Excel Quarries Pty Ltd v Payne

[1996] QCA 17

IN THE COURT OF APPEAL	[1996] QCA 017
SUPREME COURT OF QUEENSLAND

Appeal No. 121 of 1995

Brisbane

[Excel Quarries P/L v. Payne]

BETWEEN:

EXCEL QUARRIES PTY LTD

(Plaintiff) Appellant

AND:

BRENDA CORAL PAYNE

(Defendant) Respondent

Pincus JA
McPherson JA

Thomas J

Judgment delivered 16 February 1996

Separate concurring reasons by Pincus JA and Thomas J; McPherson JA dissenting

APPEAL DISMISSED WITH COSTS

CATCHWORDS:	CONTRACTS - agreement to grant lease - construction - excision of absurdity - condition requiring consent of Council for rezoning to extractive industry - consent obtained for rezoning of part only of the land - whether condition satisfied - whether condition solely for benefit of lessee - whether lessor could unilaterally waive need for satisfaction of condition - Sandra Investments Pty Ltd v. Booth (1982) 152 CLR 153 discussed - whether condition precedent - question of election waiver - Newmont Pty Ltd v. Laverton Nicol NL & Ors (1982) 57 A.L.J.R. 348 distinguished - whether estoppel or affirmation shown.
Counsel:	Mr P Keane QC with him Mr P O'Shea for the Appellant Mr R Hanson QC with him Mr R Derrington for the Respondent
Solicitors:	Hunt & Hunt for the Appellant Connor O'Meara McConaghy for the Respondent

Hearing Date: 29 November 1995

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal No. 121 of 1995

Brisbane

Before Pincus JA

McPherson JA

Thomas J

[Excel Quarries P/L v. Payne]

BETWEEN:

EXCEL QUARRIES PTY LTD

(Plaintiff) Appellant

AND:

BRENDA CORAL PAYNE

(Defendant) Respondent

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

Appeal. No. 121 of 1995

Brisbane

Before Pincus J.A.
McPherson J.A.
Thomas J.

[Excel Quarries P/L. v. Payne]

BETWEEN

EXCEL QUARRIES PTY LTD

(Plaintiff) Appellant

AND

BRENDA CORAL PAYNE

(Defendant) Respondent

IN THE COURT OF APPEAL
SUPREME COURT OF QUEENSLAND

Appeal No. 121 of 1995.

Brisbane

Before Pincus J.A.
McPherson J.A.
Thomas J.

[Excel Quarries P/L v. Payne]

BETWEEN:

EXCEL QUARRIES PTY LTD

(Plaintiff) Appellant

AND:

BRENDA CORAL PAYNE

(Defendant) Respondent

REASONS FOR JUDGMENT - PINCUS J.A.

Judgment delivered 16/02/1996

The facts and issues in this appeal are explained in the reasons of McPherson JA.

The parties to the agreement in question agreed that certain land would be leased, the lease to begin on a date fixed by reference to the last date of fulfilment of three conditions set out in cl. 2. The first of those conditions is rezoning of the land to "Extractive Industry", the second a feasibility study and the third may be, as explained by McPherson JA, ignored.

The essential point of the case is the effect on the parties’ obligations of what has happened with the rezoning, the first condition in cl. 2. What has been obtained is a rezoning of about half the land to the designated zone (Extractive Industry); the rest has been rezoned to a different zone (Special Facilities). The appellant says that despite this (on the face of it), failure of a condition of the agreement, the respondent has to go ahead and lease the land to the appellant.

In my respectful opinion the outcome of the case depends essentially upon ascertaining the intention of the parties, as rather obscurely expressed in the relevant clauses, set out at length in the reasons of Thomas J; I shall not repeat them here. The first question is whether, as counsel for the appellant submits, the indications in cl. 2(a) and cl. 5 are that what matters is not whether the contemplated rezoning is in fact obtained, but whether the intending tenant ("the tenant") is satisfied with such rezoning as in fact occurs. On that point my view is in favour of the respondent ("the owner"), because it seems very difficult to read the language used as contemplating that the tenant may compel the conclusion that the rezoning condition (cl. 2(a)) has been satisfied, by declaring itself satisfied with a partial rezoning, or perhaps no rezoning. What cl. 2(a), the condition specifically dealing with rezoning, mentions is the gazettal of rezoning of the said land to a specified zone - upon terms and conditions satisfactory to the intending lessee. The tenant’s argument would have this read as if it said "the gazettal of such a rezoning of the said land, to any zone or zones, as is satisfactory to the intending lessee".

It is unlikely, as a commercial matter, that the parties intended a reading of the clause so generous to the tenant. If it is right, as is argued for the tenant, that it may declare itself satisfied with half the land rezoned, why not a quarter, or none? One answer suggested is that the tenant must be honest in the matter of declaring its satisfaction; but a quite different rezoning from that contemplated by the contract might be genuinely satisfactory to the tenant, although inimical to the interests of the owner.

Those interests of the owner are of significance in this context, in my respectful opinion. The parties contemplated by the terms of the agreement that the rent payable would depend upon the amount of material won, so that if there were no rezoning such as to enable the winning of material, or a rezoning of only a minor part of the land, then that would probably affect the rent payable. It is true that it might not necessarily do so, because the agreement contains no express provision requiring the tenant to win particular amounts of material; but this does not substantially detract from the proposition that one would expect the owner to be concerned about the existence and extent of the contemplated rezoning.

A difficulty which might be thought to face the owner in insisting that there is no obligation to lease the land unless the condition as to rezoning is fulfilled is that each of cls. 4 and 4A (set out in full in the reasons of Thomas J) concludes by saying that in certain events, relevant to the present discussion, the tenant may determine the deed; there is no statement, in the clauses quoted by Thomas J, that the owner may in any circumstances do so. Clause 4 says, in summary, that if the council will not rezone the land as contemplated the tenant may determine. Clause 4A says that if there is an objector appeal against rezoning the tenant may determine. One possible answer to this difficulty for the owner is to say that there is no need for the owner to determine; the owner may simply resist enforcement of the agreement, as it has done. But it seems unlikely that the parties would have intended, in the event that a particular application for rezoning failed, that the owner should be obliged to leave the opportunity of obtaining a rezoning open to the tenant, with no agreed limit as to time. If the owner is to succeed, that should in my view be on the basis that it is implicit in the clauses quoted by Thomas J that if an application for rezoning in terms of the agreement ultimately fails then the owner may rescind. The expression "ultimately fails" has a degree of ambiguity, but it is unnecessary for the purpose of this case to determine what precisely is involved in it;

for here, the council rejected the application for rezoning taken no further.

in 1990 and an appeal from that refusal failed to secure the
rezoning which the agreement contemplated, the decision
being given, in outline, four years ago and finalised by

It appears to me possible to characterise the term I have mentioned as an implication, because the relevant clauses say nothing about the precise situation which has occurred - i.e. that an initial refusal has been challenged on appeal to the Local Government Court and the decision of that Court obtained. Although cl. 4(a) and (b) both contemplate such an appeal and indeed the latter contemplates the possibility of an appeal beyond the Local Government Court, cl. 4 does not say what is the outcome, so far as rescission is concerned, of failure of such an appeal, or appeals, to achieve the contemplated rezoning. Clause 4(c), giving the tenant a right of determination, does not on its natural construction deal with determination on failure of the condition at the appellate level.

So the consequence for the parties of that situation - failure of the condition at the appellate level - are not spelt out and must be left to interpretation or implication.

A reason for thinking that perhaps an implication in favour of the tenant, in that event, is all that is necessary is that each of cls. 4 and 4A allows determination by the tenant only. But in dealing with drafting of this standard, one should not in my view too readily assume that the expression of a certain right in one party is intended to exclude the implication of a corresponding right in the other party, either in the same or in an analogous situation. One possibility is that in cl. 4 the drafter has focused attention on the options available to the tenant in the event being dealt with and has omitted to notice that it might be desirable to explain the owner’s rights in the same situation.

