Dynevor Pty Ltd v Proprietors, Centrepoint Building Units Plan No 4327

[1995] QCA 166

IN THE COURT OF APPEAL	[1995] QCA 166
SUPREME COURT OF QUEENSLAND

Appeal No. 138 of 1994.

Brisbane

[Dynevor P/L v. The Proprietors, Centrepoint Building Units Plan No. 4327]

BETWEEN:

DYNEVOR PTY LTD

(Plaintiff) Appellant

AND:

THE PROPRIETORS, CENTREPOINT

BUILDING UNITS PLAN NO. 4327

(Defendant) Respondent

__________________________________________________________________

Macrossan C.J.
McPherson J.A.
Pincus J.A.

__________________________________________________________________

Judgment delivered 12/05/1995

Joint reasons for judgment of the Chief Justice and McPherson J.A. Separate reasons
of Pincus J.A.concurring in part.

__________________________________________________________________

APPLICATION FOR LEAVE TO AMEND THE NOTICE OF APPEAL REFUSED.
APPEAL DISMISSED WITH COSTS.

__________________________________________________________________

CATCHWORDS:	CONTRACT - restitution - contract for sale of unit - contracts for sale of management and letting rights - contracts mutually conditional - further condition requiring extension of management rights to purchaser - respondent demanded payment or provision of certain facilities in exchange for consenting to transfer of management rights - whether appellant (vendor) entitled to recover $50,000 paid to the respondent under protest - money had and received - consideration - whether total failure of consideration on basis that contract entered into in consequence of payment is void
ULTRA VIRES - whether body corporate has power to enter into a contract for the provision of a letting service - whether clause purporting to confer such power severable - whether receipt prohibited by s.47(1) Building Units and Group Titles Act
Humphries v. The Proprietors "Surfers Palms North" GTP 1955 (1994) 179 CLR 592 David Securities Pty Ltd v. Commonwealth Bank of Australia (1992) 175 CLR 353
ESTOPPEL - reliance - loss
APPEALS - ground not argued before primary judge - amendment of notice of appeal
Counsel:	Mr D J McGill S.C. for the appellant. Mr P A Keane Q.C. with him Mr D H Savage for the respondent.
Solicitors:	Price and Roobottom for the appellant. Bernard Ponting & Co. for the respondent.

Hearing date:17 February 1995.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 138 of 1994.

Brisbane

Before Macrossan C.J. McPherson J.A. Pincus J.A.

[Dynevor P/L v. The Proprietors, Centrepoint Building Units Plan No. 4327]

BETWEEN:

DYNEVOR PTY LTD

(Plaintiff) Appellant

AND:

THE PROPRIETORS, CENTREPOINT

BUILDING UNITS PLAN NO. 4327

(Defendant) Respondent

REASONS FOR JUDGMENT - PINCUS J.A.

Judgment delivered 12/05/1995

This is an appeal from a judgment of the District Court, dismissing the

appellant's claim to recover a sum of $50,000 paid to the respondent under protest, in

August 1988, in circumstances which will be explained. Of the three grounds of appeal

which were argued, two were points not raised below, and it was contended for the

respondent that effect should not be given to them on appeal; it was said that if these

two points had been litigated at the trial, evidence relevant to them might have been

called. The other matter raised here, an estoppel argument, is in a broad sense

covered by the pleading, but it is not in the notice of appeal; leave to amend is sought

and will be granted.

It appears to be correct that, as the respondent has contended, each of the two

new points is one in respect of which additional evidence might, had the matter been

raised below, have been called on behalf of the respondent; nevertheless, the better

course appears to be to deal with the substance of all of the arguments advanced.

The respondent is a body corporate, constituted under the Building Units and

Group Titles Act 1980 ("the Act"), in respect of a development known as "Centrepoint",

in Surfers Paradise. On 20 July 1988 the appellant,the manager and letting agent of

that building, entered into two agreements with a company called Cowen's Civic Centre

Newsagency Pty Ltd ("Cowen's"). One of them was for the sale by the appellant to

Cowen's of lot 17 on the registered building unit plan for Centrepoint, for the sum of

$250,000. The other purported to be for the sale by the appellant to Cowen's of all the

appellant's interest in a certain management and letting rights business carried on at

Centrepoint, for the sum of $1,076,200. The two agreements were mutually conditional

- i.e. each was subject to and conditional upon the contemporaneous completion of the

other. Further, the business sale agreement was by cl. 34 conditional upon and subject

to the respondent granting Cowen's on or before the date for completion a management

agreement and letting agreement in forms annexed. The annexed form of management

agreement contemplated the appointment of Cowen's as the body corporate's manager

of Centrepoint for a term of four years, being a period substantially longer than the

period of just over two years which was left under the appellant's agreement with the

respondent.

Since it is plain that a substantial part of the consideration was paid for the management agreement, the transaction contemplated, and ultimately effected, between the appellant and Cowen's was not entirely one of sale. A critical part of the

transaction between the appellant and Cowen's was that the respondent was willing to

enter into an agreement granting management and letting rights to Cowen's. That is,

the appellant stood to gain a substantial sum of money from the willingness of the

respondent to contract with Cowen's in the way in which it ultimately did. It is not very

clear why, as a commercial matter, the respondent was apparently content to allow

matters to be so arranged that it was the appellant, rather than the respondent, which

was paid that part of the consideration for the "sale" to Cowen's which represented the

value to Cowen's of the agreement the respondent made with Cowen's.

