of these matters gave rise to a doubt as to title?

MR HARRISON:   We say they gave rise to a doubt as to title ‑ ‑ ‑

GAUDRON J:   We are dealing with a leasehold title, of course.

MR HARRISON:   Yes.  They gave rise to a sufficient doubt, in our submission, as to whether the applicant would obtain a proper title to the lease because of the threatened litigation as to the entitlement of the vendor to convey the leased property.

GAUDRON J:   Well, you will have to establish some title.  Do you not point to the possibility of some title defect, and I just myself do not see how they do that, even if they are sublessees, which would be the highest at which they could pitch their claim.

MR HARRISON:   With respect, I am not sure that I understand your Honour’s question.  If they had a valid claim to be sublessees then the vendor would not have been able to give us vacant possession under the lease transferred to us.

GAUDRON J:   Well, you were talking about defects in title not vacant possession as I understood it.

MR HARRISON:   With respect, our title would have a blot on it if it is subject to a sublease which is binding on us.

GAUDRON J:   Surely that was a matter for requisitions.

MR HARRISON: The point that we wish to make is that although it is something which may be requisitioned, section 69 of the Property Law Act is a provision which is available for the benefit of a purchaser notwithstanding that the matter was not raised in the actual requisitions on title.

GAUDRON J:   But you have got to have some doubt, do you not, that the lessor did not have title to convey?

MR HARRISON:   Yes, your Honour, and on the authorities, in my submission, it is sufficient that there is threatened litigation and that settlement will subject  ‑ ‑ ‑

GAUDRON J:   As to title, surely.  Threatened litigation as to title.

MR HARRISON:   Yes, as to the title of the vendor to us to convey us a lease that is freed from any claims of sublessees to the premises.

GAUDRON J:   I do not know about that.  Your sublessees must depend on the terms of your contract and/or perhaps on the terms of your requisitions on title.

MR HARRISON:   With respect, your Honour, I think it is common ground to say that we are entitled to clear title to the lease with vacant possession and free of all encumbrances.

DEANE J:   But regardless of that, did not the trial judge find the facts were against you in relation to this, at the bottom of page 3 to the top of page 4?

MR HARRISON:   Your Honour, what the trial judge found was that after the matter having been litigated, it was the fact that they did not have title, but that, with respect, is not the issue under a question of whether there is a doubt as to title sufficient to refuse specific performance.

Could I give an illustration by referring to the decision of Mr Justice Goff in Horton v Kurzke (1971) 1 WLR 769. The issue arose there in fact in relation to a question of costs. There was a sale of property and at the time when the vendor was seeking to settle, a claim was made by a third party to a tenancy. Ultimately that was held to be bad and so the sale was able to be completed. The issue was whether the mere fact of the claim to a tenancy by a third party was a sufficient doubt as to title as to disentitle the vendor to require completion. Mr Justice Goff said of that, and he is dealing with the matter after it has been ruled against the third party claimant, at page 772:

The matter is crystallised, and I have to see whether the title, subject to an adverse claim of the nature I have described, was such as could at that stage be forced on a purchaser, and in my judgment it was not.  I derive assistance, as I have said, from Wilson v Thomas and I would refer in particular to what Mr Justice Roxburgh said when he adopted certain language of Lord Cozens-Hardy MR in In re Nichols and Von Joel’s Contract.  The passage is as follows:

“I should be very sorry to have it supposed that it is my view that upon a vendor and purchaser summons it is not the habit and duty of the court in ordinary cases to construe a will or document -

And I do not think I need to read that.  But then ‑ ‑ ‑

DEANE J:   But if you look at page 4, the trial judge has found:

The premises were, in fact, vacant at settlement and lawfully so.  The rights of those who stored boats were so clearly limited to the rights of licensees that there was no doubt about the title the plaintiff could give, regardless of the actions commenced.

His Honour is speaking of as at the time of settlement.

MR HARRISON:   Well, with respect, in my submission his Honour is speaking with the benefit of the evidence given in the trial as to the nature of their claims, but this is a case where the purchaser is not in a position ‑ ‑ ‑

DEANE J:   But his Honour says everything was so clear that there was no doubt; not that there is no doubt.

MR HARRISON:   His Honour, with respect, is concluding that his Honour has no doubt; his Honour does not go so far ‑ ‑ ‑

BRENNAN J:   That is not what he is saying; he is saying there was none.  In other words, you were putting up that there was a doubt about title at the time of tendered completion, and his Honour said, no there was not.

MR HARRISON:   Well, with respect, his Honour, in my submission, is wrong in law in saying that, because the fact of litigation is a sufficient matter within the principles relating to doubts as to title.

BRENNAN J:   Can be, not is.