Conceding, as I think one should, that the reference to determination by the tenant in cls. 4 and 4A assists the tenant’s cause in this appeal, that is in my view more than counter-balanced by considerations favourable to the owner.

Of these considerations, the simplest I suppose are that cl. 2 makes the granting of the lease subject to a condition which has not been fulfilled, cl. 5 makes the owner’s obligation to grant a lease dependent upon the occurrence of that condition (as well as another) and cl. 6 ties the commencement of the lease to three events, one of which is the fulfilment of the rezoning condition. All of these are strong indications that the parties intended that, absent fulfilment of that condition, neither should be obliged to proceed. If the condition were solely for the tenant’s benefit the owner would not ordinarily be able to rescind for breach of it; but that is not, in my respectful opinion, so here.

I agree with Thomas J that the appeal should be dismissed with costs.

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered the 16th day of February 1996

In 1989 Mr A.J. Payne and Mrs B.C. Payne, who is the defendant in the action

and the respondent to the appeal, were owners of land at Yandina described as Lot 3

on R.P. 214949. It was some 88.2 ha. in area and was the whole of the land in a

designated certificate of title. By a deed dated 4 October 1989 they agreed to lease

the land for 21 years on the terms of a draft lease, which the parties agreed they would

execute, in the second schedule to the deed. After the death of Mr Payne early in 1993,

Excel Quarries Pty. Ltd., which by an assignment has acquired the rights of the other

party to the deed, brought this action in the Supreme Court to compel execution of the

lease by Mrs Payne. The action was unsuccessful, and this is now an appeal by Excel

Quarries against the judgment in favour of Mrs Payne.

At the date of the deed, Lot 3, which is referred to indiscriminately in the deed as

"the said land" or "the demised premises", was situated in a Rural A zone under the

relevant local town planning scheme. The deed contains in cll. 1 to 15 a series of

covenants. Clause 1 requires Excel as the "intending lessee" to commence "forthwith" the preparation of, and to lodge within six months, an application to the Maroochy Shire

Council to exclude the land from the Rural A zone and include it in the Extractive Industry

zone. By cl.2 the granting of the lease is expressed to be subject to the conditions in

sub-cll. (a), (b) and (c) of that clause. The effect of a provision in that form is to make

the performance of the deed by execution of the lease dependent on fulfilment of those

conditions: Perri v. Coolangatta Investments Pty. Ltd. (1982) 142 C.L.R. 537.

Likewise, recital D records that the parties have agreed to enter into and execute the

scheduled lease "upon and subject to the fulfilment of the terms and conditions

contained in this Deed". In particular, cll. 2 to 5 are directed to achieving a state of

affairs under which the intending lessee would be lawfully entitled to conduct the

quarrying of rock on the subject land.

The three conditions in cl.2 on which the granting of the lease is dependent are:

(a) gazettal of rezoning of the land from Rural A zone to Extractive Industry zone "upon

terms and conditions satisfactory to the intending lessee within 6 months of the date of

the application to the Council, or such extended time as permitted by cll.4(b) and 4A(a)

[of the deed]"; (b) the results of site exploration proving, to the entire satisfaction of the

intending lessee, the sufficiency of suitable rock; and (c) the consent of the Council to

the lease of the land. It is accepted that the Council has in law no duty or power of

approving or consenting to such a lease, with the consequence that the conditions

specified in cl.2(c) can for present purposes be disregarded. Since it is also accepted

that the condition in cl.2(b) has been satisfied, the primary question on appeal is thus

confined to the meaning and effect of cl.2(a);

Excel's application to the Council for rezoning of the land was unsuccessful. That

was a possibility within the contemplation of the parties as disclosed in cl.4. It provides

that if the Council should fail or refuse to rezone the land to Extractive Industry, or should rezone it subject to terms and conditions not suitable to Excel, then: (a) Excel might

appeal to the Local Government Court, and (b) the time for obtaining gazettal of the

rezoning was to be extended to one month after the date of the next Council meeting

which followed "the last Court of Appeal ... judgment" in relation to the appeal from the

Council decision. Those two subclauses or conditions (a) and (b) are conjunctive. They

are followed by a disjunctive further subclause (c) providing:

"or:

(c) the intending lessee may determine this Deed."

There is a comparable provision in cl.4A to cater for the possibility of an objector's

appeal to the Local Government Court. It contains in cl.4A(a) a provision for extension

of the time within which to obtain gazettal of the rezoning. Like cl.4 itself, it also

concludes with a provision, contained in cl.4A(b), conferring on the intending lessee

Excel the option of determining the deed.

What happened in fact was that, having failed to obtain the approval of the

Council to the application for rezoning of the land, Excel took advantage of cl.4 by

appealing to the Local Government Court, or Planning and Environment Court as it has

now become. In that Court, the learned judge allowed the appeal, but in doing so

ordered that the existing single Rural A zone in respect of the land be replaced by in

effect dividing the land into two parts. One part was, as Excel wished, to be designated

as an Extractive Industry zone; the balance, however, was to be rezoned to "Special

facilities -ancillary quarry operations". The purpose was to limit the impact of the

quarrying operations on the surrounding environment. The same result could have been

achieved in the manner proposed by Excel, which was to rezone the whole of the land to

Extractive Industry, while at the same time imposing conditions having the effect of

restricting internally the area in which quarrying activities might lawfully be carried on.
That was, however, not the course adopted by the learned judge, and the order made by

her Honour in the Planning and Environment Court was not, even if it could have been,

made the subject of any further appeal by Excel.

The formal order allowing the appeal was not in fact made until 7 October 1992.

The consequential rezonings were given effect by an Order in Council amending the

town planning scheme, which was gazetted on 25 March 1994. Mrs Payne, however,

failed to execute the lease when it was presented to her on 23 May 1994 and she has

never done so. Proceedings for specific performance of the deed were instituted on 9

August 1995.

Essentially Mrs Payne's defence to the proceedings is that Excel has never

satisfied the conditions in cl.2(a) of the deed. The argument gains much of its force from

cl.5 of the deed, which is as follows:

"5. Upon the occurrence of the events described in clause 2(a) and (b) hereof to the satisfaction of the intending lessee and the obtaining of the Maroochy Shire Council's consent referred to in 2(c) the intending lessors will grant to the intending lessee a lease of the demised premises in the terms and upon and subject to the conditions described in the Second Schedule (called "the said lease") and each party shall execute the said lease within fourteen (14) days of its being tendered for execution."

Clause 2 (a) is the provision which makes the granting of the lease subject to gazettal of

rezoning of the land from Rural A zone to Extractive Industry zone. Limits of time for

achieving that result are, subject to the extensions prescribed in cl.4, imposed by

cl.2(a). No issues of timely compliance arise in this case because, apart from other

considerations, the deed does not, as contracts in Queensland commonly do, provide

that time is to be of the essence of the obligations of the parties. The real difficulty

confronting Excel is, in the end, that it was not the whole, but only part, of the subject

land that has been rezoned. Because, on the view contended for by Mrs Payne, she

and her late husband have never repudiated the deed, it perhaps remains theoretically possible for Excel to repeat the whole process of application and appeal in the hope of

achieving a different result. On this view of it, the deed remains on foot and will continue

to do so until one of the parties, by making time of the essence or otherwise, takes

steps to put an end to the contract.

What I have called the real difficulty confronting Excel has its source in the way in

which the land is referred to in cl.2(a). It is identified there as "the said land". That

expression makes its first appearance at the end of recital A of the deed, where it

follows the real property description of the land owned by Mr and Mrs Payne.

Consistently with standard descriptions in certificates of title under the Torrens system,

Lot 3 on RP 214949 is referred to as being "the whole of the land contained in" the

designated certificate of title. This has the consequence that "the said land" in cl.2(a)

and elsewhere in the deed means the whole of that land; and that, on a literal reading,

nothing less than rezoning to Extractive Industry of the whole of Lot 3 will suffice to

satisfy the condition continued in cl.2(a).