Estoppel

The appellant's pleading alleged, and it was admitted, that on 1 August 1988,

one Ireland as agent for the respondent demanded $50,000 from the appellant as a

condition of the respondent executing the agreement in favour of Cowen's; that the

same demand was made on the following day by one Quinn, the respondent's solicitor;

and that as a result $50,000 was paid by the appellant to the respondent on or about 3

August 1988. The question before the primary judge, which his Honour resolved in

favour of the respondent, was whether the payment of $50,000 was made in such

circumstances as to entitle the appellant to repayment. The appellant's case as

pleaded was that the sum paid was recoverable by the appellant for two reasons.

The first, pleaded in para. 7A and 7B of the plaint, was that in or about May

1988, Ireland, on behalf of the respondent, told one Soncum, on behalf of the appellant,

that payment of $50,000 was no longer required and that in reliance upon that the

appellant entered into the contract with Cowen's. That precise contention was not pursued in this Court; here, the argument advanced was that the judge should have held

that the appellant would have insisted on Cowen's paying $1.4M rather than $1.326M,

but for the statement to Soncum that the $50,000 payment was no longer required. This

was said to give rise to an estoppel. The appellant's task is not made easier by the

circumstance that the $50,000 payment was related in rather an obscure way to a

question of provision of a PABX system; as the appellant's counsel said, the

arrangement about these two aspects of the transaction was not satisfactorily clarified

before settlement.

The primary judge was of the view that there was no cogent evidence to suggest

that Soncum relied upon a representation by Ireland that $50,000 was not required, that

Soncum relied more on statements made by Cowen's agent, one Lane, when

negotiating the price, and that there was no reliable evidence to show either that

Soncum acted in reliance on what Ireland told him when dealing with Cowen's or that

any loss was sustained as a result of Ireland's representation.

In reaching these conclusions the primary judge should be treated as having an

advantage which we are denied, in that he saw and heard the witnesses; a question of

Soncum's credit arises. But even apart from that it is difficult to see how this Court

could find that, but for a representation by Ireland that $50,000 was no longer required,

the appellant would have obtained a higher price for what was "sold". The record

provides no solid support for such a conclusion.

Soncum's evidence was to the effect that, because of a letter he received, he

came to believe that Cowen's were going to supply a PABX system. When asked
whether he spoke to Ireland after that, he said:

"We are in touch quite often about various matters. It would come up in

that time I have mentioned".

When asked about discussions with Ireland concerning the $50,000 demand

continuing, he said that he did not believe that he (Soncum) ever brought that up, but

that Ireland came to him and mentioned that he did not want the $50,000. Soncum was

then asked whether he had signed the contract with Cowen's at that stage and replied:

"I don't - to the best of my recollection this was around the 20th of July and I'd imagine it would have been before then. That's my recollection". (emphasis added)

He then repeated that this was his recollection. When asked what operated on his mind

"when you decided to reduce your demand from 1.4 to 1.325", he said in effect that he

did so because one Lane (mentioned in the judge's reasons) said that Cowen's were

prepared to supply the PABX.

That is not an answer which supports the appellant's estoppel case. Undaunted

by it, the appellant's counsel below made further efforts to tie the reduction in price to a

statement by Ireland that no $50,000 would be required; when asked directly what he

would have done if he had been told, prior to the signing of the contract, that the

$50,000 was still required, the witness was unable to say "what I would have done in

those circumstances".

To return to the pleading, it has been noted that the estoppel case set up in

paras. 7A and 7B depended on proof that, in reliance on a representation, the appellant

entered into the contract with Cowen's. The implication was that this was

disadvantageous. But it was not shown to be; as was pointed out by counsel for the respondent, the Cowen's contract produced a very large profit for the appellant. It was

presumably that circumstance which prompted the thought that the complaint should be

made that a representation made by Ireland about the $50,000 induced a reduction in

price; but Mr Soncum did not say so and was plainly uncertain whether Ireland told him

that the $50,000 still stood before or after the contract was signed.

The other difficulty about an estoppel based on the notion that the appellant

would have insisted on a higher price than Cowen's agreed to pay is that, for the

appellant to succeed, it would have had to obtain a finding that Cowen's would have

been willing to pay the higher sum. But one does not reach that point, for there was no

evidence on which the judge could reasonably have found that, but for the

representation complained of, the appellant would have insisted on a higher price.

Neither the estoppel pleaded nor the slightly different one argued here has any

substantial foundation in the evidence and his Honour's conclusion on this aspect of the

case was plainly right.

The other two arguments advanced on the appeal were, as has been mentioned,

points which were not put to the primary judge.

