F J & P N Curran Pty Ltd v Almond Investors Land Pty Ltd (No 1)
[2018] VCC 722
•25 May 2018
| THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-16-00543
| F J & P N CURRAN PTY LTD | Plaintiff |
| v | |
| ALMOND INVESTORS LAND PTY LTD | Defendant |
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JUDGE:HIS HONOUR JUDGE COSGRAVE
WHERE HELD: Melbourne
DATE OF HEARING: 15, 16, 17, 20 and 21 November 2017
DATE OF JUDGMENT: 25 May 2018
CASE MAY BE CITED AS: F J & P N Curran Pty Ltd v Almond Investors Land Pty Ltd (No 1)
MEDIUM NEUTRAL CITATION: [2018] VCC 722
REASONS FOR JUDGMENT
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Subject:CONTRACT –TRADE PRACTICES – TORT – EQUITY – RESTITUTION – PRACTICE AND PROCEDURE
Catchwords: CONTRACT – construction and interpretation – principles of construction – role of context and surrounding circumstances and purpose – role of "ambiguity" and "plain meaning"
TRADE PRACTICES – misleading and deceptive conduct – evidence – standard of proof – reliance on oral representation
TORT – negligent misrepresentation
EQUITY – estoppel by convention – relevance of pre-contractual negotiations – equitable estoppel – promissory estoppel – principles –essentially defensive – relevance of knowledge
RESTITUTION – money paid under mistake – mistake of fact or law – right to recover – unjust enrichment – whether retention of moneys inequitable in all the circumstances
PRACTICE AND PROCEDURE – whether counterclaim statute barred – mistake – whether defendant discovered or could with reasonable diligence have discovered mistake
Legislation Cited: Competition and Consumer Act 2010 (Cth); Limitation of Actions Act 1958 (Vic); Supreme Court Act 1986 (Vic); Trade Practices Act 1974 (Cth);
Cases Cited:Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582; Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183; BB Australia Pty Ltd v Karioi Pty Ltd (2010) 278 ALR 105; BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Services GmbH & Co KG [2014] VSCA 338; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; Commonwealth v Verwayen (1990) 170 CLR 394; Cushman & Wakefield (NSW) Ltd v Carrell [2017] NSWCA 24; David Securities Pty Ltd & Ors v Commonwealth of Australia (1992) 175 CLR 353; Donis & Ors v Donis [2007] VSCA 89; Doueihi v Construction Technologies Australia Pty Ltd (2016) 333 ALR 151; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; Fitzgerald v Masters (1956) 95 CLR 420; Franklins Pty Ltd v Metcash Trading Ltd (2009) 264 ALR 15; Grace v Peter Harrison Design & Signs Pty Ltd [1998] QSC 27; Habitat 1 Pty Ltd v Formby (No 2) [2017] WASC 331; HIH Casualty & General Insurance Ltd v Axa Corporate Solutions [2002] 2 All ER (Comm) 1053; Hird v Chubb Insurance Company of Australia Ltd [2016] VSC 174; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 159; Johnson Matthey Ltd v AC Rochester Overseas Corp (1990) 23 NSWLR 190; Legione v Hateley (1983) 152 CLR 406; Liangis Investments Pty Ltd v Daplyn Pty Ltd (1994) 117 FLR 28; MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152; Mainteck Services Pty Ltd v Stein Heurtney SA (2014) 89 NSWLR 633; Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55; MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39; Moratic Pty Ltd v Lawrence James Gordon and Anor [2007] NSWSC 5; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; Painaway Australia Pty Ltd v JAKL Group Pty Ltd and Others (2011) 249 FLR 1; Pentridge Village Pty Ltd v G&S Potenza Pty Ltd [2014] VSCA 50; Retirement Services Australia RSA Pty Ltd v 3143 Victoria Street Doncaster Pty Ltd (2012) 37 VR 486; Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486; State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Victoria v Tatts Group Ltd (2016) 328 ALR 564; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Watson v Foxman (1995) 49 NSWLR 315; Whittet v State Bank of New South Wales (1991) 24 NSWLR 146
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Arthur | Cahills Solicitors |
| For the Defendant | Dr E Peden | Clear Lawyers |
HIS HONOUR:
Summary
1 This case concerns a dispute between the plaintiff (“Curran”) and the defendant (“AIL”) in relation to a farming property (“the property”) at Miralie in north-west Victoria. The property comprises the land in certificate of title volume 8060 folio 660 and is known as Crown Allotment 2 Parish of Tyntynder North (“CA2”). The property is located about 28 kilometres north of Swan Hill. Pursuant to an arrangement allegedly made between the parties, AIL paid Curran about $242,000 as crop compensation between 2007 and 2012. Curran sues AIL for approximately $186,000 being the crop compensation it alleges is due but unpaid for the years 2012-2015 inclusive. Not only does AIL deny that it has any obligation to pay the crop compensation for the later period, it says that the payments it made for the earlier years resulted from a mistake in law as to its obligations and it seeks to recover those moneys from Curran.
Background
2 The directors of Curran are Frank Curran and his wife, Phyllis. Frank has been a farmer for over 50 years. Curran owns not just the property the subject of the proceeding but other farming land in the area. This includes Crown Allotment (“CA”) 1 which abuts CA2 and other land to the west of Watson Road, which constitutes the western boundary of the property.
3 In about 2003 or 2004, Frank became aware of horticulture developers who showed an interest in farming land near the Murray River. The interest was spurred in part by the fact that land in that area had access to irrigation water. Around that time Frank attended a meeting with a representative of the local shire and several other farmers to examine whether there was any interest in making land available for intensive horticulture developments.
4 One such horticulture development company was AIL. This was the responsible entity, trustee and project manager of an investment scheme for the commercial cultivation of almonds. AIL had a project at Piangil, about 5 kilometres from the property, where approximately 2,500 acres of land was under development. The orchard manager of the Piangil project was Graham Johns (“Johns”). Around this time, other important representatives of AIL were Wayne Overall (“Overall”), who was the executive director of AIL, and his daughter, Vanessa Overall (“Ms Overall”), who was head of legal and corporate governance.
5 Frank first came into contact with AIL in early 2006 when Johns contacted him. Johns was interested in having access to Curran’s land for the purposes of undertaking soil testing. He expressed interest in possibly purchasing CA1 and CA2. Frank agreed that AIL could conduct soil tests on Curran’s land.
6 By deed dated 24 November 2006 (“the Option Deed”), Curran as grantor and registered proprietor of the property granted AIL an option to purchase the property on the terms and conditions set out in the Deed. The consideration payable by AIL for the option was $1. To exercise the call option, AIL or its nominee had to deliver various documents to Curran’s solicitors during the “call option period”. This was defined to be the period beginning at 9.00am on 24 November 2006 and ending at 5.00pm on 15 June 2010.
