Excel Quarries Pty Ltd v Payne

[1999] QSC 59

IN THE SUPREME COURT

OF QUEENSLAND

Writ No. 123 of 1998

Brisbane

Before: de Jersey CJ

[Excel Quarries Pty Ltd v Payne]

BETWEEN:

EXCEL QUARRIES PTY LTD

(A.C.N. 010 056 407)

(Plaintiff)

AND:

BRENDA CORAL PAYNE
  (Defendant)

REASONS FOR JUDGMENT - de JERSEY CJ

Judgment delivered:   23 March 1999

On 9 October 1997, the plaintiff lodged a caveat over the title to the defendant’s land at Yandina (Lot 3 on Registered Plan 214949, County of Canning, Parish of Maroochy, title reference 17086045).  The interest claimed in terms of the caveat, is:

“An equitable lien arising out of the unjust enrichment of the registered proprietor caused by the rezoning of the land to partly Extractive Industry Zone and partly Special Facilities (Ancillary Quarry Operations) Zone at the expense and upon the application of the caveator.”

The caveat specifies these as “grounds of claim”:

“The caveator rezoned the land from Rural A Zone to partly Extractive Industry Zone and partly Special Facilities (Ancillary Quarry Operations) Zone under the belief that it was entitled to a lease of the land from the registered proprietor.  The registered proprietor permitted the caveator to incur cost and expense in negotiating the terms of a rezoning deed with the Maroochy Shire Council and the carrying out of obligations under the Rezoning Deed whilst failing to notify the caveator that the registered proprietor would not accept the rezoning and would not grant a lease and has, by such conduct, incontrovertibly benefited from the rezoning at the cost and expense of the caveator.”

The defendant seeks an order that the caveat be removed (under s.127 Land Titles Act 1994).

I will recount the relevant events only briefly, so far as necessary to explain the conclusions to which I have come.  They begin with a deed of 4 October 1989 between the defendant and her late husband, and the company from whom the plaintiff subsequently took an assignment of its interest. That deed recorded the parties’ agreement that the company take a lease of the defendant’s land “subject to the fulfilment of certain terms and conditions contained in the deed”.  On execution, the plaintiff was to commence preparing an application to the Maroochy Shire Council to rezone the land from Rural A to Extractive Industry.  The granting of the lease was subject to and conditional upon that rezoning.  Clause 4 provided that should the local authority not approve the rezoning, then:

“(a)     The intending lessee may at the cost of the intending lessee in all respects appeal to the Local Government Court against the failure or refusal or the imposition of any terms and conditions which the intending lessee believes not to be reasonable and relevant in all the circumstances and subject to its indemnifying the intending lessors against all costs which the intending lessors may incur by reason of instructions or requests made to the intending lessors by the intending lessees or agents acting on the intending lessees’ behalf; ”

The rezoning application was lodged with the local authority, which determined on 23 May 1990 not to grant its approval.  On 21 June 1990 the intended lessee appealed to the Local Government Court.  On 7 October 1992 that Court allowed the appeal in part, ordering that roughly half the land be rezoned to Extractive Industry, and the other half to Special Facilities (Ancillary Quarry Operations).  The defendant did not become aware of this until about 18 months later, in May or June 1994.  She then first became aware that the land had not been rezoned in accordance with the deed, in that all of the land had not been rezoned Extractive Industry, and that the result was the duality of zoning to which I have referred.

The plaintiff’s solicitors sent the lease to the defendant for execution.  She declined to execute it, because of the plaintiff’s failure to have all of the land rezoned as envisaged by the deed.  The plaintiff commenced specific performance proceedings against the defendant.  Mr Justice Shepherdson dismissed the plaintiff’s claim for specific performance, and rejected arguments based in election, waiver and estoppel.  On the latter matters, His Honour found that “it was after the defendant had spoken to Mr Pepper following her conversation with Mr Grace (the plaintiff’s solicitor) on 25 May 1994 that she first became aware that Lot 3 had been rezoned into two different zones and that quarrying could not lawfully be carried out in one of those zones and that the requirements of clause 2(a) (of the deed) had not been fulfilled.”  The plaintiff appealed unsuccessfully to the Court of Appeal. 