Invalidity: Humphries' Case

The first is that the consideration which flowed from the respondent for the

payment of $50,000 wholly failed, because the entire agreement between Cowen's and

the respondent, entered into in consequence of the payment of $50,000, is void, not

having been authorised by the provisions of the Act. It is convenient to speak of the

"Cowen's agreement", although that consists of two documents, a management agreement and a letting agreement; as counsel for the appellant pointed out, the two

are tied together so as to form in substance one contract. The authority relied on in

support of the view that the Cowen's agreement is void is Humphries v. The Proprietors

"Surfers Palms North" Group Titles Plan 1955 (1994) 179 C.L.R. 597. It was there held

that a management agreement under which, in consideration of an annual payment by

the body corporate, the manager agreed inter alia to conduct a letting agency for the

letting of town houses on the property, was void. It was held that the body corporate had

no power to enter into a contract for the provision of a letting service for lot proprietors

or occupiers, and that part of the agreement was held not to be severable. In argument

before us the respondent was content to accept that Humphries' case applies to the

present, in its first aspect - i.e. that the Cowen's agreement includes a promise by the

manager to provide such a letting service as was mentioned in Humphries, for a

consideration of the same kind as in that case. But the respondent argued that, had the

point been taken below, evidence might have been called with respect to the question

of severance.

Had the matter been raised below, says the respondent, there might have been

evidence providing a "basis for a finding that a particular proportion or amount of [the]

annual remuneration can be attributed to the Manager's promise to conduct a letting

agency" (Humphries at p. 609, per Deane and Gaudron JJ). But it is unnecessary to

discuss that, or to reach a conclusion on the question whether the circumstance that the

respondent might have called evidence relevant to severance requires this Court to

reject the appellant's invalidity argument.

That is so because the invalidity is not relied on, as it was in Humphries, in an action brought on the management agreement, but rather in an action brought by a

person not a party to that agreement to recover money paid to procure its execution.

For an action based on total failure of consideration to succeed, it is necessary for the

plaintiff first to identify the consideration said to have failed. The respondent says the

consideration was merely the execution by it of the Cowen's agreement; whereas the

appellant must contend that no consideration passed to it from the respondent unless

there came into existence a valid agreement between the respondent and Cowen's.

In dealing with the evidence relevant to the question of the nature of the

consideration given for the $50,000 payment, it is necessary to keep in mind, as the

respondent's counsel stressed, that the matter was not in issue before the primary

judge; had it been in issue, no doubt evidence might have been called, specifically

directed to it. On 11 March 1988 Mr Quinn, the respondent's solicitor, wrote to the

appellant's directors a letter which said that conditions precedent to the then proposed

new management agreement included either installation of a new PABX system or cash

payment of $50,000. The appellant's solicitors, Messrs Price & Roobottom, replied

saying that, subject to the parties reaching agreement in relation to the type of PABX

system, the appellant was prepared to meet the cost of installing one, provided it

retained ownership of it. On 20 May 1988 Quinn wrote to Price and Roobottom

discussing the proposal relating to a PABX system and saying that if a leasing

arrangement were entered into concerning it, the respondent would require a cash

payment of $50,000. Then on 23 May 1988 there were further discussions recorded,

among them being that Quinn said that the respondent had the right to charge the

$50,000 "as it was not specifically prohibited and was really a premium and not a

commission". On 6 June 1988 a memo recorded a conversation between Quinn and Price & Roobottom in which "Quinn confirmed that the only premium to be paid on an

assignment was for the management agreement and not for the letting rights". On

1 August 1988 a Price & Roobottom memo discussing the sum of $50,000 referred to

in it as being "required for the body corporate to consent to the assignment". On 2

August 1988 Price & Roobottom wrote to Quinn referring to the $50,000 as being "in

respect of the PABX system". The letter included the following passage:

"We note that your client refuses to execute the Management Agreement unless our client pays to your client the sum of $50,000 or alternatively [procures an assignment relating to the PABX]."

Ireland did not give evidence at the trial, but a statement which he had made was

tendered and that made reference to the $50,000 payment, describing it as being a

"$50,000 cash payment if such a leasing arrangement was entered into for the PABX

system".

None of this evidence expresses that the $50,000 was paid in consideration of

there coming into existence a valid and enforceable agreement of the requisite kind

between the respondent and Cowen's, but the question arises whether that should be

implied. The characterisation of the payment in the documents clearly related it to the

question of the PABX system, but the references to that issue appear to be relevant as

explaining the justification or reason for the payment, rather than for what it was given.

There is no universal rule that a payment for an assignment of rights under a

document necessarily involves a warranty, or otherwise imports, that the document is

valid. For example, an agreement for sale of a patent does not necessarily imply a

warranty of validity: Smith v. Neale (1857) 26 L.J.C.P. 143, Hall v. Conder (1857) 26 L.J.C.P. 138; see also Cockburn C.J. in Smith v. Buckingham (1870) 18 W.R. 314.

Then there is Couturier v. Hastie 155 E.R. 1250, 156 E.R. 43, 10 E.R. 1065 in which, on

a sale of cargo, the question whether the contract was enforceable although the cargo

had been spoiled and sold before the contract sued on was made was treated as

depending on whether what was sold was (a) a cargo or (b) shipping documents; also

see McRae v. Commonwealth Disposals Commission (1851) 84 C.L.R. 377 at 405

which was a case concerning the sale of a non-existent tanker. In both these cases the

question was "What did the promisor really promise?" (McRae at 407).

We were referred to no authority on the point whether, in general, one should

imply a warranty of validity where there is a payment made by A to B in consideration of

B entering into an agreement with C. The question is somewhat narrower than that

here, for the payment was not for the respondent entering into an agreement described

as being merely of a particular character; the terms of the agreement which the

respondent was to sign were precisely defined, having been worked out between

solicitors over a considerable period. It is also relevant that the consequence of the

respondent having executed the agreement with Cowen's was that the appellant

received a very large sum of money from Cowen's. There is no suggestion that any of

that sum has been or is to be paid back. Counsel for the appellant argued that unless

Cowen's got a valid contract the matter "might have consequences between the

appellant and Cowen's later"; but if that had been thought of when the $50,000 was

paid, the parties would surely have included, if a protective term were intended, a term

connected with the possibility of the appellant having to repay Cowen's.