7 Pursuant to the Option Deed, AIL was entitled, during the call option period, to carry out development works on the property. Development works were essentially all works in connection with preparing the property (or any part of it) for an almond project including survey works, the planting of almonds and installing any necessary irrigation and other infrastructure. Subject to the terms of the Option Deed, in order to undertake development works, AIL had to give written notice to Curran or its solicitors that it elected to carry out or procure the carrying out of development works on the property. Once Curran received such notice, the area specified in the notice as the area over which development work would be done became “the leased area” and Curran was required to grant AIL and the lessee under an interim head-lease reasonable access to the leased area for the purposes of carrying out development works. An interim head-lease was Annexure A to the Option Deed.
8 Under the Option Deed, AIL had the right to perform development works on the property at any time during the call option period and independently of whether or not it exercised the call option. If AIL gave an election notice advising that it required the property or part thereof for development works, AIL was required to pay Curran compensation for its loss of use of the land in accordance with the terms of clause 6 of the Option Deed.
9 Under the Option Deed, Curran agreed that between November 2006 and the earlier to occur of:
(a) if the call option were exercised, the settlement date under the contract of sale; and
(b) 15 June 2010;
it would not use any of the following weedicides on the property: Glean, Logran, Ali and Simazine.
10 The Option Deed contemplated that the call option could be executed over the whole or part of the property. If the option were exercised over only a part, then the Deed continued to have full effect as to the remainder of the property. Also, AIL could later exercise the option over part or the balance of the property.[1]
[1]Clause 13.
11 While previously Curran farmed its land using full cultivation, between 2002 and 2006, it changed its approach to farming and engaged in dry land farming or cropping. This meant that, instead of engaging in conventional tillage of the land using chisel ploughs, blade ploughs and various other implements, the only time the soil was disturbed was when crops were actually sown. At all other times, the surface material was retained in the ground. This included such things as stubble and the residue of other crops which had been harvested. The retention of the stubble, be it cereal, legume or hay, meant both that the surface of the property was not bare and easily eroded by the wind and also that the nutrients in the stubble were retained in the soil.
12 By letter dated 27 March 2007, Overall, the executive director of AIL, wrote to Mr and Mrs Curran advising them that pursuant to its entitlements under the Option Deed, AIL would be commencing development works on the property. The letter advised that AIL and Sandhurst Trustees Ltd were in the process of executing the interim head lease and copies would be sent to the Currans in due course for the execution.
13 Between March and about May 2007, AIL undertook development works on CA2 in accordance with the Notice.
14 At the time when the Option Deed was negotiated and entered into, AIL had hopes of purchasing the property by July 2008. According to Curran, AIL expected to have the almond projects on CA1 and CA2 all planted within a three-year period.
15 Around the same time that AIL entered into the Option Deed with Curran, it entered into a similar option agreement in respect of a neighbouring property, CA1, which was also owned by Curran. AIL, in fact, purchased the CA1 property in about July 2007.
16 The development works which AIL conducted on the property involved moving topsoil from one area of the property to another, ripping the proposed almond tree lines in the land and creating mounds of soil in which to plant the almond trees. By a lease dated 13 June 2007, prepared by Allens Arthur Robinson on behalf of the AIL interests, Curran leased CA2 to Sandhurst Trustees Ltd in its capacity as custodian for the relevant AIL Trust.
17 As explained by Ms Overall:
“[E]very year we wanted to try and give ourselves the best chance of making as many sales as we possibly could so we leased as much land as we possibly could. If in any project year we didn’t end up getting sales to fill that entire area of land that was under the lease, the portion that was not required for an almond project was surrendered.”
18 By a Deed of Surrender dated 12 December 2007, Sandhurst Trustees Ltd surrendered the lease dated 13 June 2007 and Curran, as the lessor under that lease, accepted the surrender. The Deed stated that the surrender took effect from the Effective Date (as defined) which was the date of the Deed. I note that clause 15.2 of the lease said that, as at 7 July 2007, the lease was automatically surrendered as to that part of the demised land which was not the subject of a Contract of Sale, the subject of an Allotment Sub-Lease Agreement or the Compensated Area (as these terms are defined in the lease).
19 By invoice number 33 dated 22 August 2007, Curran claimed the sum of $29,181.90 from AIL. The claim included both various chemical applications in late 2006 and early 2007, together with a claim for crop damage sustained between August and October 2006. AIL paid this invoice in September 2007.
20 By lease dated 22 November 2007, Curran leased all of CA2 (the area of which was about 880 acres) to another AIL entity (“the 22 November 2007 lease”).
21 On 9 January 2008, Curran issued invoice number 37 to AIL claiming $58,080 as the 2007 crop compensation regarding CA2. The claim for compensation related to 880 acres of land at $60 per acre. AIL paid this invoice in March 2008.
22 By deed dated 10 June 2008 between Curran and AIL the parties amended the Option Deed (“the Amended Option Deed”). In general, the amendments added a new clause 13A dealing with the subdivision of the property, explicitly acknowledged that AIL (or any AIL Nominee) could exercise the call option over some part or the whole of the property and introduced the concept of “Lapsed Property” where the call option lapsed in relation to all or any part of the property.
23 By a deed made 7 July 2008, AIL surrendered part of the land the subject of the 22 November 2007 lease. Clause 1 of the Deed stated that the parties acknowledged and agreed that, pursuant to clause 15.2 of the lease, the lease automatically surrendered with respect to the surrender land, as defined, on and from 7 July 2008.
24 By invoice number 55 dated 7 February 2009, Curran claimed $51,955.20 from AIL as the 2008 crop compensation on CA2. The claim related to 787.2 acres of land at a rate of $60 per acre. AIL paid this invoice in March 2009.
25 By a deed dated 13 June 2009, Curran and a related company of AIL entered into a second deed of partial surrender of the 22 November 2007 lease. The deed had the effect of surrendering all the land the subject of the lease in CA2, but for that part of the property which had already been surrendered under the first deed of partial surrender.
26 By lease dated 14 June 2009, Curran leased to a related company of AIL part of the property for a term of 17 years and 5 days.[2]
[2]The lease contained a clause 15.2 in substantially the same terms as clause 15.2 of the 13 June 2007 lease.
27 By invoice number 77, dated 10 February 2010, Curran claimed $48,597.19 from AIL as the 2009 crop compensation regarding CA2. The claim related to 736.32 acres of land at a rate of $60 per acre. AIL paid the invoice in February 2010.
28 By email dated 30 April 2010, AIL through the head of legal and corporate governance, Vanessa Overall, advised Frank that it wished to extend the Amended Option Deed.