In an attempt to escape this construction of cl.2(a), Excel relies on the words

which follow it. Under cl.2(a), performance of the deed is subject to a gazettal of a

rezoning only if it is "upon terms and conditions satisfactory to the intending lessee"

Excel. Likewise, under cl.5, it is only upon the occurrence of that event in cl.2(a) "to the

satisfaction of the intending lessee" that the intending lessors (Mr and Mrs Payne)

become bound to grant the lease of the demised premises. The mutual obligation to

perform the duty imposed by the deed of executing the lease is therefore qualified by

requiring Excel to be satisfied that the rezoning "event" has occurred. Even so, it is not

Excel's contention that it is not satisfied with the rezoning that has taken place. On the

contrary, it is satisfied with it, even though it is a rezoning of something less than is

envisaged by cll.2(a) and 5. What those clauses contemplate is a rezoning of the whole of the land from Rural A to Extractive Industry; what has happened is a rezoning to

Extractive Industry of only a part of it.

Artificial though it may be, this literal interpretation of cll.2(a) and 5 has the

consequence, so it is contended by Mrs Payne, that Excel is unable to demonstrate that

cl.2(a) or cl.5 has been fulfilled so as to free the deed of the condition imposed in cl.2

and make the obligation to perform by executing the lease unconditional. Clause 5,

read with the meaning of "the said land" in recital A, does not really lend itself to any

form of distributive or partial application or operation. It is not by any means easy to

read it, as Mr Keane Q.C. for Excel suggested it should be, as capable of meaning that

the condition is discharged if it is fulfilled to an extent that it is satisfactory to Excel.

Under cl.5, what must occur, "to the satisfaction of the intending lessee", is the

occurrence of the particular events stipulated in cl.2(a), which is gazettal of rezoning of

the whole of the said land from Rural A zone to the Extractive Industry zone. Nothing

less than the occurrence of that particular "event", however satisfactory it may be to

Excel, is literally capable of satisfying cl.2(a) or cl.5.

It must, however, be doubted whether it was really the function and object of cl.2

to produce such a result. Conditions precedent to performance like that in cl.2(a) are on

occasion capable of fulfilling more than one purpose or of serving the interests of more

than one party to the contact. In some circumstances, particularly when the condition to

be fulfilled controls the date of settlement or of some other event which is critical to the

performance of the ultimate obligation of the parties, it may be obvious that nothing less

than full and precise fulfilment is required. See, for example, Charles Lodge Pty. Ltd. v.

Menahem [1966] V.R. 161, 165; Heron Garage Ltd. v. Moss [1974] 1 W.L.R. 148;

Sheridan v. Nicolic [1982] Qd.R. 725; Willing v. Baker (1992) 58 S.A.S.R. 357, 371-

373. Any impression that complete, precise and literal fulfilment is invariably and necessarily required of any and all such conditions precedent was, however,

authoritatively dispelled by the High Court in Sandra Investments Pty. Ltd. v. Booth

(1983) 153 C.L.R. 153 reversing the decision of the Full Court in [1983] 2 Qd.R. 233. In

the end the question is one which, as Sir Harry Gibbs recognised in giving the advice of

the Privy Council in Newmont Pty. Ltd. v. Laverton Nickel N.L. [1983] 1 N.S.W.L.R.

181, 188, depends on the nature of the condition and the overriding intention of the

parties to be found, as the same learned judge said in Sandra Investments Pty. Ltd. v.

Booth (1983) 153 C.L.R. 153, 158, in the express provisions of the contract or condition

rather than in inferences to be drawn from it.

In Sandra Investments Pty. Ltd. v. Booth, a contract for sale of land was in cl.24

expressed to be "subject to and conditional upon" council approval of a plan of

subdivision on terms and conditions satisfactory to the purchaser within six months.

The condition was not fulfilled. The argument which found favour with the Full Court of

Queensland was that, without fulfilment of that condition, the contract was at an end for

the reason that the obligation to complete the sale was in cl.27 expressed to be

dependent on timely fulfilment of the condition and under the contract time was

expressed to be of the essence in all respects.

In rejecting that view of the matter the High Court held that it was to be implied in

the contract that, if the condition was not fulfilled, the contract was to be completed

within a reasonable time. Their Honours reached that conclusion because of an express

provision in cl.24 of the contract. After making the sale conditional on Council approval

of the plan of subdivision, cl.24 went on to incorporate the further provision that:

"In the event that such approval is not obtained then the purchaser may at
their option cancel the contract ...".

Gibbs C.J., with whose reasons Mason, Murphy and Brennan JJ. agreed, held that

cl. 24 expressly dealt with the situation that arose when the approval of the Council was

not obtained within the stipulated time. "It provides", his Honour said (153 C.L.R. 153,

158):

"that in such event the purchaser at its option may cancel the contract. or allowing it to remain on foot. The plain implication is that if the purchaser does not choose to cancel the contract the vendor has no right to treat it as being at an end."

Later, on the same page of the reported reasons for judgment, his Honour spoke again

of the option to cancel, if Council approval was not obtained, as "plainly" implying that

the purchaser "may choose to carry out the contract in that event". Likewise, Wilson J.

in his separate concurring reasons said (153 C.L.R. 153, 164) in reference to the option

to cancel conferred by cl.24 that:

"There is no question of the purchaser having an implied right to waive fulfilment of the condition to which the contract is subject. It is given an option expressly. It may choose to cancel. Conversely, it may choose - for that is what an option confers, the right to choose - not to cancel the contract. In the latter case, the vendor is bound to the contract".

See also Willing v. Baker (1992) 58 S.A.S.R. 357, 373, 375, 377-378.

In the present case cl.4(c) of the deed incorporates an option to cancel

comparable to that conferred on the purchaser by cl.24 of the contract in Sandra

Investments Pty. Ltd. v. Booth. Clause 4 provides that if the Council should fail or

refuse to rezone the land to Extractive Industry, or should approve the rezoning subject

to conditions not suitable to Excel, then:

"(c) the intending lessee may determine this Deed."

In speaking of failing or refusing to rezone the land in this context, cl.4 uses the

expression "the said land". In accordance with the literal meaning said to be ascribed

to that expression in recital A, it must again be taken to mean the whole of the land contained in Lot 3. The Council has throughout failed or refused to rezone the whole of

that land to Extractive Industry. The most that has been done, consistently with the

decision of the Planning and Environment Court in 1992, is to approve the rezoning of a

part of the land to Extractive Industry. Excel was therefore entitled to exercise the option

conferred by cl.4(c) of determining the deed. Conversely, it was and is entitled to

exercise the option not to determine the deed, but to affirm it despite the Council's

refusal of or failure to approve the rezoning of the whole of the land to Extractive

Industries. In accordance with Sandra Investments Pty. Ltd. v. Booth, that is the effect

that cl.4(c) is to be considered as stating or implying. It is true that the word "option" is

not used in cl. 4(c). But the power or right given to Excel of deciding whether or not the

deed will be determined is indistinguishable from such an option. In Willing v. Baker

(1992) 58 S.A.S.R. 357 the relevant provision of the contract gave to the purchaser the

power to "terminate" the contract if the special condition in cl.15(a) was not fulfilled. The

members of the Full Court of South Australia were unanimous in treating a power

conferred in those terms as attracting the interpretation adopted by the High Court in

Sandra Investments Pty. Ltd. v. Booth.

It was nevertheless submitted that in this instance the intending lessors Mr and

Mrs Payne had an interest in the operation of the condition imposed in cl.2(a) which

would prevent the adoption of such an interpretation here. As appears from recital C of

the deed, they retained "neighbouring land" described as Lots 1 and 2 on the same

registered plan as "the said land" Lot 1. Whether or not a rezoning of the whole of Lot 1

to Extractive Industry would be beneficial to Lots 1 and 2, or their proprietor or

proprietors, is a matter on which it is not necessary to pass judgment. The point made

on behalf of Mrs Payne on appeal is that she is interested in ensuring that the whole of

Lot 1 is rezoned to Extractive Industry. Such a rezoning would make that land more valuable to her as owner of the reversion, as well as to her as intending lessor.