MR HARRISON:   With respect, the cases refer to a court’s not forcing litigation on a purchaser.  In my submission, the authorities dealing with the fact of litigation do not deal with it by making an assessment of the likelihood of success of the litigants; they simply say to the effect that ‑ ‑ ‑

BRENNAN J:   Mr Harrison, the boats had been removed on the day before, had they not?

MR HARRISON:   Yes, your Honour.

BRENNAN J:   Litigation had been instituted; there had been an application for an interim injunction which had been granted and the injunction was then subsequently dissolved, is that right?

MR HARRISON:   Yes, that is so, your Honour.

BRENNAN J:   Dissolved why?

MR HARRISON:   The reason why was not known to the purchaser.  I must say I am not sure that it was in evidence as to the reason why.

BRENNAN J:   All that one knew was that there had been an attempt by the boat owners to get their foot in the door and they had failed.

MR HARRISON:   They had failed to restrain the sale but the injunction may well have been dissolved on a balance of convenience test, and there was still the continuing litigation by the purchasers.  In addition, there was of course the matter that I have mentioned before relating to reported statements of the Minister concerning, in effect, holding the matter up until a Criminal Justice Commission investigation was concluded.  Those, in my submission, are matters ‑ ‑ ‑

GAUDRON J:   The evidence of that was rejected, was it not, at first instance?

MR HARRISON:   His Honour does not say why ‑ the evidence was received and then his Honour ruled it inadmissible.  His Honour does not give reasons as to why it was inadmissible.  It may be that it was inadmissible in that the issue was not what the Minister actually intended to do but what was the appearance of doubt.  In other words, it was the fact of statements having been made that created the doubt.  That made it a case in which the purchaser ought not to be forced to part with its money for what was going to amount to a course of litigation.

GAUDRON J:   Anyway, in this case you cannot rely on that unless you rely on a point you have abandoned which goes to whether or not the Minister’s approval was necessary.

MR HARRISON:   With respect, no, your Honour, because it is not the fact of whether or not it was necessary; it was the doubt created by the assertion of the minister.

GAUDRON J:   But if you had no contract for the minister’s approval?

MR HARRISON:   Nevertheless, we were entitled to receive good title at settlement.  The requisitions on title do not disentitle one to rely on, for example, requisitions or doubts as to conveyance.  Your Honours, I have referred in the outline to the statements in Fry on specific performance as to the effect of litigation or threatened litigation that is on page 6, in which it is stated in paragraph 890(1) that the court, to use a favourite expression, will not compel the purchaser to buy a law suit.  That is consistent with what Mr Justice Gough said in Horton v Kurzke and that is the principle that we

seek to rely on, notwithstanding that in the end it was held that the boat owners had no valid claims to subleases or other rights of occupation.

It is submitted that the matter is one which is of importance because of the conflict between the Court of Appeal’s decision in this case and the view taken of the New South Wales provision in Bennett v Stuart and Shenstone v Hewson, the relevant passages of which are set out at pages 4 and 5 of the outline.

BRENNAN J:   We understood that.  What is your point about estoppel?

MR HARRISON:   Your Honour, the court at page 28 said, starting at about line 6:

Certainly a purchaser will not be compelled to accept a title offered by a vendor when sufficient doubts attach to it, but here the purchaser, if it wished to object, was obliged to have taken steps earlier.  There are indications in the evidence that the purchaser itself caused delays in dealing with the boat owners for the purposes of its own and was responsible for the state of the relationship with those parties which persisted up to the settlement date, thereby depriving the vendor of an earlier opportunity to reach accommodation with them.  Accordingly the respondent should be regarded as estopped from raising this particular objection which was one it should clearly have raised earlier under clause 12 of the contract.

Your Honour, the point that we make about that is that it was not alleged in the pleading or litigated or argued in the Court of Appeal that the applicant was estopped from relying on this point.  The matter of estoppel was raised in relation to other issues but not based on these facts.  It was said we were estopped from relying on the absence of a transfer capable of immediate registration and other defects that had been relied on but not in relation to this issue.

BRENNAN J:   Thank you, Mr Harrison.  We need not trouble you, Mr Fraser. 

The applicant puts at the forefront of its argument the questions of the effect of section 69 of the Property Law Act 1974 (Qld) and the availability to the respondent of a plea of estoppel. These questions arise only if the title available for conveyance was doubtful. Having regard to the findings made by the trial judge and the issues litigated at the trial, the case is not a suitable vehicle for raising these questions of law. Any further questions which the applicant seeks to raise are not questions of sufficient public importance to justify the grant of special leave. Accordingly, special leave is refused.

MR FRASER:   Your Honours, the respondent seeks an order for costs.

BRENNAN J:   Yes.  Do you have anything to say to that, Mr Harrison?

MR HARRISON:   No, your Honour.

BRENNAN J:   Special leave is refused with costs.

AT 11.37 AM THE MATTER WAS CONCLUDED