29 The email referred to a discussion which had taken place between Frank and Johns regarding the extension and said:
“As you are aware, Almond Investors Land Pty Ltd would like to extend the Call Option Period for a further 5 years (that is, until 15 June 2015). We would like to do so on the existing terms (including the existing crop compensation arrangements as requested by yourself). If you are agreeable, I can arrange for our solicitors to draft a simple Amendment Deed which we will give to Alastair Lyall for his review and approval.”
30 On about 4 June 2010 Curran and AIL signed a further amendment to the Option Deed (“the Further Amended Option Deed”) whereby the Call Option Period was extended from 15 June 2010 until 15 June 2015. Curran and AIL also entered another lease that day in relation to the outstanding balance of the CA2 land. The lease commenced on 14 June 2010.[3]
[3]Clause 15.2 of this lease was in the same terms as clause 15.2 of the 14 June 2009 lease.
31 By invoice number 85 dated 27 November 2010, Curran claimed $42,240.00 from AIL as the 2010 crop compensation applicable to CA2. The claim related to 640 acres of land at a rate of $60 per acre. AIL paid the invoice in August 2011.
32 By a deed of partial surrender dated 7 June 2011, Curran and the AIL subsidiary entered into a third deed of partial surrender in relation to land within the property which was not used in an almond-growing project.
33 By a lease dated 8 June 2011 (“the June 2011 lease”) prepared by McMahon Clark Legal on behalf of AIL, the parties entered into a lease of part of the CA2 property for a period of 17 years and 5 days, commencing on 14 June 2011. In the context of this proceeding, this was the final lease between the parties and the most relevant for the purposes of the present dispute.[4]
[4]Clause 15.2 of this lease was in the same terms as clause 15.2 of the 4 June 2010 lease.
34 By invoice number 110 dated 30 May 2012, Curran claimed $40,905.17 from AIL for the 2011 crop compensation in respect of CA2. The claim related to 618.7 acres of land at a rate of $60 per acre. The invoice also claimed AIL’s share of certain water charges totalling $64.52. AIL paid this invoice in October 2013.
35 By email dated 19 August 2011, Vanessa Overall, on behalf of AIL, advised Frank that AIL was not planning a retail project for the 2012 financial year. It was exploring other opportunities, primarily with overseas investors, for 2013. It hoped that there would be a future need to purchase the remaining land on CA2, which it had not already bought. The email continued:
“You are therefore free to plant a crop on the balance of land immediately (i.e. on the remaining 250.375 hectares). Please take this email as Notice that we do not require you to reserve the balance of the property for AIL in the 2012 financial year. Under the Interim Head Lease between FJ & PN Curran Pty Ltd and Almond Investors Land Pty Ltd dated 8 June 2011 we must provide you with Notice by 10 May 2012, however we are notifying you now as a matter of courtesy and to give you more than enough time to plant a crop this year. By giving you this Notice now we have no liability for crop compensation in respect of the 2012 financial year.
If investor appetite increases and we are able to have an almond project in 2013, we will of course advise you. Accordingly, please be mindful of Clause 8 in our Option Agreement which relates to the use of weedicides.”
36 AIL relied upon this email at trial as constituting a Surplus Land Notice within clause 14 of the lease.
37 By invoice number 140 dated 12 April 2015, Curran claimed $40,834.20 from AIL as the 2013 crop compensation in respect of CA2. The claim related to 618.7 acres of land at a rate of $60 per acre. AIL did not pay this invoice.
38 By invoice number 145 dated 5 June 2015, Curran claimed $82,344.93 from AIL. An amount of $37,122 (plus GST) related to the 2013 crop compensation on CA2. This comprised a claim for an area of 618.7 acres at a rate of $60 per acre. There was an identical claim in the invoice in respect of the 2014 crop compensation on CA2. In addition, there were claims for $306.25 and $308.78 in respect of interest charges for late payment regarding the 2013 crop compensation. AIL did not pay any of the amounts in this invoice.
39 On about 18 June 2015 AIL exercised the option to purchase the balance of CA2 and Sandhurst Trustees Limited entered a contract of sale with Curran.
40 By invoice number 147 dated 2 July 2015, Curran claimed an amount of $83,024.27 from AIL. This was a repetition of the claim made in invoice number 145, save that there was an additional claim for interest in relation to the 2014 crop compensation of $617.58.
41 By invoice number 151 dated 12 July 2015, Curran claimed the sum of $183,032.24 against AIL. The claim had two elements: a compendious claim for outstanding crop compensation in respect of CA2, for the years 2012-2015 inclusive, in the sum of $148,488; the second element was total accrued interest charges for late payment of $17,904.95. In addition there was a claim of $16,639.29 for GST.
42 In general terms, the arrangement between Curran and AIL operated in the following way. AIL could exercise the option to purchase CA2 at any time within the option period (as it did with CA1). While the option was on foot, AIL could require Curran to enter into a lease agreement for the whole or part of CA2. In this way, AIL had secure title over the property which it used as part of its managed investment schemes and could properly allot interests to investors who sought to participate in the almond growing venture.
43 The surrender of the lease came about through the operation of clause 15 of the lease. This provided that:
· the lease was automatically surrendered when land covered by the lease was sold and settled pursuant to a contract of sale (clause 15.1);
· as at the first 7 July following the commencement date (which was 14 June 2011) the lease was automatically surrendered as to that part of the land covered by the lease that was not:
o the subject of a contract of sale;
o the subject of an Allotment Sub-Lease Agreement;
o the subject of a sub-lease to a custodian of a Non-Grower MIS;[5]
o the Compensated Area, namely, that part of the land the subject of compensation under clause 20 of the lease.
[5]This term is defined to mean “A managed investment scheme for the commercial cultivation and exploitation of almond tree species which is not a Grower MIS and is not offered under a Product Disclosure Statement under which interests in a Grower MIS are also offered.” A Grower MIS means “A MIS under which persons will be registered as growers in accordance with the constitution of that MIS from time to time.”
44 The surrender of the land contemplated in clauses 15.1 and 15.2 was effective from the dates determined by those claims even if the parties failed to execute a surrender deed.
45 Under the arrangements made between Curran and AIL, there was a series of leases entered into and surrendered between 2007 and 2011. As AIL took up more of CA2 with its schemes, the area of land surrendered diminished.
Issues
46 The main issues to be resolved in this case are as follows:
(a)Is Curran entitled to crop compensation and, if so, how much, under its Agreement with AIL?
(b)Is the email from AIL to Curran dated 19 August 2011 a Surplus Land Notice with clause 14 of the lease which AIL was entitled to serve and, if so, what is its effect?
(c)Did AIL engage in misleading and deceptive conduct in breach of section 18 of the Australian Consumer Law, or act negligently and thereby cause loss and damage to Curran?
(d)Is Curran entitled to damages for any loss suffered as a result of misleading and deceptive conduct or negligent misrepresentation by AIL?
(e)Is AIL entitled to recover the sum of $241,000 paid to Curran as crop compensation as money paid under a mistake?
