Donnelly v Kempsey Local Aboriginal Land Council

Case •

[2021] NSWSC 1699

•

13 December 2021

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Donnelly v Kempsey Local Aboriginal Land Council [2021] NSWSC 1699
Hearing dates: 5 and 6 October 2021. Last submissions on 14 October 2021.
Date of orders: 13 December 2021
Decision date: 13 December 2021
Jurisdiction:Equity
Before: Henry J
Decision:

Judgment for the plaintiff on her amended statement of claim in the amount of $115,000, subject to compliance with orders made on 19 October 2021. Judgment for the defendant on its cross-claim in the amount of $800. See [294].

Catchwords:

ESTOPPEL ­– Proprietary estoppel – where plaintiff undertook works on land on expectation that 99-year lease had been granted – where defendant took back possession of land – where statute prevents enforcement of plaintiff’s expectation of leasehold interest in land – where plaintiff seeks value of improvements made to land which have increased over period of plaintiff’s continuing trespass on subject land – whether equitable compensation available – quantification of relief

ESTOPPEL – Anshun estoppel – where consent orders in earlier proceeding dismissed plaintiff claims for declarations and specific performance regarding agreement for lease – where further orders in earlier proceeding dismissed plaintiff’s cross-claim for monetary relief on terms that did not prevent plaintiff claiming same relief in fresh proceedings – whether unreasonable for plaintiff not to bring present claims in earlier proceeding

LAND LAW – Indigenous land rights – Aboriginal Land Rights Act 1983 (NSW) – Dealings by Aboriginal Land Councils – where agreement for lease entered into in 1992 between plaintiff and Local Aboriginal Land Council void as not approved by New South Wales Aboriginal Land Council – whether void agreement for lease is subject to new land dealing provisions introduced in 2010 – whether plaintiff denied relief for equitable compensation or restitution by operation of s 42E(5)

Legislation Cited:

Aboriginal Land Rights Act 1983 (NSW) (as currently in force), ss 3, 40, 40B, 40C, 40D, 40E, Sch 4 Part 9 cll 50, 51

Aboriginal Land Rights Act 1983 (NSW) (as in force before 31 March 2010), ss 40 and 40B

Aboriginal Land Rights Amendment Act 2001 (NSW)

Aboriginal Land Rights Amendment Act 2009 (NSW)

Cases Cited:

ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18

Angelopoulos v Sabatino (1995) 65 SASR 1

Arfaras v Vosnakis [2016] NSWCA 65

Austin v Hornby [2011] NSWSC 1059

Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582

Australian Education Union v General Manager of Fair Work Australia (2012) 246 CLR 117; [2012] HCA 19

Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59

Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39

Conference & Exhibition Organisers Pty Ltd v Johnson [2016] NSWCA 118

Crawley v Short [2009] NSWCA 410

Donnelly v Kempsey Local Aboriginal Land Council [2020] NSWSC 1548

Eden Local Aboriginal Land Council v NTSCORP Ltd [2010] FCA 745

Eden Local Aboriginal Land Council v NTSCORP Ltd [2010] FCA 745

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072

Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10)

Grace Bros Pty Ltd v Willoughby Municipal Council (1980) 44 LGRA 400

Hill v Higgins [2012] NSWSC 270

Illawarra Local Aboriginal Land Council v Stewart [2016] NSWSC 125

Illawarra Local Aboriginal Land Council v Stewart [2016] NSWSC 125

Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd(in liq) [2009] NSWCA 145

Maxwell v Murphy (1957) 96 CLR 261; [1957] HCA 7

Meyers v Casey (1913) 17 CLR 90; [1913] HCA 50

Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285; [2008] HCA 48

Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78

New South Wales v McMullin (1997) 73 FCR 246

North Sydney Council v Michael Standley& Associates Pty Ltd (1998) 43 NSWLR 468

Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [2987] HCA 5

Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

Ramsden v Dyson (1866) LR 1 HL 129

Rhodes v Badenach [2000] TASSC 160

Riches v Hogben [1985] 2 Qd R 292

Rodway v The Queen (1990) 169 CLR 515; [1990] HCA 19

Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19

Sullivan v Sullivan [2006] NSWCA 312

Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28

Vacik Pty Ltd v Penrith City Council (Land and Environment Court (NSW), Stein J, 24 February 1992, unrep)

Van den Berg v Giles [1979] 2 NZLR 111

Van Dyke v Sidhu [2013] NSWCA 198

Vehicle Monitoring Systems Pty Ltd vSARB Management Group Pty Ltd t/as Database Consultants Australia [2020] FCA 6

Vella v Australia and New Zealand Banking Group Ltd [2009] NSWSC 123

Victrawl Pty Ltd v Telstra Corp Ltd (1995) 183 CLR 595; [1995] HCA 51

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7

Workers’ Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642; [1988] HCA 49

Texts Cited:

J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity Doctrine and Remedies (5th ed, 2014, LexisNexis Butterworths)

Category:Principal judgment
Parties: Lynette Joy Donnelly (Plaintiff/Cross-Defendant)
Kempsey Local Aboriginal Land Council (Defendant/Cross-Claimant)
Representation:

Counsel:
P Batley (Plaintiff/ Cross-Defendant)
M Maconachie (Defendant/Cross-Claimant)

Solicitors:
Johnson Winter & Slattery (Plaintiff/ Cross-Defendant)
Maher Legal (Defendant/Cross-Claimant)
File Number(s): 2020/244304
Publication restriction: Nil

Judgment

  1. These proceedings arise out the occupation by the plaintiff, Ms Lynette Donnelly, of land owned by the defendant, Kempsey Local Aboriginal Land Council (KLALC), which is located on Gowings Hill Road, South Kempsey (the Property).

  2. KLALC is a Local Aboriginal Land Council and statutory corporation established under s 50 of the Aboriginal Land Rights Act 1983 (NSW) (ALR Act). Under s 51 of the ALR Act, the objects of KLALC are to improve, protect and foster the best interests of all Aboriginal persons within its local area and other persons who are its members.

  3. Ms Donnelly is an Aboriginal Australian who lived on the Property from 1995 for over twenty years. During that time she carried out works to the Property, including installing a pre-fabricated house that had been sold to her by KLALC.

  4. In these proceedings, Ms Donnelly seeks to recover from KLALC an amount of money that reflects the value of improvements which she made to the Property by way of equitable compensation or restitution. Ms Donnelly claims to be entitled to this relief in circumstances where she occupied and carried out the works to the Property in reliance on an arrangement she had with KLALC to grant her a 99-year lease that was void by operation of the ALR Act.

  5. KLALC denies that Ms Donnelly is entitled to any relief. It contends that it is immune from suit by reason of the provisions of the ALR Act and an Anshun estoppel based on Ms Donnelly’s proceedings in 2013 that resulted in consent orders granting KLALC possession of the Property. KLALC also denies that Ms Donnelly’s works have improved the value of the Property and raises a defence of unclean hands based on her continuing trespass on the Property. In November 2016, KLALC obtained possession of the Property, although Ms Donnelly has continued to use it for her benefit.

  6. KLALC has filed a cross-claim against Ms Donnelly seeking injunctions that require her to remove her personal belongings from the Property and restrain her from entering or using it for any purpose, as well as nominal damages for continuing trespass and costs.

  7. The parties have resolved KLALC’s cross-claim for injunctive relief. Orders were made by consent on 19 October 2021 to deal with that aspect of the proceedings.

  8. Thus, the issues for determination arise, in the main, out of Ms Donnelly’s claim. They require consideration of events going back to 1991, Ms Donnelly’s 2013 proceedings in this Court and dealings between the parties since that time. Also relevant are KLALC’s bankruptcy proceedings against Ms Donnelly in the Federal Circuit Court which were adjourned pending the decision in this case and required judgment to be given this month.

  9. For the reasons that follow, I conclude that Ms Donnelly is entitled to relief on her claim in the amount of $115,000, with payment to be made within 21 days of Ms Donnelly complying with the orders made on 19 October 2021, and that KLALC is entitled to nominal damages for trespass in the amount of $800.