On the evidence in the record it would be commercially unrealistic to imply a term, in the agreement for payment of the $50,000, that the respondent absolutely

promised that the agreement negotiated between the parties was valid and enforceable

and to treat that promise as part of the consideration for the $50,000 payment. The

evidence on the point is not necessarily complete and it is conceivable that, if the

Humphries' point had been raised below, the argument in favour of such an implication

might have seemed stronger. That cannot avail the appellants; there is no basis for any

suggestion (and none was made) that a new trial should be ordered to enable the

question of the nature of consideration to be fully litigated.

The conclusion is that the evidence does not establish that the agreement

relating to the $50,000 should be held to import a promise on the part of the respondent

that the Cowen's management agreement would be valid and enforceable; the claim

based on total failure of consideration therefore fails. It is unnecessary to consider

whether, had a different conclusion been reached with respect to the nature of the

consideration, the claim in restitution would have been good, although the appellant

received and apparently retains a considerable sum in consequence of the execution of

the Cowen's management agreement.

Demand Unauthorised

The third point raised is that the demand for $50,000 was not approved by a

general meeting of the body corporate - the proprietors of Centrepoint. More precisely,

the point taken is that an extraordinary general meeting held on 28 July 1988 resolved

that the body corporate enter into the Cowen's agreement and take certain other steps,

but that resolution made no mention of the $50,000. The absence of authority then

granted to obtain a payment, it was said, produced the result that the respondent's
demand for it and receipt of it were unauthorised.

Our attention was drawn to s. 47(1) of the Act which, at the dates in issue

required, so far as relevant, that the council of the respondent do not "unless -

...otherwise determined pursuant to a special resolution of the body corporate...in any

one case, undertake expenditure exceeding...". There follows a formula which

produces a sum substantially less than the expenditure which the respondent was

required to make under the Cowen's agreement. It followed that such a resolution was

necessary to approve the agreement. The use which the appellant seeks to make of

this is that the agreement about the $50,000 was part of the same transaction; i.e. the

argument is that a special resolution had to cover the agreement whereby the appellant

paid $50,000 to the respondent in exchange for the execution of the Cowen's

agreement by the respondent. The argument seems very technical; the purpose of the

prohibition relied on in s. 47(1) of the Act is to put a brake on expenditure, not on

receipts. The better view appears to be that on its proper construction, s. 47(1) does

not apply to such a collateral agreement as is in issue - one under which a sum of

money is paid not by but to the body corporate in consideration of the execution of an

agreement providing for expenditure.

But that does not dispose of the whole point made under this heading. It was

said, in effect, that the resolution of 28 July 1988 set out comprehensively all that was to

be done in relation to the Cowen's agreement; because no mention was made of

requiring a payment of $50,000, that was not authorised. For the reason which has

been explained, it required no authority from the general meeting. What seems to be

said, then, is that in specifying precisely what was to be done in relation to the Cowen's agreement, the general meeting intended to require that nothing else be done having to

do with that subject matter.

The point appears to come down to implication; and it seems clear enough that

we cannot decide it in favour of the appellant. The question whether the resolution

should be read as impliedly excluding power in the council to require a payment for the

Cowen's agreement is of a type which can depend upon the surrounding circumstances

- for example, what was known to the proprietors about the $50,000. It can be seen

from the dates set out above that negotiations having to do with the $50,000 payment

and the related question of the PABX system had been in progress for months before

the special resolution of the body corporate; the question was mentioned as early as 3

February 1988, in a resolution of the council of the body corporate. If the point had been

litigated and the court had found that on 28 July 1988, when the special resolution was

passed, the proprietors were well aware that negotiations concerning the PABX system

and the $50,000 had not concluded, it would be difficult to read the resolution as having

the exclusory effect for which the appellant contends.

The conclusion is that s. 47(1) of the Act does not invalidate the agreement

under which the Cowen's agreement was executed in consideration of a payment of

$50,000. Nor does the resolution of 28 July 1988, on its proper construction, forbid the

exaction of the $50,000 payment.

The orders should be as follows:

1. Leave to amend the notice of appeal by adding as ground 3A: "That the learned trial judge erred in failing to find substance in the appellant's submission made at trial that the respondent was estopped from making demand for the sum of $50,000 from

the appellant".

2.         Appeal dismissed with costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 138 of 1994

Brisbane

Before Macrossan C.J. McPherson J.A. Pincus J.A.

[Dynevor P/L. v. Proprietors, Centrepoint Building Units]

BETWEEN

DYNEVOR PTY. LTD

(Plaintiff) Appellant

AND

THE PROPRIETORS, CENTREPOINT BUILDING
UNITS PLAN NO. 4327

(Defendant) Respondent

REASONS FOR JUDGMENT - THE CHIEF JUSTICE & McPHERSON J.A.