(f)If AIL is prima facie entitled to the return of the moneys paid to Curran, is its counterclaim, or any part thereof, statute barred?
(g)Is AIL estopped from:
(i)giving the surplus land notice;
(ii)relying upon clause 6.3 of the Option Deed to avoid paying the crop compensation for the years 2012-2015 inclusive?
Is Curran entitled to crop compensation payments and if so, how much?
47 Whether or not Curran is entitled to crop compensation will depend on the construction of clause 20 of the June 2011 lease.
48 There was no dispute between the parties about the applicable legal principles governing the process of contractual interpretation. The summary of applicable principles is based upon the latest major High Court authority, Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd,[6] and other recent cases from that court.[7]
[6](2015) 256 CLR 104.
[7]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at [35]; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]; International Air Transport Association v Ansett Australia Holdings Ltd (2008) 234 CLR 159 at [8], [53].
49 The meaning of the terms of the commercial contract is to be determined by what a reasonable business person would have understood those terms to mean. It will require a consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract.[8]
[8]Hird v Chubb Insurance Company of Australia Ltd [2016] VSC 174 at [31] which in turn relied ultimately upon Mount Bruce Mining at [46]-[51] and its adoption by the High Court in Victoria v Tatts Group Ltd (2016) 328 ALR 564 at [51].
50 An appreciation of the commercial purpose or object of a contract is facilitated by an understanding of the genesis of the transaction, the background, the context and the market in which the parties are operating. Usually, the process of construction is undertaken by reference only to the terms of the contract. If an expression in a contract is unambiguous or susceptible of only one meaning, evidence of the surrounding circumstances cannot be adduced to contradict its plain meaning.
51 Unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption that the parties intended to produce a commercial result. A commercial contract is to be construed in order to avoid making a commercial nonsense or working commercial inconvenience. At the same time, courts will not readily rewrite contracts for parties or find absurdity. While courts should construe commercial contracts to avoid absurdity, it is not part of the court’s role to construe an agreement which otherwise has an explicable commercial result in a matter which increases the benefits to one party to the agreement.
52 The rights and liabilities of parties under a contract are determined objectively by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the contract) and purpose.
Construction of clause 20
53 In considering clause 20 of the June 2011 lease, it is appropriate to consider the purpose of the lease and other relevant clauses so that the particular clause is read in context.
54 The purpose of the June 2011 lease was to enable AIL to market investment opportunities to investors potentially interested in almond farming. The lease gave AIL security over the land to be able to sell entitlements or allotments to investors in the various almond projects. If there were sufficient investors available to make a project viable, then AIL held the land pursuant to lease until it purchased the same from Curran.
55 The terms of the documentation were such that the parties contemplated that there might be no sale of CA2 and hence, no settlement, or that the settlement of any such sale could be delayed by some time.
56 The following are relevant clauses in the lease.
57 If the Settlement Date was not scheduled to occur in the 12 month period from the Commencement Date of 14 June 2011, or if a contract of sale were not in existence as at 14 June 2011, then AIL had to pay Curran rent of $1 for the period from 14 June 2011 to the first 7 July following that date and thereafter until the Settlement Date $1,100 per acre (or a proportional sum for part thereof) for that part of the land over which either an Allotment Sub-Lease Agreement has been granted or a sub-lease has been granted to a custodian of a Non-Grower MIS.[9]
[9]Clause 3
58 AIL was obliged to pay interest on a per acre basis,[10] to reimburse Curran for services like gas, water, electricity and phone,[11] to pay rates and taxes due on the land,[12] and to cover the cost of insurance.[13]
[10]Clause 3
[11]Clause 4
[12]Clause 5
[13]Clause 11
59 By clause 7.1 of the June 2011 lease, AIL was permitted to use the land for various purposes including granting sub-leases for the purposes of a managed investment scheme, planting trees, development works as defined,[14] and for any purpose in connection with a managed investment scheme. Curran agreed to the works being carried out on the land in accordance with clause 7.1.
[14]They were defined in clause 1.1 as “all works in connection with preparing the Land (or any part of it) for the purposes of a MIS [managed investment scheme] including, without limit, survey works, the planting of almonds, and installing any necessary irrigation and other infrastructure”.
60 Under clause 12 of the June 2011 lease, Curran agreed that AIL might wish to procure the carrying out of the development works on all or any part of the land at any time and from time to time during the term of the lease. As noted, while some development works were done on CA2 in 2007, it did not render the whole property ready for an almond project. The final part of CA2 was not prepared for development until 2015 when there was re-ripping and mounding of the land, irrigation installed, and the planting and staking of trees.
61 Clause 14.1 of the lease provided that by no later than the Surplus Land Date (defined as 10 May 2012), AIL could notify Curran of any part of the land that was not required by AIL for development works and identify that part of the land not required under the lease.
62 Once such notice was given, Curran could then ask for a licence to use all or part of the surplus land for any use permitted by law. The June 2011 lease made no reference to any specific contemplated usage by Curran.
63 Pursuant to clause 15 of the June 2011 lease, the leasehold interest was automatically surrendered, either the day before settlement if there were a purchase of land, or on 7 July following the Commencement Date of 14 June 2011 provided the land met certain conditions. The surrendered land was not to be subject to a contract of sale, the subject of an allotment sublease agreement, a sublease to a custodian or part of the Compensated Area. Compensated Area was defined to mean that part of the land the subject of compensation under clause 20.
64 Clause 20 of the June 2011 lease provides:
“For any part of the Land if:
(a) the Settlement Date is not scheduled to occur in the 12 month period from the Commencement Date;
(b) as at the first 7 July following the Commencement Date, such part of the Land is not either:
(i)subject to an Allotment Sub-Lease Agreement, which for the sake of clarity will be granted when a tenant under a sub-lease has accepted an application from a Grower for an interest in a Grower MIS; or
(ii)a sub-lease granted to a custodian of a Non-Grower MIS.
(c) Compensation is payable for such part of the Land under clause 6.3 of the Option to Purchase Deed to the Lessor as grantor; and
(d) Such part of the Land is not Surplus Land,
then the lessee must pay to the Lessor compensation for such part of the Land, at the rate of $60 (plus GST) per acre (with a proportional adjustment for any part of an acre), on or before the first anniversary of the Commencement Date (ie 8 June 2012).”
65 The parties dispute whether or not Curran is entitled to compensation for the years ended 30 June 2012 to 30 June 2015 inclusive, on the basis of their competing constructions of clause 20.
66 Both parties agreed that, in order for the compensation to be payable, each of the four preconditions of clause 20 had to be satisfied. Both parties also agreed that clause 20(b) was satisfied. Accordingly, the preconditions in dispute are (a), (c) and (d). I will address each of them in turn.