The evidence

  1. Ms Donnelly relied on her affidavit affirmed on 22 January 2021. She also relied on an affidavit of Mr Damien Burley dated 2 February 2021 that annexed his expert report dated 20 April 2020 and a supplementary report from Mr Burley dated 1 October 2021. Mr Burley is a Certified Practising Valuer at Acumentis Regional Pty Ltd.

  2. KLALC relied on two affidavits of Mr Anthony Maher sworn 15 February and 22 September 2021. Mr Maher is the solicitor for KLALC.

  3. The hearing was conducted via audio visual link using the Microsoft Teams platform.

  4. Each of the witnesses were cross-examined. I did not form an adverse view of the credit of any of the witnesses and note that no submissions were advanced that such credit findings should be made.

  5. Ms Donnelly gave evidence in a direct and straightforward manner. She came across as someone who answered the questions put to her honestly and to the best of her ability. I should record that Ms Donnelly is unable to read or write and when asked questions about statements made in her affidavit or other documents, had the relevant parts read out to her.

  6. Submissions were made about the reliability of some aspects of Ms Donnelly’s evidence and the conclusions in and what weight should be given to Mr Burley’s reports, which I deal with below.

Facts

  1. The following is a chronology of the facts and other proceedings between the parties based on the affidavit, oral and documentary evidence. It also draws on the helpful summary of the procedural history by Williams J in Donnelly v Kempsey Local Aboriginal Land Council [2020] NSWSC 1548 (2020 judgment).

  2. Most of the facts are not in dispute. Unless otherwise indicated, I am satisfied of the following matters.

1991–2008: Arrangement between Ms Donnelly and KLALC in relation to the Property

  1. In the early 1990’s, Ms Donnelly made enquiries with KLALC about obtaining a lease for some land. Ms Donnelly was told that she would be entitled to obtain a peppercorn lease paying $1.00 per year for 99 years if she joined KLALC and started attending meetings (which she did). Her request for a lease was put on an agenda of a KLALC meeting.

  2. At a KLALC meeting held on 25 November 1991, KLALC resolved to sell two houses from the Figtree Estate to Ms Donnelly and assist her with the costs of transporting those houses to the Property. According to a letter from Ms Donnelly to KLALC, she believed that the houses would still be good to use when she received her lease of the Property.

  3. At a KLALC meeting held on 9 June 1992, KLALC resolved to grant Ms Donnelly a 99-year lease of the Property. Prior to that, KLALC had placed an advertisement in a Kempsey newspaper about a Special Lease Meeting to be held under the ALR Act to discuss the grant of a lease of the Property to Ms Donnelly.

  4. As events transpired, Ms Donnelly was unable to purchase two houses from the Figtree Estate as they had been damaged. On 6 August 1992 [1] , Ms Donnelly wrote to KLALC requesting to purchase one house from the Figtree Estate “now that her lease of the [Property] had been finalised”. On 2 September 1992, Ms Donnelly purchased one house for $200. According to Ms Donnelly’s evidence, the Figtree house was made from steel frames that were bolted together from top to bottom.

    1. The letter is dated 6 August 1991 but Ms Donnelly’s evidence, which I accept, is that this was an error.

  5. At a KLALC meeting held on 28 September 1992, Ms Donnelly’s draft lease of the Property was tabled. The draft lease that was provided to Ms Donnelly was for 99 years and rent of $1 per annum. It records that KLALC had the power to lease any land vested in it by virtue of the powers conferred and conditions imposed under s 40 of the ALR Act and that the premises were to be used for the housing of Aboriginal people. The draft lease also provides that the lessee would pay rates, taxes and charges and that any dwelling houses constructed or altered would be in accordance with Local Government requirements.

  6. On 28 February 1995, Kempsey Shire Council wrote to Ms Donnelly requesting evidence of her ownership of the Property or a letter from the owner granting approval for the purposes of determining her application for a Building Permit to relocate and develop the house from the Figtree Estate on the Property.

  7. On 1 March 1995, KLALC wrote to Kempsey Shire Council and confirmed that Ms Donnelly had applied for and been granted a lease for the Property by KLALC on 9 June 1992.

  8. On 27 March 1995, Kempsey Shire Council issued a conditional Building Permit to Ms Donnelly which allowed her to erect the relocatable Figtree house on the Property. The Building Permit authorised development substantially in accordance with a stamped plan that included sketches of the proposed dwelling, one of which was an internal floorplan that identified the dwelling as having one kitchen, a family room, three bedrooms, one bathroom and one laundry. The Building Permit was subject to 19 conditions which included the construction of vehicular access, the provision of wastewater disposal and water for firefighting purposes, a requirement for inspection and approval prior to use or occupation of the dwelling and a limit of only one dwelling.

  9. In around April 1995, Ms Donnelly relocated and commenced works to the Property, including to install the Figtree house. The Property was vacant land prior to Ms Donnelly taking possession of it.

  10. From around April 1995, Ms Donnelly undertook numerous works to the Property, which included:

  1. landscaping and levelling the land around the site of the proposed house;

  2. relocating and installing the Figtree house;

  3. constructing a retaining wall;

  4. undertaking trenching to connect mains water to the house;

  5. arranging and paying the cost of erecting a builders’ power pole and thereafter the main power pole and connection to the mains electricity supply;

  6. installing a drainage and septic system;

  7. undertaking concrete paving;

  8. planting a protea grove;

  9. adding an extension to the east of the house; and

  10. constructing a carport.

  1. On 18 May 2001, Kempsey Shire Council undertook an inspection of the Property and subsequently provided permission for Ms Donnelly to occupy the dwelling.

  2. On 7 August 2008, the lawyers for KLALC sent a letter to Ms Donnelly requesting that she vacate the Property by 22 August 2008 as KLALC wanted to take possession. The letter asserted that Ms Donnelly did not have a lease or any other authority from KLALC to occupy the Property, that she did not pay any rent or rates and foreshadowed the commencement of proceedings for possession of the Property in the Supreme Court if Ms Donnelly failed to vacate.

  3. Ms Donnelly’s unchallenged evidence is that she had paid rates, water and electricity for the Property up until 7 August 2008. She says that, from August 2008, Kempsey Shire Council would not accept rate payments as they had been told that she had no right of occupation, but that she has since made payments into her solicitor’s trust account to enable her to attend to paying those rates once she is able to do so. She also gives evidence that she was surprised to receive the 7 August 2008 letter as she understood that she had a lease at the time.

  4. Pausing here, between 1992 and 2008, KLALC was entitled to lease the Property to Ms Donnelly if the lease was approved at a meeting of KLALC that had been called for that purpose and was the subject of approval by the New South Aboriginal Land Council (NSWALC): ALR Act, s 40B(2) (as in force at the time). It is common ground that the lease to Ms Donnelly was approved at a meeting of KLALC that had been called for that purpose but was not approved by NSWALC.

  5. There is no evidence from KLALC as to whether it sought approval for the lease from NSWALC and, if it did, what response was received. Nor is there any evidence from KLALC as to what prompted it to send the letter in August 2008 asking Ms Donnelly to vacate the Property.

2013: Ms Donnelly commences proceedings against KLALC to enforce the lease

  1. On 30 October 2013, Ms Donnelly commenced proceedings 2013/327345 against KLALC in this Court (2013 proceeding) seeking declaratory relief in relation to an agreement for lease of the Property between her and KLALC and specific performance of a lease of the Property from KLALC to Ms Donnelly for 99 years at a rent of $1 per year commencing on 9 June 1992, or otherwise on the terms of the unexecuted lease attached to the statement of claim.

  2. Ms Donnelly’s statement of claim referred to the facts outlined at [19]–[20], [23]–[26] and [29] above and asserted that she had relied on KLALC’s representation about the lease in relocating and installing the house on the Property, making the other improvements, occupying and residing there, and paying rates and levies. It also claimed that KLALC was estopped from denying Ms Donnelly’s demand to execute the lease.