Furthermore under the draft lease scheduled to the deed the amount of rent payable by

Excel is dependent, wholly or in part, upon the quantity of rock quarried by it or removed

from the site.

One must, however, be careful not to repeat the error committed by the Full Court

in Sandra Investments Pty. Ltd. v. Booth. [1983] 2 Qd.R. 233 of drawing inferences

from other provisions of the deed in order to contradict what in the High Court Gibbs

C.J. described as "the overriding intention of the parties [to] be found in its express

provisions". Such a course is forbidden by that decision. The deed here is in one

sense more favourable to the purchaser than the contract in Sandra Investments v.

Booth. Although in the present instance, as in that, the date for completion is linked to

the date on which the event in cl.2(a) (gazettal of the rezoning) occurs, time is in this

case not expressed to be of the essence. Here the conclusion follows, if anything more

readily, that completion must follow within a reasonable time from the exercise of the

purchaser Excel's option to allow the contract to remain on foot.

In any event, the argument based upon the amount of the rent receivable by

Mrs Payne as intending lessee is, in my opinion, not a valid one. The short answer to it

is that the Paynes never bargained that Excel would quarry or remove any particular

amount of rock from the land, so as to produce a corresponding benefit in the amount of

rent. Indeed, neither the deed nor even the draft lease itself positively requires Excel to

quarry rock on the whole of the land or any particular part of it. What cl.1 of the deed

requires is that Excel should lodge an application for rezoning of the land. No doubt it

could be implied that it was bound to pursue that application honestly, or perhaps

honestly and reasonably, to its conclusion subject only to its right under cl.4(c) and

cl.4A(b) to determine the deed in the circumstances there specified. But there is nothing express in the deed, or in the lease when executed, which obliges Excel to

quarry or remove rock from the site. Its primary duty as lessee is to pay the rent.

Under the deed and the lease the amount of the rent payable by the intending

lessee falls to be calculated according to the quantity of crushed rock "sold or removed

for sale". Clause 3.02 of the lease read with cl.7 of the deed prescribe a formula

specifying a rate per cubic metre which is called "the base rate". There is also provision

in cl.7 of the deed for payment of a minimum rent to be arrived at by multiplying the base

rate by 6000. On one view of that provision, the result is to produce a minimum rent of

at least $3000 per annum. I am content to accept that an annual rental of at least that

amount would be payable by Excel under the lease when executed. It remains true to

say that neither the deed nor the lease require that a minimum quantity of rock, crushed

or otherwise, must during any period or at any time be sold or removed from the land for

sale. Of course, both parties evidently expected that rock would be quarried, removed

and sold because that was the object of entering into the deed. But it was the prospect

of profit-making from quarrying that afforded the incentive to Excel to remove and sell

crushed rock from the site, and simultaneously provided Mr and Mrs Payne with the

expectation that the associated rental payments would be high. They never insisted or

stipulated in the deed that a particular amount of rock should be removed or sold

annually, and it would, in my opinion, go quite beyond established principles to imply

that what was agreed upon was a reasonable amount. No one could say what a

"reasonable" amount would be.

This being so, it follows in my view that there is nothing in the deed or the

accompanying draft lease to justify a conclusion that Mr and Mrs Payne had, or

Mrs Payne has, such an interest in the performance of the condition imposed by cl.2(a)

as to prevail against the right conferred on Excel under cl.4(c) of electing to determine, or electing not to determine, the deed if the condition specified in cl.2(a) was not

satisfied. Subject only to any obligation Excel might, in doing so, have had to act

honestly, or honestly and reasonably (Meehan v. James (1982) 149 C.L.R. 571), the

right not to determine the deed, but to affirm it, is impliedly invested in Excel by cl.4(c) of

the deed (Sandra Investments Pty. Ltd. v. Booth). The right so conferred is exclusive

to Excel, and so serves to confirm that the conditions to which performance of the deed

is made subject are and were intended to provide Excel, and not Mr and Mrs Payne,

with an escape route from the contract if the conditions were not fulfilled. It is a route

which Excel has not chosen to make use of.

It follows in my opinion that non-fulfilment of the conditions of cl.2 does not afford

Mrs Payne with an answer to Excel's claim to specific performance of the deed. Those

conditions, and in particular the condition as to rezoning in cl.2(a), do not constitute

conditions precedent to Excel's cause of action or its right to relief in the form of specific

performance of the deed. They would, it is true, have constituted conditions precedent

to Mrs Payne's obligation to perform by executing the draft lease and delivering

possession of the land; but only if Excel had decided to make them so by electing to

determine the deed, which it has not chosen to do.

What I have said makes it unnecessary for me to consider other arguments

advanced on appeal concerning the effect of the actions (or inaction) of Mr and Mrs

Payne. Another matter that was referred to in passing, but was not made the subject of

submissions from Council, was the impact of delay in executing the lease on the

provisions of cl.6 of the deed. It provides that the date of commencement of the lease is

to be the first day of the month following the date on which the rezoning was gazetted

under cl.2(a), or on which the results of the site exploration tests under cl.2(b) were

received, or on which the Council's consent to the lease was received under cl.2(c),

"whichever is the later". For reasons which have been explained, none of the events to

which any of those dates in cl.6 is related has come to pass, so that the provisions of

the clause are inoperative. The commencing date of a lease must be certain; but where

the lease itself does not specify a commencement date, it will, in the absence of

evidence to the contrary, be presumed to commence on the date the lease was

executed. See on this Bradbrook McCallum Moore, Australian Property Law, at 352.

This is very ancient law, for which Blackstone, in so stating the rule, gives Coke on

Littleton 46 as his authority. See 2 Bl.Com. 143. With that possible qualification upon

cl.2 of the minute of judgment proffered by Excel on this appeal, I would allow the appeal

with costs, set aside the judgment below, and make an order in the terms of that minute

of judgment, which is appended to these reasons. The commencing date of the lease,

if it becomes a matter for dispute, can be resolved on application by either party under

para.5 of that order.

Mrs Payne, as respondent to the appeal and defendant in the court below, is

ordered to pay the costs of the action including any reserved costs.

MINUTE OF JUDGMENT

1.         It is adjudged and declared that the Agreement for Lease between the Plaintiff as Lessee and the Defendant as Lessor ought to be specifically performed and carried into execution.

2.         It is ordered that the Defendant execute the lease in the form of the Lease delivered to her by the Plaintiff's solicitors under cover of their letter dated 24 June 1994 and the Defendant deliver the duly executed lease, in triplicate to the Plaintiff's solicitors not later than 14 days from the date of this Order.

3.         It is further ordered that the Plaintiff execute such form of Lease within 14 days of delivery of that form of Lease to the Plaintiff's solicitors pursuant to the preceding order.

4.         It is further ordered that the parties take all necessary steps to achieve registration of the Lease so executed.

5.         It is further ordered that any party be at liberty to apply to the Chamber Judge as it or she may be advised and order that such leave be reserved to all parties to apply for the making of such further orders for the purpose of specifically performing the said Agreement as the circumstances may require.

REASONS FOR JUDGMENT - THOMAS J

Judgment delivered 16 February 1996

On 4 October 1989 Mrs Payne (the respondent) and her husband (who is now deceased)

entered into a deed in which they promised, subject to certain conditions, to grant a lease to Ikacool

Pty Ltd. That company subsequently assigned its rights under the deed to the appellant. The

respondent, by survivorship, is the sole registered proprietor of the land referred to in the deed. She

refused to sign the lease which the appellant in due course presented to her. The appellant then

brought proceedings for specific performance which the learned Trial Judge refused to grant. This

appeal challenges that decision.

The land in question ("lot 3") comprises 88.2416 hectares and is situated in the Yandina

area. It contains material suitable for quarrying.