Judgment delivered the 12th day of May 1995

In 1986 the plaintiff was the manager and letting agent for a block of home and commercial units known as Centrepoint at Surfers Paradise of which the defendant was the body corporate. The precise terms of the management agreement and the letting agreement under which the plaintiff carried out its duties were not in evidence at the trial. However, judging by what is common in the industry as well as by the terms of the two contracts which later took their place, it is safe to assume that under the management agreement the plaintiff was, in return for a substantial remuneration, required to supervise, clean and control the building; and that under the letting agreement it was appointed to arrange for lettings of proprietors' units.

The two agreements were due to expire in August 1990, and, by May 1988 or earlier, it was known to the plaintiff that they would not be renewed. Steps were taken to arrange for the introduction of a new manager and letting agent in place of the plaintiff with a view to relieving it of its existing management and letting agreements with the defendant. A company named Cowen's Civic Centre Newsagency Pty. Ltd. (Cowens") was interested in taking over the management and letting, and arrangements were made to enter into contracts with it.

As between the plaintiff and Cowens as the prospective new manager, the transaction ultimately took the form of a written business contract dated 20 July 1988 for the sale at a price of $1,076,200 of the plaintiff's management and letting rights, together with goodwill, and plant and equipment. By a separate contract in standard REIQ form, also dated 20 July 1988, the plaintiff agreed to sell and Cowens to buy for $250,000 the lot on the registered plan comprising unit no. 17 in Centrepoint used in connection with the management and letting business. The total sum payable by Cowens to the plaintiff under both contracts, which are part of ex. 6, was thus $1,326,200.

In order to transfer the business, it was necessary to obtain the consent of the defendant for the sale or assignment by the plaintiff of its rights under the existing management and letting agreements with the defendant. In fact, the form in which the transaction was carried out was more akin to a novation. The defendant executed in favour of Cowens a fresh management agreement dated 2 August 1988 (ex.4), and a fresh letting agreement (ex.5) also of that date, both for a term of four years. There does not seem to have been any formal discharge of the existing management and letting agreements with the plaintiff, but their continuation was plainly inconsistent with the fresh contracts being entered into with Cowens. No one disputes or doubts that the existing agreements were terminated when the transaction was settled and Cowens took over.

The action now before this Court concerns a payment by the plaintiff to the defendant at the insistence of the defendant of a sum of $50,000. As a condition of giving its consent for the transfer to Cowens of the management rights under the existing agreements, the defendant demanded that the plaintiff provide a new PABX system for the building, or in lieu a payment of $50,000. The matter became the subject of negotiations between the parties or their solicitors in the period before settlement. Unfortunately, as the learned trial judge said, and as he found, the arrangement between plaintiff and defendant for provision of a new PABX system, or payment of $50,000, was never satisfactorily clarified. The outcome was that, at settlement on 3 August 1988, the defendant insisted on payment of $50,000, which the plaintiff paid, but under protest, and then brought this action to recover that sum. The appeal now before us is against the judgment given in the court below, which dismissed the plaintiff's claim.

In the plaint instituting the action in the District Court at Southport, the plaintiff's claim is put forward as one for recovery of moneys had and received. Its contention is that the management agreement (ex. 4) dated 2 August 1988 between the defendant and Cowens was beyond the powers of the defendant as the body corporate of Centrepoint and, being ultra vires, was void. The authority relied on for that result is the decision in Humphries v. The Proprietors "Surfers Palms North" Group Titles Plan 1955 (1994) 179 C.L.R. 597, in which the High Court held that a body corporate like the defendant has, in the absence of any appropriate by-law, no power to enter into an agreement by which it undertakes to pay money to a person like Cowens in consideration of that person's conducting a letting agency for the benefit of proprietors of units in the building. The particular vice of the management agreement ex. 4 in the present case is said to lie in cl.22, by which the defendant body corporate agreed with Cowens as manager that it would carry on the business of letting residential apartments for such of the proprietors of units in the building as required that service from the manager in accordance with the letting agreement ex. 5. It was further submitted that cl.22 of the management agreement was not severable from the other provisions of that contract, and so pulled down with it and invalidated the whole of that contract, as well as the letting agreement ex. 5, which is said to be dependent on it.

The essence of the decision in Humphries is that the powers of a body corporate, constituted as it is under the Building Units and Group Titles Act 1980 as a creature of statute, are circumscribed by the specific statutory provisions of the Act. There being no statutory power authorising the body corporate to expend corporate funds for the benefit of individual proprietors or their units, an agreement contemplating or requiring such expenditure was held to be beyond power; or, if otherwise authorised by express agreement with a proprietor, to be an improper exercise of the powers of the body corporate to apply corporate funds for the benefit or purposes not of the body corporate but of a particular proprietor or proprietors (179 C.L.R. 597, 602, 605-606, 608-609). In the context of that case, such an illegitimate purpose was found to have arisen from the presence in the associated management agreement of a provision for remuneration of the manager, by way of a single indisseverable annual fee, in return for performing various duties specified in that agreement including the conduct of a business of letting individual units.

To that extent there are points of resemblance between the case of Humphries and this, in which there is a comparable provision in cl.22 of the management agreement ex. 4 with Cowens, as well as provision for remuneration of Cowens in the form of an annual fee specified in the First Schedule to ex. 4. In the present case, the defendant's authority to enter into the new management and letting agreements (exs. 4, 5) with Cowens was made the subject of a specific resolution adopted, apparently with unanimity, at a meeting of the individual proprietors at an extraordinary general meeting of the body corporate held on 28 July 1988.