  3. On 5 March 2014, KLALC filed its defence in the 2013 proceedings, the essence of which was that KLALC could not grant the lease sought by Ms Donnelly without approval from NSWALC, which approval had not been granted, relying on ss 40 and 40B of the ALR Act. KLALC admitted that it had agreed to assist Ms Donnelly with transportation costs of the Figtree house (although not that the house had been transported in part performance of any lease) and to her application to lease the Property on 9 June 1992, subject to approval by NSWALC.

  4. On 6 May 2014, the parties attended a mediation in Sydney at which they reached an in-principle agreement. Pursuant to that agreement, the Property would be valued.

  5. On 18 July 2014, Mr James Flanagan, a certified valuer from Opteon, conducted an inspection of the Property on the joint instructions of Ms Donnelly and KLALC. In his report dated 20 July 2014, Mr Flanagan valued the land at $120,000, the improvements at $155,000 and the market value of the Property at $275,000 (Opteon Report).

  6. On 14 August 2014, Ms Donnelly’s solicitors wrote to KLALC and requested that KLALC seek approval from NSWALC of KLALC’s 9 June 1992 resolution to grant a lease to Ms Donnelly for the Property. In a reply to Ms Donnelly sent on 24 September 2014, KLALC’s solicitors indicated that it would not seek approval from NSWALC of the purported lease and asserted that such a course did not form part of the in-principle agreement reached at the mediation on 6 May 2014.

  7. On 15 October 2014, KLALC filed a cross-claim in the 2013 proceeding for possession of the Property, leave to issue a writ of possession, and damages. Ms Donnelly’s defence to the cross-claim, filed on 5 November 2014, denied KLALC’s entitlement to possession.

  8. On 20 August 2015, Ms Donnelly’s solicitors served written submissions on KLALC’s solicitors which stated that Ms Donnelly accepted that the ALR Act barred her claim to a lease. The submissions identified the only issue between the parties as being the period of time that should be provided for Ms Donnelly to remove her house and fixtures which she had erected since entering into possession and sought a period of three years for her to vacate the Property.

  9. On 25 August 2015, Young AJ made consent orders in the 2013 proceeding in the following terms:

1. Dismiss the statement of claim filed 30 October 2013.

2. Judgment for possession of the whole of the land contained in and being Lot 187 in Certificate of Title Volume 15255 Folio 191, situated at and known as 142 Gowings Hill Road, South Kempsey in the State of New South Wales (‘Property’).

3. The plaintiff/cross-defendant is to pay the defendant/cross-claimant’s costs to date on the ordinary basis.

4. Leave for the defendant/cross-claimant to file any writ of possession in respect of the Property be withheld until further order.

5. Note that the issue as to the plaintiff’s removal of the dwelling, fixtures and fittings on the land is reserved.

6.   The proceedings be listed in the Registrar’s list on 6 October 2015 at 9am.

7.   Further questions of costs reserved.

  1. During October 2015, the parties’ solicitors were negotiating about Ms Donnelly’s entitlement to remove structural improvements from the Property. A draft deed of agreement set out terms on which KLALC was prepared to resolve the dispute. The draft deed provided for Ms Donnelly to vacate the Property within six months and referred to the option of her removing the dwelling and fixtures from the Property, with KLALC having a right to apply any security or call on a bank guarantee if she did not remove all items so as to return the Property to the same condition as when she took occupation. The recitals, however, referred to KLALC’s denial, subject to the deed, that Ms Donnelly was entitled to remove the dwelling, fixtures and fittings from the Property. KLALC’s terms were not accepted and the deed was not signed.

  2. On 6 October 2015, Mr Maher notified Ms Donnelly’s solicitor that KLALC was not prepared to pay for any dwellings, fixtures, structures or other items on the Property.

  3. On 20 October 2015, Darke J granted leave to issue a writ of possession for the Property but stayed the execution of the writ up to and including 5 pm on 17 November 2015.

  4. On 16 November 2015, Ms Donnelly filed a cross-claim in the 2013 proceeding seeking an order that KLALC pay her the sum of $155,000, which was asserted to be the value of the improvements made to the Property (as assessed in the Opteon Report). Ms Donnelly’s cross-claim relied on largely the same factual matters set out in her statement of claim in the 2013 proceeding and claimed damages for $155,000 as the amount expended on the Property.

  5. On 17 November 2015, KLALC filed a notice of motion seeking orders that Ms Donnelly’s cross-claim be dismissed on terms that would prevent her from bringing any fresh proceedings or claiming the same relief in fresh proceedings. It also sought orders for Ms Donnelly’s solicitor to indemnity KLALC against any costs payable by it in relation to the notice of motion and for Ms Donnelly to pay its costs of the 2013 proceeding from 26 August 2015.

  6. That day, White J (as his Honour then was) dismissed Ms Donnelly’s cross-claim and made orders in the following terms:

1. The cross-claim filed by the plaintiff on 16 November 2015 is dismissed on terms that this order shall not prevent the plaintiff from bringing any fresh proceedings or claiming the same relief in fresh proceedings.

2. The plaintiff is to pay the defendant’s costs incurred as from 26 August 2015.

3. The defendant’s notice of motion filed in court on 17 November 2015 is otherwise dismissed.

2016: KLALC takes possession of the Property and obtains costs judgment

  1. On 9 November 2016, KLALC took possession of the Property, a writ having been issued on 7 March 2016. On the day it took possession, Steve Wallis and Associates attended the Property on KLALC’s behalf and produced a report on the Property which identified that several used vehicles, a caravan, two horses, two dogs and goldfish were present on the Property and that the sheds and the front gate had been locked.

  2. Ms Donnelly accepts that when she vacated the Property on 9 November 2016, she left several personal belongings in the dwelling, as well as her two dogs and two horses on the land. She gives evidence that she recalls being offered in late 2016 the opportunity to remove the dwelling and fixtures from the Property but that she was unable to afford the removal and, in any event, had nowhere to put those items. She also gives evidence that at no point had she been told to remove her possessions and animals from the Property and that nobody from KLALC or otherwise questioned her about her presence there.

  3. On 29 November 2016, KLALC obtained judgment in the Port Macquarie Local Court against Ms Donnelly in the amount of $71,431.21. The judgment reflected the value of the certificate of determination of costs and the certificate of determination of the costs assessment in relation to the costs order made by Young AJ which KLALC had registered in the Port Macquarie Local Court.

  4. During December 2016, the parties’ solicitors negotiated about Ms Donnelly having access to the Property. She was granted access for two hours on 23 December 2016.

2017: Bankruptcy notice

  1. In March 2017, Ms Donnelly secured pro bono representation from Clayton Utz.

  2. On 27 September 2017, KLALC served a bankruptcy notice on Ms Donnelly for $75,863.96 in respect of the Local Court judgment sum plus accrued interest.

  3. On 16 October 2017, Clayton Utz wrote to Mr Maher asserting that Ms Donnelly had a claim against KLALC in relation to the improvements made to the Property that would exceed the amount of KLALC’s claim sufficient to have the bankruptcy notice set aside. The letter invited KLALC to withdraw the bankruptcy notice and confirm that no further action would be taken in respect of it. An offer was made to proceed with settlement negotiations that contemplated Ms Donnelly purchasing the Property from KLALC for $120,000 and paying the Local Court judgment sum over a series of instalments.

  4. On 18 October 2017, KLALC wrote to the Australian Financial Security Authority, copied to Clayton Utz, and withdrew the bankruptcy notice.

  5. On 30 November 2017, Clayton Utz sent Mr Maher a letter from Mr Kane Duke of Kempsey Shire Council to Ms Donnelly dated 30 November 2017 which stated that the Council had inspected the relocated house at the Property and given Ms Donnelly permission to occupy the dwelling.

  6. On 4 December 2017, Mr Duke sent an email to Mr Maher confirming that the inspection referred to in his 30 November 2017 letter to Ms Donnelly took place on 18 May 2001. The email also confirmed that Mr Kane did not enter the dwelling when he inspected it on 30 November 2017, and that upon attendance on 30 November 2017, he “identified an addition to the dwelling that [had] not been approved by Kempsey Shire Council and [was] likely to be dealt with by way of order from [the Council] in the future”.