The deed of 4 October 1989 contained the following recitals and covenants:

"WHEREAS:

A.	The intending Lessors are the registered proprietors of an estate in fee simple of the land described as Lot 3 on Registered Plan No. 214949 in the County of Canning Parish or Maroochy containing 88.2416 hectares and being the whole of the land contained in Certificate of Title Volume 7086 Folio 45 situated at Yandina Creek Road, Yandina in the State of Queensland (called 'the said land').
B.	The intending lessors are the registered proprietors of an estate in fee simple of the land described as Lots 1 and 2 on Registered Plan No. 214949 in the County of Canning Parish of Maroochy containing 12.032 hectares and being the whole of the land contained in Certificates of Title Volume 7086 Folios 43 and 44 (called 'the neighbouring land').
C.	The intending Lessee proposes that it will lease the said land as is described in the First Schedule hereto (such part being called 'the demised premises') for a term of twenty-one (21) years commencing on the first day of the calendar month immediately following the date upon which the said land is rezoned to Extractive Industry subject to the terms hereof.
D.	The intending Lessors and the intending Lessee have agreed to enter into and execute the Lease contained in the Second Schedule hereto (called 'the said lease') upon and subject to the fulfilment of the terms and conditions contained in this Deed.

NOW THIS DEED WITNESSES and the parties hereto covenant with each other as follows:

INTENDING LESSORS TO APPLY

1. The intending lessee will forthwith upon the execution hereof commence with the preparation of an application with the necessary supporting information to the Maroochy Shire Council to exclude the said land from the Rural A zone and to include the said land in the Extractive Industry zone and shall within six months of the execution hereof lodge such an application.

LEASE SUBJECT TO PERMIT AND SITE EXPLORATION

2.          The granting of the said lease shall be subject to the following conditions:-

(a)	the gazettal of rezoning of the said land from Rural A zone to the Extractive Industry zone under the Town Planning Scheme for the Maroochy Shire Council upon terms and conditions satisfactory to the intending lessee within six (6) months of the date of application referred to in clause 1 hereof or such extended time as permitted by clauses 4(b) and 4A(a) hereof; and
(b)	the results of a site exploration program to be conducted by the intending lessee proving to the entire satisfaction of the intending lessee the sufficiency of rock on the demised premises to enable the conducting of a viable business operation of extractive industry and the extraction of rock in the opinion of the intending lessee suitable as road base and for crushing and screening as aggregates on the demises premises for the period of the proposed lease within two (2) months of the date of gazettal of rezoning referred to in subclause (a) hereof; and
(c)	the consent of the Maroochy Shire Council to the lease of the said land in accordance with the provisions contained in the First Schedule upon terms and conditions satisfactory to the intending lessee on or before the date for obtaining the results referred to in subclause (b) hereof.
. . . . .

APPEAL TO LOCAL GOVERNMENT COURT

4. If the Maroochy Shire Council shall fail or refuse to rezone the said land to Extractive Industry or approve the rezoning to Extractive Industry subject to any terms and conditions not suitable to the intending lessee 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 lessee's behalf;

and

(b)

the time within which to obtain the gazettal of the rezoning is extended to a period expiring one month after the date of the next meeting of the Maroochy Shire Council to be held after the date of handing down by the last Court of Appeal of judgment in relation to any appeal or appeals against the decision of the said Maroochy Shire Council or, that date following the handing down by the last court of Appeal of judgment in relation to the appeal or appeals against the decision of the said Maroochy Shire Council on which the rezoning is gazetted, whichever is the later date (provided always however that such appeal or appeals are promptly commenced and diligently prosecuted by the intending lessee); or

(c)

the intending lessee may determine this Deed.

OBJECTORS APPEAL

4A. In the event any person lodges an objection to the application for rezoning with the Maroochy Shire Council and appeals to the Local Government Court against the proposal of the Council to grant the application then:-

(a)

Time within which to obtain gazettal of the rezoning extended to a period expiring one (1) month after the date of the next meeting of the Maroochy Shire Council to be held after the date of handing down the last Court of Appeal of judgment in relation to the appeal or appeals against the proposal of the Council to grant the application or, that date following the handing down of the last Court of Appeal of judgment in relation to the appeal or appeals against the proposal of the Council to grant the application on which the rezoning is gazetted, whichever is the later date; or

(b)

The intending lessee may determine this deed.

PARTIES TO SIGN LEASE

5. Upon the occurrence of the events described in clause 2(a) and (b) hereof to the satisfaction of the intending lessee and the obtaining of the Maroochy Shire Council's consent referred to in 2(c) the intending lessors will grant to the intending lessee a lease of the demised premises in the terms and upon and subject to the conditions described in the Second Schedule (called 'the said lease') and each party shall execute the said lease within fourteen (14) days of its being tendered for execution.

DATE OF COMMENCEMENT OF LEASE

6. The date of commencement of the said lease shall be first day of the calendar month immediately following the date upon which the rezoning is gazetted in terms of clause 2(a) or receive results of site exploration tests referred to in clause 2(b) or receives the consent of the Maroochy Shire Council to the said lease whichever is the later."

Time was not stipulated to be of the essence.

On 27 January 1990 Ikacool (which had changed its name to Suncoast Quarries) applied to

the Maroochy Shire Council to rezone the whole of the subject land for the use of extractive

industry. The Council received a considerable number of objections, and on 23 May 1990 refused

the application. Suncoast Quarries promptly lodged an objection in the Local Government Court.

In February 1991 Suncoast assigned its right to the present appellant, which continued the pending

proceedings in Suncoast's name.

In the course of the proceedings, in June 1991, the appellant, on the advice of its experts,

decided to limit the area over which actual quarrying would occur, apparently influenced by

evidence and arguments from objectors concerning noise, environmental impact and the recent

identification of a rare plant species on the western portion of lot 3. Revised plans were prepared

proposing development of the quarry based on extraction from the eastern knoll, so that there would

be no extraction from the western knoll of the property. The revised proposal contemplated that the

balance area outside the eastern knoll would still form an integral part of the proposed quarry

operation, providing for various extraction-related activities and buffer area purposes. These

proposals were disclosed to the learned Planning and Environment Court Judge during the hearing.

On 23 January 1992 reasons for judgment were published by O'Sullivan DCJ in the
Planning and Environment Court, holding that the proposed rezoning ought to be approved subject

to reasonable and relevant conditions. Her Honour indicated some conditions that she would regard

as necessary and gave directions for the parties to make further submissions concerning the

conditions that should be attached to the approval.

The reasons for judgment of 23 January 1992 contained the following statement:

"Prior plans to quarry the western knoll have been abandoned, and that area is not

included in the land now sought to be rezoned."

The first proposition is correct to the extent that the appellant had earlier proposed to use part of the

western area for extraction. But the second proposition was not correct, because the appellant at all

material times both before and after delivery of the reasons for judgment sought rezoning to

"extractive industry" of the whole of the land, submitting that the areas which were to serve purposes

other than actual extraction should be controlled by the imposition of conditions and that the Court

did not have jurisdiction to approve a dual rezoning when only one rezoning had been applied for.

The suggestion that this be achieved by a split zoning seems to have been insisted upon by the

Court. It was not a proposal of the appellant.

A considerable time elapsed before the Council finally stated the conditions for which it

contended, and it was not until 7 October 1992 that the Court finally gave judgment allowing the

appellant's appeal by rezoning the land into two zones, one part of which was to be rezoned to

"extractive industry" and the balance of which was to be rezoned to "special facilities - ancillary

quarry operations". The recommended rezoning was subject to conditions which need not be here

mentioned. In the event they were satisfactory to the appellant.

On 25 March 1994 an Order in Council was gazetted amending the relevant town planning

scheme, effecting a rezoning into the two zones mentioned in the Court's decision.

On 23 May 1994 a representative of the appellant took the proposed lease to the

respondent for her signature. She indicated no dissent, but said that she needed time to consider it.