To that extent the defendant as an artificial person or body corporate may be thought to have been invested, as might any other person or individual, with express authority to enter into the management contract with Cowens. The fact that, in the result, the defendant may have exceeded the literal terms of that express authority by also demanding and receiving the sum of $50,000 as the consideration for the execution of that contract would, in my opinion, not of itself mean that the receipt of that sum was beyond the power of the defendant, or render it recoverable by the plaintiff which paid it. A bribe received by an agent for an unauthorised act done in the course of executing business of his principal is recoverable from the agent by the principal, to whom the agent is bound to account: Reading v. Attorney-General [1951] A.C. 507; but it is a novel proposition that the payment is also recoverable from the agent by the person who paid it. To extend the decision in Humphries from expenditure of corporate moneys to the receipt of money by the corporation is not warranted by anything in the judgments in that case or in the Act itself.

It is at this point that the frailties of the plaintiff's claim begin to emerge. The right of a lender to recover money lent to a corporation which it had no power to borrow was doubted by Fullagar J. in Re K.L. Tractors Ltd. (1961) 106 C.L.R. 318, 338. See also Re Edward Love & Co. Pty. Ltd. [1969] V.R. 230, 233, 237-238. It may be that, since the overthrow in Australia & New Zealand Banking Group Ltd. v. Westpac Banking Corporation (1988) 164 C.L.R. 662,673, of the doctrine of implied contract as the basis for restitutionary relief, the path of a lender who seeks to recover money lent in the course of ultra vires borrowing is in Australia no longer obstructed by the decision in Sinclair v. Brougham [1914] A.C. 398. But it is another question entirely whether the plaintiff here is entitled, as the means to recovering that payment for itself, to assert against the defendant body corporate that its act of demanding and receiving the subject payment was ultra vires.

The plaintiff was not even a party to the management agreement which it claims is invalid as being beyond the powers of the defendant or the consequence of its improperly exercising those powers.

In the area of company law the existence of an action to recover dispositions of corporate property that are ultra vires or otherwise improper, or to restrain an illegitimate exercise of corporate power that seeks to do so, is well established. It is available as one of the exceptions to the rule in Foss v. Harbottle (1843) 2 Hare 461, that, apart from those exceptions, the corporation is the only competent plaintiff for redress in proceedings of that kind. See

Hawkesbury Development Co. Ltd. v. Landmark Finance Pty.

Ltd. (1969) 92 W.N. (N.S.W.) 199, 213. The exceptions permitting such actions to be brought are closely controlled. A suit to recover corporate property is considered as derivative, in the sense that, although instituted in the name of the plaintiff, it is regarded as brought for the benefit of the corporation, in whose favour any restitutionary relief to be granted must in the end be made. At the same time, a plaintiff employing this form of action must make out a title to do so as a member of the corporation whose claims or interests it is sought to protect.

The defendant is the corporate creature of a statute, and the rule has been held to apply to statutory corporations capable of suing in their own names: Hodgson v. National Local & Government Officers Association [1972] 1 W.L.R. 130, 139. The principle underlying it is appropriate to the case of a corporation of this kind. For a wrong done to a corporation like the defendant, the body corporate is prima facie the only proper plaintiff in an action claiming to redress that wrong, unless the person claiming to sue in the corporate interest comes within one or more of the recognised exceptions to the rule. No such question arose in Humphries because it was the defendant body corporate itself that relied on ultra vires in answer to the claim of the plaintiffs to enforce the agreement which was held by the High Court to be beyond power.

The question arises here because the plaintiff in this action is not a member of the defendant body corporate constituted under s.27 of the Act by the proprietors for the time being of units or lots coming into existence on registration of the building units plan. It ceased to be a proprietor when in 1988 it disposed of its unit to Cowens for the price of $250,000, which is not something that is said to have been invalid. It thus now has no capacity to sue to vindicate the rights of the corporation of which it was formerly, but is no longer, a member or corporator. Accordingly, it has no standing to challenge the validity of its own payment to the defendant on the ground that it was either beyond or an improper exercise of the powers of the defendant as a body corporate to demand or receive it.

The plaintiff, therefore, cannot in my opinion successfully rest its claim to recover the payment of $50,000 on the simple assertion, whether correct or not, that the management agreement between Cowen and the defendant was or is ultra vires and void. On appeal its submissions to that effect nevertheless tended to suffuse, to a greater or lesser extent, other arguments on its behalf. The matter was complicated on appeal by the fact that some questions raised here were not advanced at the trial, and that the terms of the pleadings and even of the notice of appeal, are not in all respects in keeping with the case now sought to be made. It is therefore helpful to approach the plaintiff's claim in a broad way in order to see if there is any basis on which restitutionary relief might be granted in respect of the sum of $50,000 sought to be recovered.