  7. On 19 March 2018, Mr Maher wrote to Clayton Utz about Ms Donnelly’s personal possessions and animals at the Property and stated that the consent or permission that had previously been provided for her to leave those them on the Property was “hereby expressly withdrawn”. The letter stated that Ms Donnelly was required to take immediate steps to remove all her possessions and animals from the Property at a time and date nominated to KLALC, the animals would be transferred to a public pound at Ms Donnelly’s cost if they were not removed by 3 pm on 22 March 2018, and KLALC reserved its right to remove the other items if they were not collected within 21 days. It also stated that it was not to be construed as providing Ms Donnelly or any other person with consent or permission to access the Property.

2018: Second bankruptcy notice and Ms Donnelly’s application to set it aside

  1. On 18 April 2018, KLALC served a second bankruptcy notice on Ms Donnelly in the amount of $78,770.13, being the judgment sum plus accrued interest. At this time, Ms Donnelly was no longer represented by Clayton Utz and she took the notice to Legal Aid NSW.

  2. On 2 May 2018, Legal Aid NSW sent a letter to Mr Maher on behalf of Ms Donnelly regarding the second bankruptcy notice. The letter acknowledged the difficulties in resolving the dispute between the parties, referred to Ms Donnelly’s offsetting claim by reference to Clayton Utz’s 16 October 2017 letter, and proposed a resolution that involved Ms Donnelly entering into a three-year tenancy agreement with KLALC at a weekly rent of $350 with an option to purchase if she became eligible for finance in return for her relinquishing her rights to make any claim in set-off. Ms Donnelly’s offer was rejected on 8 May 2018.

  3. On 9 May 2018, Ms Donnelly filed an application in the Federal Circuit Court of Australia to set aside the second bankruptcy notice (SYG1313/2018, 2018 proceeding).

  4. On 16 October 2018, Ms Donnelly lodged a caveat on the Property, as foreshadowed in a letter to Mr Maher dated 27 July 2018 from Ms Donnelly’s new pro bono lawyers, Sparke Helmore.

  5. On 4 December 2018, Judge Barnes heard Ms Donnelly’s application in the 2018 proceeding.

  6. On 5 November 2019, Judge Barnes dismissed Ms Donnelly’s application to set aside the second bankruptcy notice: Donnelly v Kempsey Local Aboriginal Land Council [2019] FCCA 3152. On 13 December 2019, Ms Donnelly was ordered to pay KLALC’s costs of the application.

December 2019 – April 2020: KLALC Federal Circuit Court proceedings

  1. On 20 December 2019, KLALC filed a creditor’s petition in the Federal Circuit Court of Australia (Bankruptcy proceeding). The creditor’s petition was served on Ms Donnelly on 23 December 2019.

  2. On 10 January 2020, Legal Aid wrote to KLALC on behalf of Ms Donnelly requesting access to the Property for the purpose of obtaining an up-to-date valuation, which request was declined.

  3. In February 2020, Ms Donnelly secured pro bono legal representation by Johnson Winter & Slattery.

  4. On 2 March 2020, Ms Donnelly filed a notice stating grounds of opposition in the Bankruptcy proceeding.

  5. On 2 April 2020, at a case management hearing in the Bankruptcy proceeding, Judge Driver directed KLALC to grant access to the Property by no later than 22 April 2020 to a Certified Practising Valuer instructed by Ms Donnelly for the purpose of obtaining an expert report. His Honour set down the matter for a one-day hearing commencing on 4 September 2020.

  6. On 20 April 2020, Mr Burley undertook an inspection of the Property for the Bankruptcy proceeding and produced a report dated 20 April 2020 that valued the Property at $270,000, of which $100,000 was for the land and $170,000 was for improvements. Mr Maher also attended the Property as KLALC’s representative during the inspection conducted by Mr Burley, as did Ms Donnelly and her de facto partner, Mr Wayne Witchard. Mr Maher’s evidence is that, at the inspection, Ms Donnelly told him that she had dogs locked up at the Property to “protect the place” and they had a discussion about the improvements and the rubbish that was at the Property.

August 2020 to date: Ms Donnelly commences these proceedings

  1. On 11 August 2020, Johnson Winter & Slattery served on KLALC the unsealed statement of claim in these proceedings (2020/244304) and sought KLALC’s consent to adjourn the hearing of the Bankruptcy proceeding on 4 September 2020 to allow for the determination of Ms Donnelly’s claims in this Court.

  2. On 21 August 2020, Ms Donnelly filed her statement of claim in these proceedings.

  3. On 28 August 2020, KLALC made an application for summary dismissal of these proceedings before Parker J as the Equity Duty Judge. His Honour dismissed the application with costs.

  4. On 4 September 2020, Judge Driver made orders that adjourned the Bankruptcy proceeding pending resolution of these proceedings on the proviso that they were to be pursued diligently by Ms Donnelly and required the parties to inform the Federal Circuit Court within 7 days of the outcome of these proceedings. The orders also extended the expiration of KLALC’s creditor’s petition presented on 18 December 2018 up to and including 17 December 2021.

  5. By notice of motion filed on 11 September 2020, KLALC sought summary dismissal of these proceedings.

  6. On 18 September 2020, Ms Donnelly filed an amended statement of claim in these proceedings (ASOC).

  7. On 4 November 2020, Williams J dismissed KLALC’s motion for summary dismissal of the present proceedings with costs for the reasons in the 2020 judgment.

  8. On 26 November 2020, KLALC filed a defence to the amended statement of claim and its cross-claim in these proceedings.

  9. On 15 January 2021, Ms Donnelly filed her defence to the cross-claim and reply to the defence to the amended statement of claim.

  10. On 12 February 2021, Mr Maher attended the Property. When he arrived, he saw two dogs inside the Property, one of which he recognised from his previous attendance. Mr Maher did not enter the Property.

  11. On 21 September 2021, Mr Maher once again attended the Property. He gives evidence that he observed a padlock on the gate to the Property and a dog which remained on the other side of the gate.

The claims and issues between the parties

  1. In these proceedings, Ms Donnelly seeks:

  1. an order that KLALC pay equitable compensation to her for the value of the improvements she has made to the Property, namely the installation of the Figtree house on the Land and the associated works referred to at [27] above: ASOC Relief at [3]; and

  2. alternatively, an order that KLALC pay restitution to her in the amount of the value of the improvements: ASOC Relief at [3A].

  1. Ms Donnelly had also sought, but did not press at the hearing, a claim for declaratory relief that KLALC holds the Property on constructive trust in her favour to the value of the improvements: ASOC Relief at [1]; T74.39–44.

  2. Ms Donnelly’s claim for equitable compensation is based on proprietary estoppel by encouragement or, alternatively, the breakdown of a joint endeavour giving rise to an equity based on the principles in Baumgartner v Baumgartner (1987) 164 CLR 137 (Baumgartner) at 147–8; [1987] HCA 59 and Muschinski v Dodds (1985) 160 CLR 583 (Muschinski v Dodds); [1985] HCA 78.

  3. The basis for Ms Donnelly’s claim in restitution is unjust enrichment, which is said to be the benefit to KLALC from Ms Donnelly’s improvements to the Property in circumstances where the agreement for the 99-year lease was void by reason of the operation of the ALR Act.

  4. Ms Donnelly’s claims are pleaded as arising from:

  1. Ms Donnelly’s understanding that she had or was entitled to a 99-year lease of the Property, encouraged by the conduct of KLALC: ASOC at [7]–[8];

  2. KLALC’s representation to Kempsey Shire Council that Ms Donnelly had been granted a 99-year lease of the Property on 9 June 1992: ASOC at [10];

  3. the works that Ms Donnelly carried out to the Property (namely the works identified at [27] above) were undertaken in reliance on her understanding and KLALC’s representation and/or in pursuance of a joint endeavour between Ms Donnelly and KLALC: ASOC at [13]–[15] and [29];

  4. the basis on which Ms Donnelly undertook the works subsequently became ineffective and/or broke down by reason of NSWALC not having given approval of a 99-year lease of the Property, Ms Donnelly and KLALC’s mistaken belief that KLALC had power and authority to grant Ms Donnelly a 99-year lease of the Property which it was not permitted to do without the approval of NSWALC pursuant to s 42B of the ALR Act, and KLALC obtaining possession of the Property: ASOC at [16]–[18], [22], [30] and [33];

  5. the improvements made by Ms Donnelly added value to the Property which she can no longer enjoy the benefit of and conferred a benefit onto KLALC: ASOC at [25], [26] and [32d]; and/or

  6. the circumstances render it unconscionable for KLALC to retain the benefit of Ms Donnelly’s improvements: ASOC at [25]–[31].