A few days later she visited the office of the appellant's solicitor, and without giving a clear indication of assent or dissent intimated that she was going overseas. On 7 June 1994 a letter was written on

her behalf by a Mr Pepper suggesting that considerably higher rates of rental and royalty than those

agreed upon in the 1989 deed would be "fair and reasonable". The letter contended that the 1989

deed was "not applicable" any longer due to the non-fulfilment of conditions. The letter made the

point that Condition 2(a) of the deed had not been satisfied because only part of the land had been

rezoned to extractive industry. It was contended during the trial in the Supreme Court that the

respondent and her husband must have known of the appellant's altered proposal during the

proceedings, because they had been given a copy of O'Sullivan DCJ's reasons for judgment in

January 1992. However Mrs Payne gave evidence that she had not read them. His Honour held

that Mrs Payne was not aware until late May 1994 that only part of the land had been zoned for

extractive industry. His Honour was not satisfied that her husband had actually read the reasons for

judgment either. This point has potential relevance in relation to estoppel and waiver alleged by the

appellant against Mrs Payne. To the extent to which knowledge of this fact is relevant, the onus of

establishing it is upon the appellant. Consistently with the principles stated in Devries v. Australian

National Railways Commission (1993) 177 CLR 472, I am unable to say that it was not reasonably

open to his Honour to fail to be satisfied that Mrs Payne knew of the proposal to zone only part of

the land extractive industry earlier than May 1994, or to fail to be satisfied that Mr Payne was at any

time aware of it.

The appellant's writ was issued on 9 August 1994 seeking the specific performance of the

deed. The respondent's defence and counterclaim did not allege that the respondent had terminated

the contract, or that she regarded it as void because of non-fulfilment of necessary conditions. It

pleaded that the appellant breached its contract to apply to rezone to extractive industry, that the

orders of the Planning and Environment Court were null and void and that the conditions prescribed

by clause 2 of the contract had not been fulfilled. It further pleaded that the Court should in its

discretion refuse to order specific performance, and counterclaimed for damages for breach of

contract.

It is necessary to comprehend the deed (with the appended lease) as a whole before

attempting to answer the ultimate questions that arise on the appeal.

Rental

Annual rental was to be calculated according to the volume of crushed rock applied to a

rate called the base rate. That rate was fifty cents per cubic metre, subject to proportional CPI

variation. It was further provided that if the rental so calculated was less than the minimum rent, a

minimum rent should be paid. The commencing minimum rent was defined as the sum ascertained

by multiplying the base rate by six thousand. These provisions are contained in clause 7 of the deed

and in section 3 of the appended draft lease.

The basic rent was to be calculated upon fifty cents per cubic metre of crushed rock sold or

removed for sale; and there was further provision for payment of a royalty of twenty cents per cubic

metre for materials other than crushed rock removed for sale (s.3.06 of the appended lease). If the

basic rent did not exceed the minimum rent, then the latter would apply. The minimum rent was

capable of precise calculation, and at the commencement of the lease would appear to amount to a

little over $3000 per annum.

Consent of Maroochy Shire Council to Lease

The inclusion of clause 2(c) is in my view completely inappropriate. Such a clause is

necessary when a proposed lease of part of an existing parcel of land effects a subdivision for the

purposes of legislation such as the Local Government Act 1993. In such a case, the lease is

unlawful unless the relevant local authority has consented to it (Local Government Act ss. 34(1),

34(8), 34(17); Part V of the Local Government (Planning & Environment) Act 1990). The

proposed lease was of the whole of the land described in the title reference, and it is impossible to

suggest that such a lease could effect a subdivision. There is no other basis suggested upon which a

local authority could be asked to give its consent to a lease between citizens and seemingly a local
authority has no power to give such a consent.

The inclusion of clause 2(c) seems to have been the inclusion of a clause based upon an

inappropriate precedent. In the context of this lease it is an absurdity. In my view it is inapplicable

and meaningless and should be disregarded (Fitzgerald v. Masters (1956) 95 C.L.R. 420, 427;

Laybutt v. Amoco Australia Pty Ltd (1974) 132 C.L.R. 57, 63-64, 81-82); Kavir v. Dwyer

[1973] Qd.R. 192).

Further references to clause 2(c), such as in clauses 5 and 6, should similarly be

disregarded.

Commencement of Term

Clause 6 of the deed makes commencement of the lease dependent upon "the date upon

which the rezoning is gazetted in terms of clause 2(a)" or the receipt of results of exploration tests

under clause 2(b), whichever is the later. The latter event, according to clause 2(b), must occur

within two months of the date of gazettal of the rezoning. For reasons mentioned under the previous

heading, the reference in clause 6 to the date of receiving consent of the Maroochy Shire Council to

the lease should be ignored.

The point to be noted here is that unless a rezoning occurs in conformity with clause 2(a)

there is no means of fixing the commencement of the lease.

Lessee's Satisfaction

Certain rights are conferred upon the lessee according to whether it is satisfied with certain

events. Thus under clause 2(a) the granting of the lease is made subject to the gazettal of a rezoning

upon terms and conditions satisfactory to the lessee within stated times. Under clause 2(b) the

granting of the lease is further made subject to the lessee's satisfaction as to sufficiency of rock etc.

within two months of the necessary gazettal.

Under clause 4, if the Council refuses to rezone, or if the Council imposes conditions unsatisfactory to the lessee, the lessee may bring an appeal, in which case the time for obtaining gazettal is extended, or it may determine the deed. Under clause 4A, if there is an objector appeal,

the lessee may resist the appeal in which case time for gazettal is extended, or it may determine the

deed.

It was submitted on behalf of the appellant that clause 5 confers further rights upon the

lessee over and above those already mentioned. This submission will be considered later.

Lessor's Rights

The deed contemplated the taking of a series of steps, for some of which time-limits are

prescribed. Clause 1 requires the lessee to prepare and lodge the application for rezoning within six

months of the execution of the deed. Clause 2(a) then requires the necessary gazettal to occur

within six months from date of application "or such extended time as permitted by clauses 4(b) and

4A(a) hereof". Apart from the expectation of the grant of the lease, and the benefits to be expected

thereunder, the main rights and protections afforded to the lessor are the prescription of times by

which the basic condition (gazettal of rezoning) must be satisfied. Those times are prescribed by

clauses 4(b) and 4A(a) and by clause 2(a) itself. So far as extensions of time under those latter two

clauses are concerned, it seems to me that many words have been wasted, because in the end, if

appeal proceedings ensue, the words which govern the situation in each instance are: "The time

within which to obtain the gazettal of the rezoning is extended to [the times of various events] or . .

that date . . on which the rezoning is gazetted, whichever is the later date . . ". It therefore seems

that the other earlier alternatives are immaterial.

The result is that clause 2(a) makes the grant of the lease subject to gazettal of rezoning of

the said land satisfactory to the lessee irrespective of when the gazettal might occur.

The main protection afforded to the lessor against the land being tied up indefinitely by a

dilatory or cynical developer is in the proviso -

"Provided always however that such appeal or appeals are promptly commenced
and diligently prosecuted by the intending lessee".

It would also seem that if the obtaining of a gazettal were to be unduly delayed, the lessor might claim that as the lessee had the carriage of the rezoning application it was obliged to do all that was

reasonable to obtain gazettal within a reasonable time (Perri v. Coolangatta Investments Pty Ltd

(1982) 149 CLR 537, 566). For present purposes however it is unnecessary to pursue this matter

as no allegation of that kind has been made.

To what land does clause 2(a) refer?

It is difficult to see how "the said land" referred to in clause 2(a) can refer to anything other

than the whole of the property that is to be demised. The preceding reference to the land in recital

A is to "the whole of the land" contained in the certificate of title. If it had been intended to refer to

part only of the land, it would be difficult to know what part was intended. If it had been intended

that the rezoning be of "so much of the said land as is acceptable to the lessee" the agreement should

have said so. In the context of an agreement to grant a lease in which the expected returns to the

lessor are based upon quantities of rock extracted from the land, it is reasonable to think that the

parties, in referring to a rezoning to "extractive industry" of the land were referring to a rezoning of

the whole of it.