First, it was not suggested that the money in question was paid under a mistake, whether of fact or, since the decision in David Securities Pty. Ltd. v. Commonwealth Bank (1992) 175 C.L.R. 353, of law. There is nothing in the evidence to suggest that, in making the payment of $50,000 to the defendant, the plaintiff mistakenly believed the management agreement ex. 4 was valid. Next, it is clear that the payment was not made in pursuance of a contract that was or has become void or invalid. As already observed, the plaintiff was not a party to either of the contracts ex. 4 and ex. 5 which (or one of which) it claims are void. In a broad sense, the payment was, it is true, made to ensure that the whole transaction of novation, involving the release or discharge of the plaintiff from the existing agreement (ex. 6) went through to completion; but the plaintiff does not assert that the whole transaction or the novation, to which it was a party, is void. Involving as it would an obligation to repay the price of $1,326,200 received from Cowens, such a result would, it may fairly be assumed, not be welcome to the plaintiff. What it asserts is that only one element in the whole transaction is void. That is the management agreement ex. 4, to which the plaintiff itself is not a party, and under which it did not make the payment sought to be recovered. It is plainly not entitled to recover the payment on that basis.

What is contended by the plaintiff is that there has been a total failure of the consideration for which the sum of $50,000 was paid by it to the defendant, and that it is entitled to recover it as moneys had and received. Reliance was placed on Westdeutsche Landesbank Girozentrale v. Islington London Borough Council [1994] 1 W.L.R. 938, 943, where Dillon L.J. said that the expression "the consideration has wholly failed" meant that "the performance promised has not been provided". It may be compared with the statement in David Securities Pty. Ltd. v. Commonwealth Bank (1992) 175 C.L.R. 353, 382, that "the notion of total failure of consideration now looks to the benefit bargained for by the plaintiff rather than any benefit which might have been received in fact". If there is a difference between the two formulations, it is enough to say that the plaintiff here succeeds in satisfying neither of them.

The first step is to identify precisely what it was that formed the consideration for which the sum of $50,000 was paid by the plaintiff to the defendant at settlement on 3 August 1988. Because of the way in which the trial was conducted below, oral evidence on the matter is scant; but, from the correspondence passing between the solicitors for the parties, it is plain what the sum of $50,000 was being paid for. It was to induce the defendant to execute the management agreement ex. 4 with Cowens. A facsimile letter dated 2 August 1988 sent, on the eve of settlement, by the plaintiff's own solicitors notes that the writer had, in the course of a telephone conversation earlier that day with the defendant's solicitor Mr Quinn, received advice that "your client refuses to execute the management agreement" with Cowens, and that it required payment of an additional sum of $50,000 in respect of the PABX system. It goes on to say that the plaintiff's solicitors also note "that your client refuses to execute the Management Agreement unless our client pays to you the sum of $50,000 ...."; and it concludes by requiring "that the documentation be executed by your client no later than 4.00 p.m. today ...".

It is, of course, not in dispute that the defendant did in fact execute and deliver the management agreement ex. 4 on 3 August 1988. At settlement on that day the plaintiff paid over the sum of $50,000 which it now seeks to recover.

The only reasonable inference is that it did so because the defendant executed and delivered the agreement. If the defendant had in fact promised it would do so, it thus provided performance of its promise by executing the agreement. The fact (if it be the fact) that the management agreement or the collateral letting agreement ex. 5, or both, were invalid was and is immaterial. The defendant did not promise the plaintiff that either agreement was or would when executed be valid. It gave no warranty to that effect and is not alleged to have done so. As has been said more than once, the plaintiff was not a party to those agreements, and neither of the parties to those agreements claims they are invalid.

It may in any event be doubted whether the defendant ever made any promise to the plaintiff that it would execute the management agreement. If earlier it had made a binding promise to the plaintiff that it would execute agreement, it would by doing so have come under a contractual duty to perform that promise; if the defendant had then insisted on being paid an additional $50,000 for performing that contractual duty, it would, according to orthodox doctrine, not have been entitled to retain that payment. See T.A.

Sundell & Sons Pty. Ltd. v. Emm Yannoulatos (Overseas) Pty.

Ltd. [1956] S.R. (N.S.W.) 323. The recent English decision in Williams v. Roffey Bros. & Nicholls Contractors Ltd. [1991] 1 Q.B. 1 may be thought to suggest a different result; but, however that may be, the defendant is not shown to have made in advance any binding promise to execute anything. It consequently remained at liberty to do what it did, which was simply to refuse to execute the agreement until it was paid $50,000 for doing so.

What has been said so far provides no foundation for recovering the money paid as on a total failure of consideration. It adds nothing to say that the letting agreement or the management agreement is invalid because it is ultra vires and void. Even if void, its validity was not the consideration for which the payment of $50,000 was made.

What was required by the plaintiff's solicitors in their letter dated 2 August in order to enable the transaction to be settled on 2 or 3 August 1988 was the executed "documentation", meaning by that the management agreement. The consideration for the payment was not a promise to execute the management agreement, or the performance of such a promise, but the defendant's act of executing it. It may safely be assumed that it was only upon the production of that agreement executed by the defendant that Cowens was willing to and did settle its transaction with the plaintiff and paid over the total of $1,326,200 to which the plaintiff became entitled on settlement of its two contracts (ex. 6) with Cowens. The plaintiff received and has retained that consideration. The case is thus distinguishable from Westdeutsche Landesbank v. Islington L.B.C. [1994] 1 W.L.R. 938, where the payment sought to be recovered by the plaintiff bank was made by it to the defendant pursuant to a contract with the defendant, which, being beyond the statutory powers of the defendant council, was wholly void.

The plaintiff here did not pay $50,000 to the defendant pursuant to the management contract (ex. 4), or pursuant to any other contract or transaction which was void.