  1. By its defence, KLALC raises the following:

  1. as a matter of fact, KLALC did not encourage and Ms Donnelly did not have an understanding that KLALC had granted her a 99-year lease as she knew that the Property could not be leased without approval from NSWALC: Defence at [7]–[8];

  2. s 42E of the ALR Act renders KLALC immune from Ms Donnelly’s claims as they involve her seeking remedies in respect of a warranty or promise relating to an unenforceable agreement for lease of the Property: Defence at [17], [34(d)];

  3. Ms Donnelly’s claim is barred by an Anshun estoppel arising out of the 2013 proceeding: Defence at [34(a)]–[34(b)], [34(c)(iii)];

  4. the works undertaken by Ms Donnelly do not constitute improvements as some were undertaken without approval by Kempsey Shire Council or KLALC, impose a liability on KLALC and, in any event, are affixed to the land and consequently owned by KLALC: Defence at [13(a)]–[13(h)]; and/or

  5. Ms Donnelly should be refused relief by reason of unclean hands arising from her continuing trespass on the Property and delay in bringing these proceedings which have caused prejudice to KLALC: Defence at [13(i)], [26(a)]–[26(d)], [34(f)]–[34(g)].

  1. KLALC’s defence also asserted res judicata and issue estoppel (Defence at [34(c)(i)]–[34(c)(ii)]), but these were not pressed at the hearing: KLALC’s Closing Submissions (DCS) at [33].

  2. As agreed between the parties, the issues for determination are:

  1. Whether Ms Donnelly has established that she contributed any improvements to the Property and, if so, to what value.

  2. Whether Ms Donnelly has established a claim for equitable compensation based on proprietary estoppel by encouragement or a Baumgartner equity, or a common law claim for restitution.

  3. Whether Ms Donnelly’s claim is precluded by s 42E of the Aboriginal Land Rights Act 1983 (NSW) (ALR Act).

  4. Whether, given the history of legal proceedings between the parties, Ms Donnelly is prevented from obtaining any relief based on Anshun estoppel and other discretionary considerations.

  1. The remaining issue raised by KLALC’s cross-claim concerns KLALC’s claim for damages for trespass which, as pressed, is a claim for nominal damages only: T53.12–3, T42.49–50.

Issue 1: Has Ms Donnelly established that she has contributed any “improvements” to the Property and, if so, to what value?

  1. There is no dispute that Ms Donnelly carried out the works to the Property that are identified at [27] above (ASOC at [13] and Defence at [13(a)]). The issue between the parties is whether those works constitute improvements to the Property and, if so, what is their value.

  2. Ms Donnelly submits that her works are improvements and confer a benefit on KLALC as they have improved the value of the Property. She relies on Mr Burley’s expert valuation evidence to contend that the value of the improvements as at 1 October 2021 is $220,000.

  3. KLALC disputes that Ms Donnelly’s works constitute improvements that have added value to the Property. KLALC submits that Mr Burley’s valuation evidence should be rejected for reasons that relate to his underlying assumptions and says that the additional structures on the Property are of no benefit to it. It also submits that it made clear to Ms Donnelly that it did not consider the additional structures to be of benefit to it.

  4. As noted above, Mr Burley inspected the Property on 20 April 2020. He did so having been instructed by Ms Donnelly for the purposes of preparing a valuation of the Property that determined the details and value of improvements to it, specifically the details and value of approved and non-approved structural improvements.

  5. Mr Burley’s first report, dated 20 April 2020 (20 April Report), identifies the Property as an irregular-shaped large residential lot. It records that the Property is subdivided into five main paddocks, is connected to town water and electricity and has been improved by the addition of an average quality, older-styled single level dwelling with three bedrooms, two bathrooms, kitchen, living, dining and laundry rooms and an extensive deck to the southern and western alignments, which was relocated to the site around 1995. It identifies the approved structural improvements as including the dwelling, connection of services (including water and electricity), land improvements such as site levelling, cut and fill, retaining walls and fencing. The unapproved improvements are identified as including an incomplete extension to the eastern alignment and the carport to the western side of the dwelling.

  1. Mr Burley adopts a direct comparison method of valuation assuming that the highest and best use of the Property is the existing rural residential use, based on the designation of the property in the Town Planning Scheme as “R5 Large Lot Residential”. His valuation assumes that the Property was ‘land only’ as at the date of occupation with extensive rubbish present, no fencing and no land improvements.

  2. In undertaking his valuation, Mr Burley also records that the title to the Property includes a restriction on dealings and plans as it is subject to the ALR Act. He notes that any dealing must be fair and equitable to the local Aboriginal council members, assumes that any dealing would consider the definition of market value included in his report, and therefore assumes that the restriction has no impact on his valuation. I pause to observe that no submission was advanced by KLALC that this assumption was flawed or undermined the conclusions in Mr Burley’s report, or that the ALR Act restrictions meant that his approach of assessing the market value of the improvements was not an appropriate method of valuation.

  3. Mr Burley values the Property at $270,000, with the land component at $100,000 and the improvements at $170,000. Mr Burley’s report apportions the value of the improvements as follows:

Improvements

Added Value

Dwelling and Outdoor Area

$118,500

Ancillary Improvements

Concrete/Paths

$5,000

Landscaping

$2,500

Fencing

$3,000

Garden Sheds/other

$500

$11,000

Connection of Services

$5,000

Total Improvements

$134,500

Adopt

$135,000

Unapproved Structures

Carport (western end)

$8,850

Extension (eastern end)

$26,100

$34,950

Adopt

$35,000

  1. In his affidavit of 1 February 2021, Mr Burley opines that he expects the value of the Property would have increased by approximately 10% to 15% since the date of his 20 April Report, with the ratio between the value of the land and the improvements remaining consistent with the ratio in that report. Mr Burley’s opinion is based on improvements in the market for rural residential assets similar to the Property within the Kempsey and Greater Macleay area since the date of his 20 April Report and assumes that the Property, dwelling and other improvements remained in the same physical state as when he observed them on 20 April 2020.

  2. In a letter dated 1 October 2021, Mr Burley revised his assessment of the value of the Property to $380,000, with the land component at $160,000 and the improvements at $220,000. He assesses the value of the unapproved structures as remaining at $35,000 and the value of the other improvements as increasing to $185,000. Mr Burley’s revised valuation is based on improvements in the market for rural residential assets since 2020, was produced without a further inspection of the Property and assumes that the Property, dwelling and other improvements remained in a similar condition as when he observed them on 20 April 2020.

  3. KLALC did not take issue with some of the works identified and valued as improvements by Mr Burley, such as the connection of services, concrete paths, landscaping, fencing and garden sheds (ancillary improvements), together valued at $16,000. However, it challenges Mr Burley’s valuations on the basis that he has failed to take into account two matters: first, the impact of possible storm damage since conducting his inspection on 20 April 2020; and second, the prospect of the Council needing to undertake remedial works to deal with the unapproved rubbish dump on the Property and unapproved works to the dwelling, including to address the internal fit out of the dwelling not conforming with the Building Permit stamped plan.

  4. The fact that there were storms and floods in the extensive mid-north coast region of NSW after April 2020 is not, in my view, sufficient to conclude that Mr Burley’s valuation is unreliable. The contention that the Property likely suffered damage because it is located within the storm-affected “mid-north coast region” goes no further than speculation given there is no evidence that suggests the Property was damaged by storms or floods in a way that might adversely impact on Mr Burley’s valuation of the improvements.