Precondition (a)
67 Precondition (a) provided that compensation can only be paid if “the Settlement Date is not scheduled to occur in the 12 month period from the Commencement Date”.
68 “Settlement Date” was defined to mean either the first 7 July following the Commencement Date, or such other date as may be specified in the Contract of Sale as the settlement date. “Commencement Date” was defined as 14 June 2011. “Contract of Sale” was defined to mean the contract of sale and purchase coming into existence between Curran and a custodian of a managed investment scheme upon the exercise of the call option (for CA2 or any part thereof). This meant that it could apply to a partial sale and was not limited to a sale of the whole of CA2.
69 Curran made no detailed written submissions about this precondition and how it was satisfied or complied with.
70 In its oral submissions, Curran contended that the Settlement Date would occur only after AIL exercised the call option. The first part of the definition of Settlement Date was not applicable – the Surplus Land Notice was dated 19 August 2011 and therefore after 7 July 2011.
71 Curran appears to interpret ‘Commencement Date’ in relation to the Surplus Land Notice, rather than in relation to the call option (see AIL’s interpretation below). As the Surplus Land Notice was dated 19 August 2011 and therefore falls after the “first 7 July following the Commencement Date”, Curran submitted that the first alternative meaning of ‘Settlement Date’ (being 7 July 2011) could not apply.
72 Curran went on to submit that precondition (a) was satisfied where no Settlement Date had been scheduled in the 12 month period from the Commencement Date (namely, before 11 June 2012), whether or not such date had been scheduled in any event. Curran appeared to interpret the precondition in such a way that it might read alternatively, “no Settlement Date is scheduled to occur in the 12 month period from the Commencement Date”, rather than its actual terms, “the Settlement Date is not scheduled to occur in the 12 month period from the Commencement Date”.
73 AIL made the following written submissions about the position regarding clause 20(a):
(a) “Settlement date” is defined to mean either (i) the first 7 July following the Commencement Date (ie 7 July 2011 was the first 7 July after the Commencement Date of 8 June 2011(sic)[15]) or (ii) such other date as may be specified in the Contract of Sale as the settlement date.
(b) Clause 20(a) must be referring to a settlement date that has been “specified in the Contract of Sale” because otherwise it would not need to be “scheduled” as it would be 7 July 2011.
(c) “Contract of Sale” is defined to mean the “contract of sale and purchase coming into existence between the Lessor and a Custodian upon the exercise of the Call Option”.
(d) The “Call Option” and “Option to Purchase” are not defined with certainty, but probably mean the 10 June 2008 Amendment Deed in relation to the 24 November 2006 Option Deed.
(e) As the tense is future (“coming into existence…”), any “Contract of Sale” must mean a contract entered into after the commencement of the Lease on 8 June 2011.
[15]The Commencement Date is 14 June 2011.
74 AIL attributed significance to the word “scheduled” as acting to limit the possible alternatives of the definition of Settlement Date. The word “scheduled”, AIL submitted, implied a positive act, which effectively ruled out the first possible meaning of Settlement Date (being the first 7 July following the Commencement Date) because that “default” Settlement Date would apply in any event. Since the default Settlement Date must necessarily fall within 12 months of the Commencement Date in any case, that interpretation of Settlement Date should be avoided because it renders precondition (a) redundant. Accordingly, on AIL’s interpretation, clause 20 applied only where a settlement date had been scheduled – rather than left as 7 July 2011 by default – and only where that date fell beyond the 12 month period from the Commencement Date.
75 AIL submitted that, as the call option was not exercised until 18 June 2015, there was no Contract of Sale until after that time. Accordingly, at the time the lease was entered into and for several years following, there was no Settlement Date scheduled, whether after 8 June 2012 (being 12 months after the Commencement Date of 8 June 2011) or at all.
76 The parties seemed to agree, albeit for different reasons, that the second alternative definition of Settlement Date applied when seeking to interpret this precondition. The first alternative definition of Settlement Date – the first 7 July following the Commencement Date – corresponded to 7 July 2011. Because precondition (a) said “if the Settlement Date is not scheduled to occur in the 12 month period from the Commencement Date”, clause 20 could never be satisfied on the first alternative definition of Settlement Date because the first 7 July must necessarily fall within 12 months of any Commencement Date.
77 In the circumstances, I am satisfied that the first alternative definition of Settlement Date should be avoided because, if applied, it would render precondition (a) impossible to satisfy, and therefore the entire clause inapplicable. I note also that, if the first alternative definition of Settlement Date were intended to apply in the interpretation of clause 20, then it is unlikely that the words “as at the first 7 July following the Commencement Date” would be used in precondition (b). Rather, if the first alternative definition were intended, the words “Settlement Date” would simply have been used in their place.
78 The parties’ differing interpretations of precondition (a) look to be based on a different view of the absence of a scheduled date. While on AIL’s interpretation the precondition is satisfied only if a Settlement Date is indeed scheduled but on a date not within the 12 month period, on Curran’s interpretation, the precondition is satisfied by the absence of a scheduled Settlement Date within the 12 month period.
79 On balance, I prefer the construction contended for by AIL because it makes better sense in the context and gives more accurate effect to the agreement expressed by the parties in their written documentation.
Precondition (b)
80 Both parties agree that precondition (b) of clause 20 was satisfied, as the land was not subject to an Allotment Sub-Lease Agreement as at 7 July 2011.
Precondition (c)
81 Precondition (c) of clause 20 stated that compensation can only be paid if “Compensation is payable for such part of the Land under clause 6.3 of the Option to Purchase Deed to the Lessor as grantor”.
82 Both parties accepted that this precondition referred to clause 6.3 of the Amended Option Deed dated 10 June 2008. Clause 6 of that Deed was in the following terms (so far as is relevant):
“6.CROP COMPENSATION
6.1Application of Clause
This clause only applies if AIL gives an Election Notice.
6.2Compensation
AIL must pay the Grantor compensation for the Grantor’s loss of use of the Property or any part of it due to AIL electing to carry out the Development Works, in accordance with and limited to the amount determined by this Clause 6.
6.3Compensation Amount
If, as at the date the Election Notice is given to the Grantor or the Grantor’s Solicitors, the Grantor has prepared any part of the Leased Area, the subject of that particular Election Notice, for the sowing or harvesting (or both) of any farming crops to recognised industry standards up to but not including the stage of actual harvesting, then:
(a)the Grantor may provide to AIL copies of all relevant documents evidencing the reasonable costs and expenses incurred by the Grantor in preparing the Leased Area for sowing or harvesting (or both) to recognised industry standards (including, without limit, tax invoices and wage sheets); and
(b)after (and only after) receipt of the same (together with a tax invoice, if applicable), AIL must reimburse the Grantor for those costs.”