Because of a view expressed in the Court of Appeal to the effect that the deed had not, to the point of its judgment, been brought to an end, the defendant’s solicitors did so expressly by letter of 9 May 1996.  The plaintiff’s solicitors responded claiming compensation, contending that a right to compensation arose because the defendant had “allowed” the plaintiff to continue with the case in the Planning and Environment Court in the belief that she did not take objection to the partial rezoning.  (One observes that that runs contrary to the findings of Mr Justice Shepherdson.)

The plaintiff lodged the instant caveat on 9 October 1997. Although the writ originally lodged in respect of these matters related to the cost of obtaining the rezoning approval, the statement of claim sought to enforce proprietary remedies in relation to the land.  The plaintiff delivered its statement of claim on 22 September 1998.

Consistently with Re Burman’s Caveat [1994] 1 Qd.R 123, in order to justify the continued existence of the caveat, the plaintiff caveator must demonstrate that there is a serious question to be tried as to its entitlement to an interest in the land, and if so, that the balance of convenience warrants preserving the caveat.

The plaintiff seeks to support the caveat on two bases.  The first, in terms of the caveat, is “an equitable lien arising out of the unjust enrichment of the registered proprietor caused by the rezoning ... at the expense and upon the application of the caveator”.  Mr Gore, QC, who appeared for the plaintiff, submitted that such a remedy is available “where a person spends money on land in the belief that an interest in the land will be acquired, with the acquiescence of the owner and with knowledge by the owner of that belief, and where it is unconscionable for the owner to later assert an entire interest in the land”.  Second, the plaintiff asserts the existence of a constructive trust.  (Although that is not referred to in the caveat, the plaintiff would as necessary seek amendment.) 

Mr Gore referred to a number of cases, including Muschinski v. Dodds (1985) 160 C.L.R. 583, seeking to liken the current situation to cases where “the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it”, in which event “equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do” (at p. 620, per Deane J). He submitted that it is well recognised that “the total failure of an agreed return is a proper basis for restitution”. He relied on the approach in Muschinski (p. 614, per Deane J) which sees the constructive trust “as a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contract to equitable principle.”  The trust, he submitted, may be imposed as a remedy for unconscionable conduct, or to prevent unjust enrichment (Baumgartner v. Baumgartner (1987) 164 C.L.R. 137, 152-4 per Toohey J).

The interest claimed in the caveat is an equitable lien “arising out of ... unjust enrichment”.  Unjust enrichment is not as such a cause of action under Australian law (David Securities Pty Ltd v. Commonwealth Bank of Australia (1992) 175 C.L.R. 353, 378-9). To succeed, the plaintiff must be able to point to some known cause of action which fits within the general concept of “unjust enrichment”.

To do that, as per its “grounds of claim” specified in the caveat, the plaintiff asserts, (1)  that it secured the dual zoning “under the belief that it was entitled to a lease of the land”; and (2) that the defendant permitted the plaintiff to incur the rezoning costs “whilst failing to notify the caveator that the registered proprietor would not ... grant a lease”.  These grounds are factually insupportable, and that is sufficiently clear for a summary determination.  As to (1), that belief, if held, was unfounded, for as the Court has found, the plaintiff was entitled to the lease only if the whole of the land was rezoned “Extractive Industry”.  As to (2), the Court has found, significantly,  that the defendant did not know of the dual zoning until May or June 1994, that is after the Local Government Court proceedings had been determined.

In his oral submissions, Mr Gore essentially contended that because the actual rezoning, “paid for” by the plaintiff, potentially benefits the defendant, it would be unconscionable for the defendant, having exercised her strict contractual rights, to exclude the plaintiff from any participation in that benefit, while retaining it for herself.  The response made by Mr Derrington, who appeared for the defendant, focussed on the deed of 4 October 1989.