  5. In cross-examination, Mr Burley gave evidence that he was aware that storms and floods had affected the mid-north coast region of New South Wales in 2021 but considered that the Property was not on flood-affected land. This view was stated to be based on information contained in the New South Wales planning portal and his observations of the Property as being located on an “elevated” and “sloping site” that is “not on a flood plain” and “rises above [the] road”. This is consistent with the cadastral map in evidence which shows that the lowest point of the Property is about 30 metres above sea level and situated above any watercourses.

  6. KLALC could have asked Ms Donnelly whether there had been any storm or flood damage to the Property since April 2020, but it did not do so. Nor did KLALC lead any evidence of such damage to the Property or to any neighbouring property in support of its contention. Further, and while not determinative, the recent photographs of the Property included in Mr Maher’s evidence do not show any observable damage to the dwelling or the Property that might have arisen from storms or floods.

  7. KLALC’s submission that Mr Burley’s valuation does not account for the presence of illegal buried rubbish is based on Mr Maher and Ms Donnelly’s evidence about buried rubbish, the 20 April Report which records Ms Donnelly referring to “extensive rubbish” on site at the date of occupation, and Ms Donnelly’s evidence to the effect that the “extensive rubbish” included wrecked cars, bikes, doors, gearboxes and glass bottles. KLALC submits that this raises the possibility that building waste may have been deposited in the rubbish holes and of oil or fuel contamination, which also undermines the reliability of Mr Burley’s report.

  8. Mr Burley accepted in cross-examination that the existence of contaminated waste material on the Property or the issuance of a Council order with respect to an “unapproved rubbish dump” would impact his valuation. However, his evidence in re-examination was that the burial of vegetation matter, glass bottles or broken glass would have no impact so long as it was not contaminated and the main contaminant of concern was asbestos.

  9. According to Mr Maher’s evidence, at the 20 April 2020 inspection of the Property, Ms Donnelly referred to digging up two big holes and pushing rubbish, trees and stumps, into the holes, and Mr Witchard referred to “millions of glass bottles” in the holes. Mr Burley also gave evidence that he was told about the presence of bottles and other “surface items” at the inspection but did not recall any discussion about bulldozers digging holes. In relation to the alleged rubbish dump, Ms Donnelly gave evidence that the “only thing that went into those two holes was crushed glass that I could not pick up”, and that car parts and other items were taken to the scrap yard: T42.3–4.

  10. Based on Mr Maher’s and Ms Donnelly’s evidence that referred to the “large holes” and “rubbish”, I do not consider that Ms Donnelly’s evidence that only crushed glass was buried in the holes is entirely reliable. That said, I accept her evidence that scrap metal and other objects, such as bikes, car parts and building materials, were not buried on the Property. As previously mentioned, I found Ms Donnelly to be a truthful witness. In my view, Ms Donnelly’s evidence to that effect is also plausible given Mr Burley and Mr Maher did not refer in their evidence to those items being mentioned by Ms Donnelly and Mr Witchard.

  11. Thus, I find it likely that the material buried on the Property was limited to crushed glass, glass bottles, and vegetation waste, including from levelling the land and cutting down trees to their stumps. I do not consider that the evidence supports a finding of a likelihood of contamination or buried waste that would adversely impact Mr Burley’s valuation.

  12. KLALC’s submission that seeks to cast doubt on Mr Burley’s valuation also relies on the apparent disconformity between the floorplan of the dwelling approved by the Building Permit and the present layout of the dwelling. It submits that this may render the whole of the main dwelling an unapproved structure which may be dealt with by way of an order by the Kempsey Shire Council and, thus, Ms Donnelly’s works do not improve the Property’s value.

  13. Mr Burley accepted that were the Council to issue an order in relation to unauthorised structures, it would affect his valuation. His evidence also identifies that the dwelling includes an additional kitchenette and ensuite with laundry facilities which are not marked on the floorplan of the stamped plan attached to Ms Donnelly’s Building Permit.

  14. In answer to questions about the departure of the internal configuration of the dwelling from the stamped plan, Mr Burley gave evidence that, in his experience, the Council will generally require people to take out unapproved appliances. He did not consider that “the kitchenette etc. made any difference to the added value of the structure”. The 20 April Report also identifies that Mr Burley took into account the “awkward” internal design of the dwelling in his valuation.

  15. Ms Donnelly’s evidence is that the entire house was relocated from the Figtree Estate and the bathroom and kitchen fittings were installed by a plumber. When asked by the Court whether changes were made to add the kitchenette and ensuite when the dwelling was relocated to the land, Ms Donnelly stated “I don’t think so … That’s how it was”: T40.41–2. She also gave evidence, which I accept, that the kitchenette and ensuite identified in Mr Burley’s report were in the dwelling at the time of Kempsey Shire Council’s May 2001 occupation inspection: T47.46–T48.8.

  16. Based on that evidence, I am satisfied that the main dwelling was in its present form, which included the additional kitchenette and ensuite, when Kempsey Shire Council inspected the dwelling in May 2001 and granted Ms Donnelly permission to occupy.

  17. Further, and as Ms Donnelly submits, Building Permit Condition 1 states that “the development referred to in this application is to be carried out substantially in accordance with the approved development plans as modified by any conditions of this consent”.

  18. Ms Donnelly referred me to cases which have considered the latitude afforded to developers by the use of the phrases “generally and in accordance with” and “substantially the same” in planning contexts. In Grace Bros Pty Ltd v Willoughby Municipal Council (1980) 44 LGRA 400, Wootten J stated (at 406–7) that:

The use of the words “generally and in accordance with” [in interim development orders] are obviously intended to allow for some deviation from the drawings … The significance of any particular deviation will depend upon the criteria by which it is judged.

  1. Whether a development is “substantially the same” has been interpreted as meaning essentially or materially the same or having the same essence: North Sydney Council v Michael Standley& Associates Pty Ltd (1998) 43 NSWLR 468 at 481–2 (Stein JA), citing Vacik Pty Ltd v Penrith City Council (Land and Environment Court (NSW), Stein J, 24 February 1992, unrep).

  2. Applying those principles and in view of the nature of the internal changes and Mr Burley and Ms Donnelly’s evidence, I am not persuaded that the main dwelling with its current internal layout was not approved by Kempsey Shire Council or that the additional kitchenette and ensuite with laundry facilities represent liabilities that are likely to be dealt with by way of an order for demolition or rectification works.

  3. In my view, the present main dwelling is essentially or materially the same as the dwelling the subject of the plan attached to the Building Permit; it is a three-bedroom residence that fits within the footprint of the Building Permit layout plan. To the extent that KLALC’s submissions suggest that it was incumbent on Ms Donnelly to adduce evidence about who constructed the additional kitchenette and ensuite and that they complied with relevant building codes and Australian standards, I reject them. This is particularly in the context where I accept Ms Donnelly’s evidence that Kempsey Shire Council inspected and approved the current layout and facilities of the main dwelling in May 2001 and approved occupation on that basis.

  4. Having regard to the above matters, I am satisfied that the items referred to in Mr Burley’s 20 April Report as the dwelling and outdoor area, the ancillary improvements, and connection of services involve works undertaken by Ms Donnelly that constitute improvements to the Property. As to their value, for the reasons set out above and noting the absence of expert evidence to the contrary, I accept Mr Burley’s evidence and assess their value to be $135,000 as at 20 April 2020 (based on his 20 April Report), and $185,000 as at the date of the hearing (based on his 1 October 2021 report that updates the valuation to reflect movements in the market demonstrated by comparable property sales in the locality).

  5. The position is, in my view, different for the unapproved improvements identified in Mr Burley’s 20 April Report as the eastern extension and carport.

  6. As Ms Donnelly accepts, these structures have been constructed without approval by Kempsey Shire Council. I also infer that either or both of those structures comprise the unapproved addition to the dwelling identified by Mr Duke at his 30 November 2017 inspection and may be the subject of some order in the future, although I accept there is some vagueness and uncertainty as to what action might be required by Council given the “addition” is unspecified and four years have passed. In the absence of any evidence from Ms Donnelly to the contrary and given the material in the Opteon and 20 April Reports indicating that the eastern extension is incomplete, I would also infer that the eastern extension and carport were not in existence at the time of the inspection by Mr Kane in May 2001 and the occupation approval.