The plaintiff's case is, in my opinion, also distinguishable from David Securities Pty. Ltd. v. Commonwealth Bank (1992) 175 C.L.R. 353, where the payments held to be recoverable were made on account of a liability for interest that was invalidated by a statutory provision rendering such a liability "absolutely void". The High Court in that decision (which was not relied on by the plaintiff on this appeal) held that the payments in question were recoverable as having been made for a distinct and identifiable consideration which was severable from the remainder of the contract or transaction between the parties. For reasons already given, the management contract ex. 4 or its execution by the defendant is not severable from the novation or wider transaction entered into and settled by the parties on 3 August 1988.

In our opinion, it is not open to the plaintiff to recover the sum of $50,000 as moneys paid by the plaintiff to the defendant for a consideration that has failed. It was nevertheless submitted that the defendant was by its conduct estopped from demanding the sum of $50,000 from the plaintiff, and that the learned judge was wrong in failing so to find at the trial of the action. Leave is sought to add to the notice of appeal a ground to this effect.

In the plaint on which the action went to trial, there is an allegation in para. 14 that the defendant acted "unconscionably" in compelling the payment. The allegation in para.14 was later expanded or explained in paras. 7A and 7B of the plaint as amended, which allege that in May 1988 a Mr Ireland on behalf of the defendant told Mr Soncum on behalf of the plaintiff that payment of the sum of $50,000 was no longer required; and further that, in reliance on that representation, the plaintiff entered into the business contract on 20 July 1988 with Cowens that now forms part of ex. 6. Paragraph 7C then goes on to allege that as a result, the defendant is estopped from alleging as it does in para. 6 of its defence "that there was a condition for payment of $50,000, and it is unconscionable for the defendant to retain" it. Paragraph 6 of the defence, in its turn, admits that, as alleged in paras. 8 and 9 of the plaint, the defendant demanded $50,000 as a condition for its executing the management and letting agreements with Cowens, but sets up that the demand was made and complied with as a condition "which was to apply in respect of any further management or letting agreements ... unless a new PABX telephone system were purchased for the defendant free of cost to it".

It cannot be said that these allegations are models of clarity. As sometimes happens, in the end it becomes simpler to look at the relevant evidence adduced in support of paras. 7A and 7B of the pleadings, and to try from it to work out whether any title to the relief claimed is discoverable. The substance of the plaintiff's complaint is that, in the negotiations with Cowens, its original asking price of $1,400,000 for the business and unit was reduced to $1,326,200 in reliance on Mr Ireland's representation that payment of $50,000 would not be required by the defendant. What the trial judge found, which was substantially in accordance with para. 7A of the plaint, was that in May 1988 Mr Ireland told Mr Soncum that a payment of $50,000 was no longer required. The trial judge was, however, not prepared to find that the plaintiff acting through Mr Soncum had in fact relied on that representation to its detriment by reducing by a corresponding amount the total price it was prepared and agreed to accept from Cowens for the sale of its business and the associated unit. His Honour said there was "no cogent evidence to suggest that Mr Soncum relied on the representation of Mr Ireland, when one considers what transpired before and after it was made". The refusal to make a finding to that effect was challenged on appeal. Apart from difficulties inherent in such a challenge, it seems to us that it is not possible for the plaintiff to succeed in asserting such an estoppel in the face of its subsequent conduct in insisting that the defendant execute and settle the two agreements (exs. 4 and 5) entered into between the defendant and Cowens.

The plaintiff's own business contract with Cowens for sale of the management and letting rights was expressed in cl.34 to be conditional on the defendant granting to Cowens management and letting agreements in the form annexed, which in due course became exs. 4 and 5. The contract for sale of the unit to Cowens was in turn made conditional upon contemporaneous completion of the plaintiff's business contract with Cowens. It follows that, if the defendant had refused to execute the management and letting contracts (exs. 4 and 5) with Cowens, the plaintiff's own business contract and the agreement for sale of the unit would have remained conditional, and the plaintiff would not have been obliged to accept what it now claims was the reduced price of $1,326,200 for those properties. Instead of allowing that state of affairs to develop, the plaintiff took active steps to ensure that the contracts with Cowens to which it was a party ceased to be conditional and went through to completion. It did so by paying at settlement the sum of $50,000 demanded by the defendant in return for its execution of the management and letting contracts exs. 4 and 5 with Cowens. In doing so it was aware that the defendant was not fulfilling, but acting contrary to the representation made on its behalf by Mr Ireland in May 1988, and that it would in consequence receive the reduced price of $1,326,200 from Cowens. The plaintiff nevertheless elected to follow that course. It cannot now complain that, but for the representation, it could or would have bargained for or received the higher price of $1,400,000 from Cowens.

The position would no doubt have been different if, at or before settlement, the defendant had been contractually bound to the plaintiff to execute the two contracts (exs. 4 and 5) entered into by the defendant with Cowens; but that was not the case. At settlement the plaintiff paid $50,000 to the defendant because it wished to be relieved of its own two existing agreements with the defendant, which could only be accomplished if the defendant settled and completed its two contracts (exs. 4 and 5) with Cowens. In those circumstances the plaintiff acquired no right at law, or in equity, to recover the sum of $50,000 which it paid to the defendant in order to bring about that result.

We would refuse leave to amend the notice of appeal as sought, and would dismiss the appeal with costs.