Mr Keane QC for the appellant sought to rely upon clause 5 as adding something to clause

2 so that even if the rezoning was not of the whole of the land it could nevertheless be said to be the

occurrence of the event contemplated by clause 2(a) to the appellant's satisfaction. Satisfaction by

the Lessee under Clause 5, he submitted, was sufficient to require the respondent to grant the lease.

One difficulty with the submission is that it converts the events described in clause 2(a) and (b) into

something less than what is described in those clauses. Mr Keane paraphrased the combined

phrase into, "where that event occurs to the extent that we are satisfied with it".

If the submission is correct, a rezoning to some other zone entirely might satisfy the condition

so long as this satisfied the lessee. Mr Keane submitted that that would not be a surprising result

because the lessee would be bound not to act dishonestly or unreasonably (Meehan v. Jones 149

C.L.R. 581, 590, 598), and that bearing in mind that the agreement was for a lease of premises where material was to be extracted and where the rent was to be fixed by reference to the material

extracted, his client could not come to an honest satisfaction about a rezoning if the effect meant that

no rent other than the minimum rent would be payable. Such a construction however produces

considerable difficulties. There is nothing in the deed or appended lease which fixes a minimum level

of activity on the part of the lessee, and the parties seem to have been content to assume that the

lessee's own desire for profit would probably bring about a satisfactory level of production. Section

6.01 of the lease includes a covenant by the lessee "to use the demised premises only for the

purpose of extractive industry". It was submitted that in the circumstances of this particular deed the

lessee would be under an implied obligation to engage in quarrying activity to a reasonable extent. I

assume for the purposes of argument that a duty of the kind discussed in Secured Income Real

Estate (Australia) Ltd v. St Martins Investments Pty Ltd (1979) 144 C.L.R. 596, 607, would arise

in the postulated circumstances although I refrain at this stage from attempting to formulate it. The

submission goes some distance in reducing the otherwise open-ended breadth of the right contended

for on behalf of the appellant, but it introduces a number of arguable uncertainties into the contract.

Mr Keane further submitted that the rezoning achieved in the present case was precisely the

same as might have been achieved by a rezoning of the whole of the land with conditions prohibiting

extraction on the western knoll. He submitted in other words that it was enough if his client was

reasonably satisfied with the substance of the rezoning even though its form might not literally comply

with clause 2. However, as Mr Hanson QC pointed out on behalf of the respondent, a large part of

the subject land has been zoned "special uses - ancillary quarry operations" and that in such a zone,

it is unlawful to quarry such areas. Further rezoning would be necessary before any part of such

area could be exploited. The legal rights flowing from dual rezoning are distinctly different from

those flowing from a single extractive industry zoning of the whole land. The amount of rock

quarried directly affects the quantum of the rent to be paid during the lease. Also the reversion might

be more valuable to the respondent if there remained a larger area of the land already zoned for

extractive industry at the end of the lease. In my view the most that can be said on behalf of the lessee is that the rezonings that were obtained were from a practical commercial point of view nearly

as good as might have been obtained by a rezoning of the whole land subject to restrictive

conditions. But they are not the same as what is stipulated in clause 2(a). Only about half the land

has been given the legal rights attributable to extractive industry zoning. Substantial performance of

a condition such as this is not enough. Either it is satisfied or it is not (Tri-Continental Corporation

Ltd v. HDFI Ltd (1987) 21 NSWLR 689, 705).

Mr Hanson submitted that the expression "to the satisfaction of the intending lessee" in

clause 5 is a shortened reference to the words "upon terms and conditions satisfactory to the

intending lessee" earlier contained in clause 2(a) and "to the entire satisfaction of the intending lessee"

in 2(b). Mr Keane's submission is that such a construction treats the words in clause 5 as

surplusage, and that it is preferable that some additional meaning be given to them. The quality of

the drafting of this deed is not such as to cause one to think that the avoidance of repetition was of

concern to the drafter, and in any event it may well be that the inclusion of those words in clause 5

removes the possibility of argument that "the events" in clauses 2(a) and (b) are limited to the gazettal

as distinct from something in the mind of the lessee such as its satisfaction. Without these words it

might at least be submitted that clause 5 requires the lessor to grant the lease upon gazettal

irrespective of any question of satisfaction, and it may have been considered important to preserve

the lessee's right to be satisfied. It should also be noted that the events in clauses 2(a) and 2(b)

would occur at different times, and that different satisfactions would be involved.

I am unable to read clause 5 as conferring a separate right of satisfaction upon the lessee

capable of diluting the requirements of clause 2(a).

It follows that the answer to this question must be that the requisite rezoning to extractive

industry must be of the whole of the land intended to be leased.

The Nature of Condition 2(a)

Mr Hanson submitted that performance of clause 2(a) was not only essential to the further performance of the agreement but that without such performance no question of termination, election

or waiver could arise. He submitted that the clause was of the same kind as that discussed in

Newmont Pty Ltd v. Laverton Nicol NL & Ors (1982) 57 A.L.J.R. 348, (1983) 1 N.S.W.L.R.

181. In that case the respondents were able to resist specific performance even though they were

assumed to have been guilty of a breach of contract which made it impossible for the necessary

condition to be fulfilled. However the condition in that case is distinguishable from the present. The

relevant condition required the approval of the Equity Division of the Supreme Court of New South

Wales to the making of the agreement. It was a case where the condition had a public aspect and

was for the protection not only of the parties to the agreement in question but of third parties

including creditors. The court rejected the appellant's submission that in the circumstances the

condition should be treated as having been fulfilled. The case can readily be seen as one where

none of the parties had the right or power to dispense with performance of the condition which was

imposed for the benefit of others (pp. 188-189). That is not the position in the present case. In

my view this condition was not a condition precedent to the formation of a contractual relationship.

Obligations were created, including a duty on the part of the intending lessee to make the necessary

application. I reject the submission that no question of termination, election or waiver may arise

unless the condition is satisfied.

This is not a case where either party has promised that condition 2(a) will be fulfilled.

However because the appellant has the carriage of the attempted gazettal it is under certain duties to

take reasonable steps to obtain it, and the respondent might if necessary obtain specific performance

of those obligations, or a decree "limited to the performance of any promise affecting the occurrence

of the contingency" (per Brennan J in Perri v. Coolangatta Investments above, p.566). Such a

decree might order further performance subject to the achievement of the contingency (Brown v.

Heffer (1967) 116 CLR 344; Kennedy v. Vercoe (1960) 105 CLR 521). However, the

appellant's rights against the respondent are not co-extensive. The respondent has not promised that

the event will occur, nor does it have the means or duty of bringing it about, except in the provision of the necessary cooperation in the making of the necessary application which it has already given..

It is not suggested that the respondent has breached any obligation under the contract or that she has

failed to perform any act that the respondent has asked her to do. Until the condition is actually

satisfied, the appellant has no equity to enforce against the respondent.

In the light of the findings of the learned Trial Judge, the appellant has not committed any

breach of contract. The allegation in paragraph 10(a) of the defence was that the appellant, in

breach of the contract, failed to apply to rezone the land (i.e. the whole land) to extractive industry.

To the contrary it was proved that the application was for the whole of the land and that the

appellant was not responsible for the dual zoning result finally imposed by the Court, as it had at all

times submitted against the making of such an order. It follows that the non-fulfilment of condition

2(a) is not a consequence of any breach on the part of the appellant (cf. Ankar Pty Ltd v. National

Westminster Finance (Aust) Ltd (1987) 162 CLR 549, 555-556). But a non-fulfilment it remains.

It is clear enough that the satisfaction of clause 2(a) was a condition precedent, not to the

formation of a contract, but to the obligation to complete it (Perri v. Coolangatta Investments Pty

Ltd (1982) 149 CLR 537, 543, 551-552, 557-558, 565-566; Sandra Investments Pty Ltd v.

Booth (1982) 152 CLR 153, 157). It is unnecessary to consider whether the clause might for some

purposes be regarded as a condition subsequent. The preferred use of the latter term in Suttor v.