  7. While Mr Burley’s evidence attributes some value to the unapproved improvements, in my view, Ms Donnelly has not established that those works are improvements in the sense that they are of benefit to KLALC and should be attributed some value in this case. This is primarily for the reason that I do not consider they are works of the type that could enliven any obligation to pay equitable compensation or make restitution in accordance with the principles referred to below. Ms Donnelly was not authorised by the Building Permit approval to undertake those works and they were carried out contrary to the terms of the draft lease (as referred to at [22] above). In that context, I do not see how her expectation or understanding that she had been granted the 99-year lease could be said to have induced her to carry out the unapproved works.

  8. Nor do I accept that KLALC’s failure to deny the correctness of Ms Donnelly’s expectation of a 99-year lease could be said to have caused her detriment in respect of unapproved works or that those works could be considered improvements to the Property that were in any way encouraged by KLALC or about which KLALC could be expected to have had knowledge or acquiesced in them being undertaken.

  9. Accordingly, in this case, I have concluded that Ms Donnelly has not established that the unapproved structures are improvements to the Property in the sense that they are of value or any benefit to KLALC and will not attribute any monetary value to them for the purposes of considering Ms Donnelly’s claims.

  10. Finally, I should record that I have placed no weight on the valuation contained in the Opteon Report. It was not relied on by Ms Donnelly in oral or written submissions. As KLALC submits, it also assumed, incorrectly, that the development complied with all requirements and disregarded the restrictions on dealings that were taken into account by Mr Burley, as referred to at [97] above.

Issue 2: Has Ms Donnelly has established a claim for equitable compensation based on proprietary estoppel by encouragement or a Baumgartner equity, or a common law claim for restitution?

  1. In closing oral submissions, KLALC accepted that the factual material before the Court would give rise to a proprietary estoppel by encouragement, a claim in restitution, or a Baumgartner equity on which the Court could grant the relief sought by Ms Donnelly, assuming her claims were not barred by reason of s 42E of the ALR Act, Anshun estoppel, other equitable considerations, and KLALC’s challenge to the claimed improvements: T115.3–50. In other words, KLALC did not take issue with the underlying factual bases for those claims. Nor did it any advance any other legal or other submissions in defence of those claims.

  2. That said, it is appropriate to record my factual findings on the matters raised by Ms Donnelly’s claims and my conclusions on each of them.

Factual findings

  1. The parties are agreed on most of the facts that underpin Ms Donnelly’s claims. They agree on the key facts about the arrangement to lease between 1992 and 1995 and the subsequent history, which is set out at [18]–[81] above.

  2. Relevantly, it is common ground that:

  1. in 1992, Ms Donnelly and KLALC entered into an agreement for lease of the Property: T95.25–6;

  2. KLALC treated the lease as though it were on foot by informing Kempsey Shire Council that a lease had been granted and giving Ms Donnelly possession of the Property: T94.27–30, DCS at [21];

  3. Ms Donnelly treated the lease as though it were on foot by developing the Property by putting a home on it: T94.27–32;

  4. the Property was vacant land prior to Ms Donnelly taking possession of it: T94.25–6, DCS at [20];

  5. the lease was granted, possession of the Property was given and the works undertaken on it without NSWALC giving its approval for the lease to Ms Donnelly in accordance with s 40B of the ALR Act: T94.32–5;

  6. as a consequence of NSWALC not giving its approval and by reason of s 40(2) of ALR Act, the agreement for lease was rendered void from 1992;

  7. the “improvements” to the Property, namely the dwelling and other works undertaken by Ms Donnelly, are fixtures on the land: T121.43–7, DCS at [55]–[56]; and

  8. Ms Donnelly’s claim in the 2013 proceeding for specific performance of the agreement for lease was misconceived, for reasons that include the operation of s 40 of the ALR Act that rendered the agreement for lease void: T87.28–30, T91.25–6.

  1. As raised by KLALC’s defence, there was a factual dispute about whether KLALC’s conduct encouraged Ms Donnelly’s understanding that she had a 99-year lease, whether she proceeded to carry out works on the assumption that KLALC had granted her that lease, and whether she knew that the Property could not be leased to her by KLALC without approval from NSWALC. While the concessions made by KLALC’s counsel during closing submissions (as referred to at [127] above) suggest that KLALC no longer disputes those matters, I set out my findings about them below.

  2. I am satisfied that the evidence establishes that KLALC represented to Ms Donnelly that she had been granted a 99-year lease by KLALC, that Ms Donnelly undertook the works to the Property on the assumption that she had been granted such a lease, and that KLALC’s conduct encouraged that assumption until at least August 2008. In my view, those findings are supported by the following objective evidence:

  1. KLALC’s 9 June 1992 resolution: at [20];

  2. KLALC’s sale of the Figtree house to Ms Donnelly for use on the property: at [21];

  3. KLALC’s letter to Kempsey Shire Council informing them that a lease had been granted to Ms Donnelly in connection with Ms Donnelly’s building permit application: at [24];

  1. Finally, and while not determinative, as Ms Donnelly’s counsel submitted, KLALC could have but has not brought any evidence of prejudice which it has suffered as a result of her delay in bringing her claim.

  2. For these reasons, I have concluded that Ms Donnelly’s claims in this proceeding are not precluded by Anshun estoppel.

Other discretionary factors

  1. KLALC’s defence and submissions also raise equitable defences of laches and unclean hands and contend that Ms Donnelly’s claim for equitable compensation should be refused on those bases. Its written submissions refer to Meyers v Casey (1913) 17 CLR 90; [1913] HCA 50 at 123–4.

  2. In support of these defences, KLALC points to Ms Donnelly’s conduct in relation to the Property. In particular, it says that Ms Donnelly has known that she had no lawful right to occupy the Property from as early as August 2008 and points to the unequivocal indications that she is not entitled to be on the Property since KLALC’s March 2018 letter. It says that, despite this, Ms Donnelly has continued to trespass on the Property by leaving her possessions and animals there and effectively asserting adverse possession by putting her own lock on the gate.

  3. KLALC also submits that Ms Donnelly should not be entitled to benefit from her own wrongdoing by obtaining monetary compensation by reference to the value of the improvements to the Property during her wrongful occupation. As was put at the hearing, Ms Donnelly’s delay in commencing the proceeding has caused unconscionable prejudice and she should not be entitled to the benefit of any value increase over that period

  4. KLALC referred to Ms Donnelly having carried out works to the Property that are unapproved. Its pleading asserts that Ms Donnelly’s conduct has caused prejudice to it as it has been unable to achieve its objects set out in s 51 of the ALR Act, although this was not pressed in submissions.

  5. Ms Donnelly rejects that she should be denied any equitable relief on the basis of laches or unclean hands but accepts that some adjustment to what she recovers should be made based on the principle that she should do equity to receive equity. She accepts that the Court should take into account the benefit she has received in being permitted to keep her possessions and animals on the Property until at least March 2018 and submits that the Court should do the best it can on the information available to account for that benefit in the absence of any evidence on which it can be valued.

  6. I do not accept that KLALC has established defences to Ms Donnelly’s claims based on laches and unclean hands.

  7. To establish a laches defence, KLALC must demonstrate both unreasonable delay and prejudice to it. As the authors of Meagher, Gummow & Lehane’s Equity Doctrine and Remedies state at [38-005]:

Laches is an equitable defence to an equitable claim. It is no answer to a claim at law. In its primary sense, laches requires a defendant to establish that a plaintiff has so delayed the institution or prosecution of an equitable claim that the defendant has altered his or her position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb. Mere delay, of itself, is not sufficient to establish the defence.

(citations omitted)

  1. Ms Donnelly may have delayed in commencing this proceeding, but I am not satisfied that KLALC has established that it has suffered some unconscionable prejudice as a consequence of that delay: Crawley v Short [2009] NSWCA 410 at [163]. Nor do I consider that the circumstances of Ms Donnelly’s delay warrant the conclusion that it would be practically unjust to grant her any relief at all.