83 The parties disputed the exact nature of the interaction of precondition (c) with clause 6.3 of the Option Deed.
84 Curran contended that precondition (c) could not be read literally because it flouted common sense and led to an absurd operation – something had “gone wrong with the language”. Curran argued the clause had to be read down in one of the ways set out in its written outline of submissions. Those submissions, however, did not set out an alternative wording or construction of precondition (c) which embodied a written formulation of the interpretation for which Curran contended. Rather, the submissions contained observations about the development works performed on the property, their effect upon dry land cropping and why Curran did not incur costs and expenses in preparing the property for sowing or harvesting for the purposes of clause 6.3 of the Option Deed.
85 Paragraph 48 of Curran’s written submissions, which purported to deal with the “reading down” issue, set out the facts and circumstances which Curran relied upon in support of the interpretation it contended for and which I have summarised as follows:[16]
[16]Para 48, Outline of Final Submissions on behalf of the Plaintiff.
(a) AIL performed extensive earthworks prior to 2008, including deep ripping of trees lines and banking of several rows for the planting of almond trees;
(b) these earthworks resulted in the land being unsuitable for use by Curran as normal dry land cropping in the absence of extensive earthworks to ‘undo’ the earthworks done by AIL;
(c) accordingly, Curran did not incur any costs and expenses in preparing the land for sowing or harvesting;
(d) Curran was therefore unable to provide AIL with any documents evidencing any such costs and expenses; and
(e) AIL paid Curran crop compensation for the years ended 30 June 2007, 2008, 2009, 2010 and 2011.
86 On the basis of the matters summarised in paragraph 85, Curran appeared to contend that, since clause 6.3 of the Option Deed had not been adhered to but AIL had nonetheless paid crop compensation in previous years, the clause should be “read down” to the effect that Curran was not required to provide evidence of, or even incur, any expenses in order to receive crop compensation in a given year.[17]
[17]Para 48(d), Outline of Final Submissions on behalf of the Plaintiff.
87 Curran argued that AIL paid Curran crop compensation for the years ending 30 June 2007 to 30 June 2011 inclusive. Curran alleged that AIL knew that, at all times after it required the property for development works, Curran could not or would not incur the significant costs and expenses associated with preparing the property for sowing or harvesting, because the land was not capable of supporting dry land cropping without this major expenditure. Because of its detailed knowledge, AIL never sought documentary evidence of Curran’s costs and expenses before paying the crop compensation. According to Curran, Johns, the AIL orchard manager, recognised these facts by late 2007 and acknowledged them at that time in conversation with Frank Curran.
88 Because Curran contended that precondition (c) had to be read down or construed in another way which made better commercial sense in the context, I asked Curran’s counsel in final submissions to tell me how precondition (c) should be read to reflect what Curran said was its proper construction in light of the context. Counsel said that the clause should be read in the following way:
(a) compensation is payable if AIL had been liable to pay compensation under clause 6.3 of the Option Deed at any time;
(b) compensation is payable if AIL would have been liable to pay compensation had Curran incurred any such expenses.
89 Curran submitted that, on its proper construction, precondition (c) should give no effect to clause 6.3 of the Further Amended Option Deed, as its terms were inconsistent with the obligation on AIL to pay crop compensation in accordance with clause 20.[18] Rather, Curran submitted, the obligation to pay crop compensation under clause 6 of the Further Amended Option Deed was varied or supplemented by clause 20 of the lease, which created an independent and separate right to compensation notwithstanding Curran’s noncompliance with the terms of the said Deed.
[18]Plaintiff’s opening submissions.
90 Curran also submitted that the purpose of compensation under clause 6.3 was to compensate Curran in the initial period after the Further Amended Option Deed was entered into if it actually incurred costs in dry land farming. Curran made a claim for such compensation under invoice 33. Once AIL undertook the initial development works in the period between about March and May 2007, clause 6.3 had no work to do. This was presumably because once AIL required the property for development works and then began the work of preparing the property for commercial almond farming, the land could not be “unrequired”. Thus, Curran submitted that the purpose of clause 20 was to compensate Curran as lessor if AIL required the land for development works, as it in fact did.
91 AIL submitted that clause 6 of the Further Amended Option Deed applied only if AIL gave an Election Notice under clause 6.1. AIL did not give such a Notice after the creation of the June 2011 lease. AIL submitted that, viewed objectively, the parties must have intended that it was possible for AIL to perform development works after that 2011 lease was created – the development works performed in 2007 were limited and incomplete if AIL was planning to plant a full crop.
92 AIL contended that clause 12 of the lease was consistent with this construction because it referred to carrying out development works “at any time and from time to time during the Term”.
93 AIL observed that, while it did carry out development works in 2015 by further preparing the land and planting trees, under clause 6.2, AIL was only obliged to compensate Curran for its loss of use of the Property or any part of it “in accordance with and limited to the amount determined by this Clause 6”. Clause 6.3 provided that Curran had a right to compensation for “reasonable costs and expenses incurred by [Curran] in preparing [the land] for sowing and harvesting”. Therefore, AIL was only required to pay compensation for costs and expenses actually incurred by Curran in connection with the specific activities described. By its own admission, Curran did no preparatory work for sowing and harvesting after June 2011.[19]
[19]Indeed, Curran accepted that it did no such work after 2007.
94 Although Curran did make a claim in about August 2007 for alleged crop damage, since that time it had not prepared the land for sowing or harvesting of crops and had not provided any evidence of reasonable costs or expenses incurred in connection with harvesting or sowing.
95 Curran in effect agreed that after the initial development work was done, it did not perform any sowing or harvesting work on the property. Curran sought to justify its actions by explaining why it was not commercially feasible for it to have undertaken sowing and harvesting work. It argued that, in the circumstances where the whole of CA2 had been ripped in the first half of 2007, it was not possible to restore CA2 for dry land farming operations without significant expenditure. In addition, Curran said that even if this were done, it did not have untrammelled access to CA2 for a definite period sufficient to obtain a financial return on the expenditure required to restore CA2 for the purpose of dry land farming. Further, Curran had agreed not to use certain inexpensive weedicides on CA2 until the expiration of the call option.
96 AIL noted that Curran claimed an entitlement to compensation without complying with clause 20 of the lease or clause 6.3 of the Further Amended Option Deed on the basis that, because AIL had carried out some development works on CA2, it would have cost Curran a significant amount of money to restore the property to a state in which it could be used again for dry land farming. AIL said that this construction of the agreement between the parties was flawed for the following reasons:
(a) development works in the Further Amended Option Deed were defined slightly differently from their description in the lease;
(b) clause 6.3 of the Further Amended Option Deed contemplated the possibility of multiple election notices and expressly provided at clause 7.1 that AIL could, on multiple occasions, exercise its rights under clause 5.1(c), being the provision by which AIL could elect by written notice to carry out or procure the carrying out of development works on the property or part thereof at any time and from time to time;
(c) the performance of development works would not necessarily be complete within a period of one year or necessarily lead immediately to a crop.