That deed should be seen as the parties’ attempt comprehensively to regulate their relationship.  The defendant fulfilled the obligations cast on to her by the deed, such as permitting the plaintiff’s entry upon the land to carry out inspections and conduct site exploration tests.  Clause 4 sets out the consequences of the local authority’s failure to rezone “the said land” (the whole of the land) to Extractive Industry.  It provides for appeal, but “at the cost of the intending lessee in all respects”.  The defendant effectually, eventually, terminated the deed.  But that does not mean that the deed lost significance as the parties’ “manifesto” of their relationship: as Brennan J, as he then was, reminded in Pavey and Matthews Pty Ltd v. Paul (1986-7) 162 C.L.R. 221,238 (a restitution/unjust enrichment case):

“A subsisting contract is the source and charter of the rights and obligations of the parties ... the law cannot impose other rights and obligations ...” (and see p. 256 per Deane J).

It does not matter, for the present, that this contract was ultimately terminated by the defendant in exercise of her contractual right.  It retained significance as the definition of what the parties intended.

The very important point for the present is that this apparently comprehensive agreement, which went so far as to make provision against the possibility that local authority approval may not be given,  did not provide that should the intended rezoning not go ahead, but a lesser nevertheless valuable rezoning occur, the defendant must in some way  compensate the plaintiff for the plaintiff’s efforts in securing that, recognising that the defendant might benefit because of increase in the value of her land.  One should not assume that was overlooked.

Mr Gore sought to assimilate the situation to cases of total failure of consideration.  This is not, however, such a case.  The plaintiff received its promised return: performance by the defendant of her obligations, such as permitting the testing etc., and the opportunity to secure a rezoning of the whole of the land to Extractive Industry.  The plaintiff did not bargain for a guaranteed rezoning of that character.  Mr Gore also referred to Cadorange Pty Ltd v. Tanga Holdings Pty Ltd (1990) 20 N.S.W.L.R. 26, but in that case the agreement was void, ab initio, with the other party to the agreement not obtaining any part of the consideration (p. 32).

As mentioned above, Mr Gore’s essential submission, to adopt now his precise terms, was:  “(the defendant) successfully defended (the plaintiff’s) specific performance proceedings on the ground that the dual zoning meant that she had not obtained the zoning which she had bargained for.   In those circumstances, it is unconscionable for her to seek to retain the enrichment that the non-contractual zoning has produced.”  Against what criterion does one gauge the conduct?  The approach would appear to fall generally foul of the High Court’s warning in David Securities (p.379) against determining “whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable”.  The plaintiff has been unable in this case to identify a known cause of action which fits within the general concept of “unjust enrichment”.  The circumstance that the plaintiff completed its part of this endeavour within the comprehensive framework of the deed, which now affords it no relevant relief, is, in my view, enough to exclude the otherwise general and nebulous basis on which the claim to support the caveat is advanced.

I record Mr Gore’s expressed satisfaction that I should determine these questions summarily, if I  felt able to do so.  He did not take the position that there were factual issues better resolved at a trial, such as should dissuade me from proceeding now to a determination.

I also record that the plaintiff did not seek to justify its caveat by reference to the doctrine of proprietary estoppel, although the formulation in the caveat itself might have suggested such a claim.  Such a claim would have been factually insupportable anyway, for the reasons briefly expressed above with reference to the assertions numbered (1) and (2).

Because I am satisfied that there is no serious question to be tried, there is no need to deal with the otherwise potentially important issue of the balance of convenience, and I should order the removal of the caveat.  I do therefore order that the caveat referred to in paragraph 1 of the defendant’s Notice of Motion filed on 1 March 1999 be removed, and that the plaintiff pay the defendant’s costs of and incidental to the application to be taxed.

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