Gundowda Pty Ltd (1950) 81 CLR 418, 441 has not been maintained in the more recent decisions,

although the authority of Suttor v. Gundowda and Gange v. Sullivan (1966) 116 CLR 418, 441-

442 as to the rights of the parties upon non-fulfilment of such conditions remains unimpaired. A

characterisation exercise is unnecessary.

The essential finding that led to denial of the appellant's claim for specific performance was

that the rezoning of part only of the land to extractive industry was not a satisfaction of clause 2(a) of

the deed (cf. para.10(e) of the defence). It is worthy of note that up to the present time there has

been no express termination of the deed by either party.
Failure of the Condition

On the construction I have given to the contract, there can be no doubt that condition 2(a)

has not been satisfied, notwithstanding that the appellant claims to be satisfied with what has

happened.

The remaining questions are whether the appellant may unilaterally waive the benefit of the

condition or whether it can rely upon conduct of the respondent as establishing affirmation, waiver or

estoppel so as to render proof of satisfaction of the condition unnecessary. Unless the appellant can

by-pass the effect of this clause in one of these ways it has no right to demand further performance

from the respondent.

Unilateral Waiver by Appellant

It was submitted that the clauses requiring occurrence of events to the satisfaction of the

appellant conferred an exclusive right upon the appellant, and that "because the appellant alone had

the right to determine the deed, it had the right to waive the fulfilment of the condition precedent to

performance". The premise that the appellant had the right to determine the deed (as distinct from

the right to be satisfied with the terms and conditions of a specified rezoning) is incorrect, but the

question remains whether on the proper construction of the contract the appellant could waive the

need for the rezoning described in clause 2(a).

The question whether one party may unilaterally waive the need for fulfilment of such a

condition is commonly (though not invariably) answered by enquiring whether the condition is one

that operates solely in favour of that party, or alternatively whether it is for the benefit of both parties

(Sandra Investments Pty Ltd v. Booth (1983) 153 CLR 153, 159; Dorellyn Pty Ltd v. Allain

[1984] 2 Qd.R. 93, 107). Sometimes the matter may be approached "more directly" as when the

contract itself provides for the consequences that are to flow from a failure to fulfil the condition

(Sandra Investments p. 157). In that case the relevant clause not only required an approval on

conditions satisfactory in all respects to the purchaser, it also provided that "in the event that such approval is not obtained then the purchaser may at their option cancel this contract", with further

provision for full refund of the deposit. The clause in the present case contains no such express

consequences, and the question whether the appellant can in effect drop clause 2(a) out of the

contract is best approached by asking whether its inclusion was solely for the appellant's benefit.

There are a number of features of the present contract which demonstrate that its inclusion

was for mutual benefit. Firstly the quantum of the return to the lessor was capable of depending

upon the amount of material extracted. If only a small part of the land were to be appropriately

rezoned, the potential for high extraction and consequently high rent over the full period would be

directly impaired. Secondly, unlike a sale contract, the respondent would retain a reversionary

interest. In commercial terms, the rezoning from rural A to extractive industry might be regarded as

enhancing the value of the reversion. To some extent the two factors so far mentioned might

interrelate with each other, but it cannot be denied that the full performance of the condition was one

in which the respondent had a considerable stake and from the proper performance of which she

stood to benefit. Further, the achievement of less than full performance of the condition could lead

to premature termination of the lease by the lessee under section 15 of the draft lease. This could

occur if only a small area were rezoned, and the deposits were exhausted. It might also be noted

that unless the rezoning were achieved, the intended lease for quarrying purposes could not be

granted at all, as it would be illegal.

It may now be accepted that the circumstance that the commencing date of the lease is fixed

by reference to the date of obtaining of the appropriate gazettal is not by itself sufficient to

characterise it as a condition for the benefit of both parties (Sandra Investments v. Booth above,

reversing the Full Court in Sandra Investments Pty Ltd v. Booth [1983] 2 Qd.R. 233, and

disagreeing with the Full Court's interpretation of the majority judgment in Gange v. Sullivan (1966)

116 CLR 418). However for the reasons already mentioned the present contract for the grant of a

lease was one in which the performance of the stated condition was not for the benefit of one party

alone. Anything less than full performance of the conditions could lend to adverse consequences flowing directly to the lessee through further performance of the contract. That is enough to require

the contract to be construed against granting a right of unilateral waiver to the lessor with respect to

such a condition.

It follows that the appellant was not entitled unilaterally to waive the need for its

performance.

Estoppel

The learned Trial Judge declined to find that the respondent was estopped from exercising

any right to terminate the contract. Mr Keane accepted that in order to falsify that conclusion it

would be necessary to show that the learned Trial Judge erred in failing to hold that prior to the end

of May 1994 either Mr Payne or Mrs Payne must have known the facts upon which the right to

terminate might arise. Whether the view of a minority of the High Court in Commonwealth v.

Verwayen (1990) 170 CLR 394, 413 and Legione v. Hateley (1983) 152 CLR 406, in effect

assimilating common law estoppel to equitable estoppel, correctly states the law is a question that

may arise another day. For the purposes of the present case Mr Keane was not prepared to

challenge the correctness of the views of Mason CJ in Verwayen and Mason CJ and Deane J in

Legione v. Hateley which suggest that knowledge of the right or of facts which establish the right

would be necessary in order to establish an estoppel against the respondent. For reasons earlier

given I do not consider that his Honour's findings of fact in this regard can be successfully challenged

on appeal. It follows that the challenge to his Honour's rejection of the plea of estoppel fails.
Affirmation

Condition 2(a) is a condition precedent to the obligations of the parties to complete the

contract, and its non-satisfaction would entitle either party to avoid it (Sutton v. Gundowda (above);

Gange v. Sullivan (above)). No-one has purported to avoid it. As either party may avoid the

contract I am prepared to assume for the purposes of the present discussion that either party may

bind itself by affirming the contract for performance notwithstanding that the condition has not been

satisfied.

I did not understand Mr Keane to press the submission that the respondent elected to affirm

the contract unless this Court is prepared to set aside the finding of absence of knowledge. In any

event it seems to me that there was nothing in the conduct of Mr Payne or Mrs Payne at any

material time that amounted to a distinct affirmation or disaffirmation of the contract. There is little

doubt that Mrs Payne reserved her position on 23 and 25 May 1994, and that her right to rely upon

non-performance of the condition was reserved by Mr Pepper's letter of 7 June 1994 and at

material times thereafter. It is true that the pleading filed on her behalf seeks inconsistent remedies,

but it cannot as a whole be regarded as an unequivocal affirmation of the contract or a waiver of the

right to insist upon performance of clause 2(c).

In my view there was no evidence upon which it could properly be held that the respondent

has elected either to affirm or disaffirm the contract. One might respectfully cavil with the learned

Trial Judge's finding that after the end of May 1994 "the conduct of the (respondent) is . . .

consistent only with her exercising her right to treat as at an end the obligation to execute the lease"

(my underlining). However his Honour's further finding "I consider it impossible to say that the

(respondent's) conduct was unequivocally consistent only with an election to keep the contract on

foot including her obligation to execute the lease" is plainly correct. Nothing specific either in the

evidence or in the conduct of the case can be referred to that could be regarded as unequivocal

avoidance or affirmation. To the contrary an equivocal attitude seems to have been maintained

throughout. If, as seems to be the case, the contract has never been avoided by either party, it remains alive for either further performance or avoidance by an innocent party (Gange v. Sullivan

(above at pp.441-2).

Whether there remains any obligation upon the appellant to make further application to

achieve extractive industry zoning of the whole area is a question that seems not to have been

litigated. It may well be that the parties recognise this to be a practical impossibility. All that has

been decided and all that needs to be decided in the present action is that the appellant has not

proved the performance of condition 2(a), which was a condition precedent to Mrs Payne's

obligation to grant the lease. The learned Trial Judge was right to refuse specific performance on

this ground.

The appeal should be dismissed with costs.