97 I consider that Curran has not satisfied clause 20(c) of the June 2011 lease. First, Curran effectively conceded that, read naturally, it could not satisfy the requirements of clause 20(c) of the lease and clause 6.3 of the Further Amended Option Deed. It was because the requisite factual underpinning was absent that Curran was forced to contend for a ‘read down’ version of clause 6.3. Secondly, there was in my view no proper basis to ignore the wording of the existing clauses and substitute a new formula advanced by Curran which was different from the written documentation embodying the parties’ agreement. If Curran had wanted to amend the Further Amended Option Deed or the June 2011 lease in or after 2010 to better reflect its position after AIL gave the notice regarding development work in 2007, it had the time and opportunity to do so. It is not acceptable for Curran to try and force a significant change upon AIL in relation to a written agreement signed by them because the circumstances affecting Curran have changed in a way which Curran did not anticipate or foresee.
98 Finally, the circumstances do not warrant the court finding the clause absurd and construing it in the way for which Curran contended. Courts do not readily find absurdity in contractual clauses. Usually, the cases involving this phenomenon have an obvious error, for example:
· typographical errors;[20]
[20]For example, Habitat 1 Pty Ltd v Formby (No 2) [2017] WASC 331 at [143]-[146].
· “shorter” being read as “longer”;[21]
· “inconsistent” being read as “consistent”.[22]
[21]Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486.
[22]Fitzgerald v Masters (1956) 95 CLR 420.
99 Courts cannot simply rewrite contracts which parties have entered into. Especially is this the case when the words are unambiguous. The court should give effect to the terms even if the result appears unreasonable or less businesslike, unless it leads to an absurd result.[23] To omit or correct words in a contract, two conditions must be satisfied.[24] First, the literal meaning of the words in the contract must be absurd. Secondly, the parties’ objective intention is to be self-evident.
[23]Bank of Queensland Ltd v Chartis Australia Insurance Ltd [2013] QCA 183 at [36]; Cushman & Wakefield (NSW) Ltd v Carrell [2017] NSWCA 24 at [71].
[24]Mainteck Services Pty Ltd v Stein Heurtney SA (2014) 89 NSWLR 633, 661 at [117].
100 I consider that, in the circumstances, Curran has not satisfied clause 20(c) of the June 2011 lease.
Precondition (d)
101 Precondition (d) of clause 20 provides that compensation can only be paid for part of the land where “Such part of the Land is not Surplus Land”.
102 Curran submitted that the property was not Surplus Land within the meaning of the lease and hence, this precondition was also satisfied.
103 Curran’s argument was that AIL was not permitted to give such a Notice because the whole of CA2 had already been required for development work by the Notice given on 27 March 2007. This notice reflected AIL’s desire to perform development works on the whole of CA2. Indeed, this is exactly what AIL then did with the movement of soil about the block using large machinery and the extensive ripping which involved creating about 270 kilometres of ripped tree lines, each of which was approximately 1-1.5 metres deep. AIL acknowledged that it spent over $150,000 performing this development work.
104 Curran argued that, having required the property to be made available to AIL so it could perform the development work, the process could not be reversed and the property be “unrequired”. This was especially so when AIL’s 19 August 2011 email indicated that it hoped to undertake more work on the property in the following year or two. Accordingly, there was no time during which Curran was certain that AIL would not require the land. This lack of certainty made it difficult for Curran to plan for any potential use it might make of the land. Moreover, due to clause 8 of the Further Amended Option Deed, Curran could not use certain weedicides on the property. This was a significant issue because, in order to successfully engage in dry land cropping, the use of weedicides was crucial.
105 AIL said that it gave a Surplus Land Notice under clause 14 of the June 2011 lease in one or more of the following ways:
(a) the email from Vanessa Overall to Curran on 19 August 2011 advising that there would be no almond project in 2012;
(b) the letter from Wayne Overall to Curran dated 31 August 2011; and
(c) the email from Nicholas Tkalcevic to Curran dated 23 February 2012 confirming the notice under the interim head lease advising that Curran was free to use `the remaining land to plant a crop.
106 AIL submitted that, consistently with clause 14.1, it issued a Surplus Land Notice by “no later than the Surplus Land Date”, which was defined as “the first 10 May following the Commencement Date”, being 10 May 2012. It argued that this notice process could only be performed once under the lease.
107 AIL placed some significance on the fact that the lease did not speak of the Surplus Land Notice in the plural in the same way that it did with other clauses. Accordingly, it treated the definition of “Surplus Land Date” as a single date and not a date each year. AIL contended that the agreement could not be construed in such a way that the Surplus Land Notice could not be given if such development works had been carried out. It said that the June 2011 lease was entered into at a time when Curran was already aware that AIL had carried out some development works under the Further Amended Option Deed. It was said that the parties must have intended that the “Surplus Land” clause could operate because otherwise they would not have included it in the document.
108 I am satisfied that AIL served a valid surplus land notice on Curran being:
· the email from Ms Overall to Curran dated 19 August 2011;
· the letter from Overall to Mr Curran dated 31 August 2011.
Curran agreed that it received both these documents.
109 The documents made clear that AIL had no use for the balance of CA2 for almond growing or an almond project in the 2012 financial year and that Curran was free to use the land for its own purposes. At the time the June 2011 lease was entered into, the parties were each well aware that there was an original Option Deed, that original Option Deed was amended in 2010, and that AIL had conducted some development work on CA2 in the first half of 2007. Both Curran and AIL knew that AIL had conducted development work on the land the subject of the most recent lease. Thus, the parties should be taken to have intended that a surplus land notice could be given under the June 2011 lease notwithstanding some development work had already been performed on the land the subject of the lease. Thus, Curran did not satisfy clause 20(d).
Did AIL engage in misleading and deceptive conduct towards Curran in breach of section 18 of the Australian Consumer Law?
110 Curran alleged that AIL engaged in misleading and deceptive conduct in contravention of section 18 of the Australian Consumer Law, being schedule 2 to the Competition and Consumer Act 2010 (Cth). Curran did not make a claim in contract for any breach of the agreement alleged in paragraph 5A of the amended statement of claim. Nor was there any claim for rectification of any agreement between Curran and AIL.
111 Curran alleged that in April 2010 Johns represented (“the Johns representation”) in a conversation with Frank that:
(a) there was a lull in the almond industry and they did not have investors at the time;
(b) AIL would like an extension of the option granted under the Option Deed for a further five years on existing terms;
(c) Curran would continue to receive the crop compensation in the future for the extended option period as it had received during the past four years; and
(d) the crop compensation would remain the same.