  2. As to unclean hands, in this case, the relevant equity being sued for is the loss of the proprietary interest that Ms Donnelly expected to receive and which she no longer enjoys, with the payment of a money sum to the value of the improvements she made, by way of equitable compensation, as an appropriate proxy for that interest. That equity arose independently, and relevantly, before Ms Donnelly’s alleged misconduct. Thus, the impropriety complained of does not have the immediate and necessary relation to the equity sued for: Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd(in liq) [2009] NSWCA 145 at [28] (Hodgson JA).

  3. That said, in my view, discretionary factors are of some significance in this case. This is particularly as Ms Donnelly accepts that she has trespassed on the Property for some period and consented to judgment for possession in favour of KLALC in 2015. In my view, Ms Donnelly’s entitlement to equitable compensation must be qualified if I conclude that the value of the improvements would exceed what is justified by the requirements of conscionable conduct and would be unjust to KLALC: Sullivan at [94]

  4. There does not appear to be any governing principle that the relief to be granted is that which is the minimum necessary to do justice, although a party seeking to enforce an equitable estoppel must do equity. There must also be proportionality between the remedy and the detriment which it is directed to avoiding: Giumelli at [40]–[48]; Commonwealth v Verwayen (1990) 170 CLR 394 at 413; [1990] HCA 39.

Conclusion on Ms Donnelly’s claim

  1. As I have found that Ms Donnelly has established her primary claim for equitable compensation based on proprietary estoppel by encouragement, and that KLALC’s defences do not operate to preclude that claim, the remaining issue is the quantum and form of the relief to be granted.

  2. The upper limit of the amount of compensation to be awarded to Ms Donnelly is the value of the improvements (but not the unapproved structures) which, as noted at [120] above, I have found to be $185,000 as at the date of the hearing and $135,000 as at 20 April 2020. However, I consider that these values are higher than justified in this case and do not reflect the circumstances of Ms Donnelly or KLALC. Regard should be had to Ms Donnelly’s acceptance that she has been trespassing and receiving a benefit from storing her possessions and animals on the Property without any right to do so from, in my view, November 2016 when KLALC took possession. Ms Donnelly’s delay in commencing this proceeding does not disqualify her claim entirely but is a relevant factor given the timing of her claim and the apparent increase in the value of the improvements between April 2020 and October 2021.

  3. Doing the best I can, and adopting a broad brush approach, I have come to the view that the appropriate remedy is an order for the payment of compensation in the amount of $115,000. I have arrived at that amount by taking the April 2020 valuation as the appropriate starting point and discounting it by $20,000. That discount takes into account the occupancy benefits received by Ms Donnelly for the last five years and assumes that there was an increase in the value of the improvements between the date that KLALC obtained possession and Mr Burley’s valuation, which I accept would be unjust if KLALC were required to compensate Ms Donnelly for.

  4. I have also concluded that the payment of this sum to Ms Donnelly should be conditioned on Ms Donnelly’s compliance with the orders made on 19 October 2021 in respect of KLALC’s cross-claim. That condition is, in my view, appropriate as it is a means by which Ms Donnelly can be required to do equity in order to obtain equitable relief.

KLALC’s cross-claim

  1. As noted above, the parties have resolved KLALC’s cross-claims for injunctive relief. The orders made by consent on 19 October 2021 in relation to the cross-claim:

  1. require Ms Donnelly to remove her personal belongings from the Property by 4 pm on 14 January 2021 and restrain her from entering upon or using the Property for any purpose without KLALC’s written permission after that time;

  2. note that KLALC requires an undertaking from Ms Donnelly to remove only her personal items and cause no harm to the Property as a condition of her entry, and that that condition is not an admission of any value in the structures on the Property; and

  3. reserve the remaining issues for decision.

  1. The only remaining issue concerns KLALC’s claim for damages for trespass which, as previously mentioned, is limited to a claim for nominal damages.

  2. At the hearing, KLALC indicated that it did not put on any evidence of damage arising from trespass or seek substantial damages in its cross-claim as it understands that Ms Donnelly is not in a position to make good any award of damages. Apart from indicating that the relief sought in its cross-claim was limited to nominal damages, KLALC did not make any submissions regarding how the Court should quantify an award of nominal damages.

  3. Trespass is “actionable per se”. Nominal damages serve to vindicate a plaintiff’s right to exclusive possession of their land even where no actual loss has been suffered: Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353 at [189]–[190] (Port Stephens Shire Council).

  4. Adopting a broad brush approach and in the absence of any submissions from the parties on the issue of quantification, I have concluded that KLALC should be awarded nominal damages for trespass in the amount of $800, which reflects approximately $160 per year for the five-year period since KLALC took possession of the Property (as referred to at [48] above).

  5. In coming to that view, I have had regard to the amount of annual rent payable under the agreement for lease ($1), as well the amounts which Ms Donnelly offered to pay per week during her negotiations with KLALC after judgment for possession was granted in KLALC’s favour (for example, $350 per week, at [60] above). In this case, Ms Donnelly’s trespass may have continued over a period of some years, but KLALC has seemingly acquiesced in her keeping some possessions on the Property until March 2018.

  6. I have also had regard to the approach and the amounts of nominal damages awarded in other cases, such as: $250 for each of four instances of trespass in Port Stephens Shire Council; $200 in nominal damages for two occasions of trespass, and $20 in nominal damages for the continuing encroachment of a retaining wall in Hill v Higgins [2012] NSWSC 270; and $4,000 for a mortgagee temporarily taking possession of property in Vella v Australia and New Zealand Banking Group Ltd [2009] NSWSC 123, which Young CJ in Eq calculated as a proportion of the annual rent figure reflecting the period for which the plaintiff was out of possession (not disturbed on appeal).

Orders and costs

  1. As noted above, KLALC’s creditor’s petition in the bankruptcy proceeding was due to expire on 17 December 2021. Cognisant of that and having progressed the drafting of these reasons to an advanced stage, the matter was listed for judgment on 13 December 2021. On that occasion, the parties were informed that I was in a position to give judgment and make orders that day and would provide the parties with an overview of my findings, with my detailed written reasons to follow soon after. The parties were content with that approach.

  2. Accordingly, and for the reasons set out above, on 13 December 2021, I made the following orders:

  1. On the Plaintiff’s amended statement of claim, judgment in favour of the Plaintiff in the sum of $115,000 (judgment sum).

  2. On the Defendants’ cross-claim, judgment in favour of the Defendant in the sum of $800 for trespass to the Defendant’s land.

  3. Payment of the judgment sum is to be made to the Plaintiff within 21 days of the Plaintiff complying with the orders made on 19 October 2021 that the Plaintiff remove her personal belongings from the Defendant’s property.

  4. Reserve costs.

  5. Grant liberty to the parties to approach my Associate to advise whether the issue of costs has been agreed or whether it is to be determined by submissions and on the papers.

  1. I should also record that when the orders were made, Ms Donnelly’s counsel indicated that she would not take issue with any application for an extension of time to cover the period between the entry of orders on 13 December 2021 and the date of delivery of these reasons in the event of any appeal.

  2. As to costs, on 16 December 2021, the parties notified my chambers that they were unable to reach agreement on that issue, were content for it to be determined on the papers, and proposed a timetable for the exchange of submissions on that issue pursuant to the following directions which I will make:

  1. By 18 February 2022, the plaintiff is to file and serve written submissions as to the costs of the proceedings.

  2. By 25 February 2022, the defendant is to file and serve written submissions as to the costs of the proceedings.

  3. By 4 March 2022, the plaintiff is to file and serve any written submissions in reply.

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Endnotes

Decision last updated: 24 December 2021

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Cases Citing This Decision

3

Sckaff v Sckaff [2024] NSWCA 207
Donnelly v Kempsey Local Aboriginal Land Council (No 2) [2022] NSWSC 329
Kempsey Local Aboriginal Land Council v Donnelly [2022] FedCFamC2G 149
Cases Cited

47

Statutory Material Cited

4

ADCO Constructions Pty Ltd v Goudappel [2014] HCA 18
ADCO Constructions Pty Ltd v Goudappel [2014] HCA 18
ADCO Constructions Pty Ltd v Goudappel [2014] HCA 18