Also, Curran alleged that in an email dated 30 April 2010, AIL through Ms Overall represented (“the AIL representation”) that it wanted to extend the call option period until 2015 on terms which included the existing crop compensation arrangements as requested by Curran. In reliance on both the Johns representation and the AIL representation, Curran claimed that it entered into both the deed varying the Amended Option Deed by extending the call option period until June 2015 and the June 2011 lease. Curran alleged that, by so acting, it suffered loss and damage.
112 Curran’s allegations were made in a context where Frank also said that in discussion with Johns in late 2007, Johns agreed in effect that due to the development works which AIL had undertaken on the property, the property was no longer suitable for dry land cropping and could not return to its prior state without Curran undertaking extensive and costly works on the property. Curran said that, as a result, Johns and Frank agreed that AIL would pay Curran by way of compensation an annual fee of $60 per acre on those parts of the property which Curran could not use and were otherwise not purchased or leased by AIL for commercial almond growing schemes.
113 Curran relied upon the evidence of Frank Curran to establish that AIL made the two representations alleged. AIL offered no direct evidence on the conversations because Johns was dead. However, AIL contended that the court should not be satisfied that the claim had any substance.
114 First, AIL referred to the comments made by McLelland CJ in Eq in Watson v Foxman[25] regarding alleged oral misrepresentations where he said:[26]
[25](1995) 49 NSWLR 315.
[26]Ibid 318-19.
“Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”
AIL contended that Curran had not given sufficiently clear evidence about the detail of the alleged conversations. It contended that Curran believed the need for AIL to make payments of compensation each year arose from an obligation in the annual leasing arrangements between the parties. AIL did not accept (and argued that Curran did not prove) that Johns made any comment, much less give a commitment, about ongoing annual compensation payments.
115 Secondly, AIL argued that neither Frank nor Johns was a lawyer and so whatever discussion they might have had, there was no binding agreement until the parties’ respective lawyers signed off and formalised the contractual arrangements between them. Both parties routinely used lawyers and Curran did not sign any agreements with AIL until after his lawyer had examined, and presumably approved, the document. Thus it was said, it was not reasonable for Curran to rely upon any comments which Johns might have made.[27]
[27]AIL did not concede that Johns made the representations.
116 Thirdly, the written representation constituted by the email from Ms Overall was not clear because it referred to the extension of the call option “on the existing terms (including the existing crop compensation arrangement as requested by [yourself])”. The Option Deed did not refer specifically to crop compensation and included no new terms on that topic. AIL submitted that the parties must therefore be taken objectively to have considered that the existing crop compensation arrangement was included within the existing terms of the written documents signed by them. AIL also distinguished between the continuation of the crop compensation arrangements or terms on the one hand, and the continuation of the crop compensation payments on the other hand. AIL submitted that there was reference in the documents only to the former and not the latter.
117 Fourthly, in circumstances where Frank was aware that he was under no legal obligation to agree to an extension of the call option period, he could have insisted upon some new term in the agreement if he had wanted to formalise the crop compensation payments. He chose not to do so.
118 Fifthly, Curran did not rely upon the alleged discussion with Johns. If he had, the court should have expected to see evidence of conversations and correspondence later, where Curran complained about being misled by Johns and AIL and being duped into granting an extension for no consideration and then having AIL renege on the arrangement made.
119 AIL contended further that Curran relied upon its lawyers to check and approve documents before signing. Given that no new term was introduced into the call option extension amendment document, it suggested that Curran made no comment to the lawyers about the alleged oral arrangements.
120 On balance, I am not satisfied that Johns made a representation to Frank to the effect that, if Curran extended the option until 2015, then AIL would make annual crop compensation payments until then as it had in the previous four years. I reach this conclusion for several reasons.
121 First, I accept the force of the comments made in Watson v Foxman. Where the misleading and deceptive conduct relied upon is what one party says to another in the course of conversation, the words need to be proved with a suitable degree of precision. The court must be satisfied that the words spoken were misleading and deceptive in all the circumstances.
122 Here, Frank’s evidence regarding his conversations with Johns in 2010 was not impressive. Frank did not give a detailed account of what was said. Frank dealt with the matter on three occasions. Initially in evidence-in-chief, Frank said that Johns told him there was a lull in the almond industry and AIL wanted to extend the lease on CA2 for a further five years on the terms of the existing agreement. Frank said he asked if that would include the crop compensation which had been paid for the previous four years. Johns said it would be the same on the new extended lease.
123 In cross-examination, Frank confirmed that when he and Johns spoke about the extension of the option for five years, Johns did not propose any changes to the existing agreement other than extending the option date five years.
124 In re-examination, Frank said the conversation between him and Johns was at his farm and went for about 15 minutes. Frank said Johns assured him that the extension of the option would be on the existing terms which included the existing crop compensation payments.
125 For a conversation which lasted about a quarter of an hour, Frank gave no more than a brief summary. While I accept that the conversation in 2010 was some years ago, Frank highlighted parts he recalled and not the rest of the conversation. It is not possible from the limited evidence he gave to obtain a fuller picture of the context and atmosphere in which the discussion occurred.
126 The need for clarity in connection with allegations of oral misrepresentation is heightened where the court can hear from only one of the two participants in the conversation. The death of Johns in 2014 has made the situation more difficult because the court has no opportunity to hear directly from him.
127 The only evidence available from Johns is an email by him to Ms Overall dated 30 August 2011. In that email, he refers to correspondence between AIL and Curran and says that Frank’s responses about Curran planting a crop on CA2 are no different from other times when he tried raising the issue with him. In relation to the conversation between him and Frank in April 2010, Johns says that all he recalls saying was that there would be no change to the existing agreement between the parties save for the five year extension.
128 To a degree therefore, there is a conflict between Johns and Curran because Johns does not agree that he gave a commitment or assurance that AIL would continue to make annual crop compensation payments to Curran until 2015.
129 Another item of evidence, albeit indirect, is the email dated 30 April 2010 from Ms Overall to Frank in which she said that AIL would like to extend the call option for five years “on the existing terms (including the existing crop compensation arrangements as requested by yourself)”. I consider that this indirectly reflects Johns’ view because Ms Overall agreed that the only AIL representative in discussion with Frank in April 2010 about the extension was Johns.
130 The email was consistent with Ms Overall’s oral evidence that Johns told her that the existing crop compensation clauses in the existing agreement were to remain, that Mr Curran was adamant he wanted those existing crop compensation clauses to remain and he had requested that they should remain in the amending deed. The email supports Johns’ comment that the extension would be on the existing terms between the parties. It further supports the view that Curran asked that the crop compensation arrangements set out in the lease and Amended Option Deed not be changed.
131 Overall, I am not satisfied to the requisite degree that Johns made the alleged representation to Curran. The evidence lacks the necessary clarity and precision.
132 Secondly, the issue about the lack of clarity regarding the evidence of the conversation is not helped by the absence of other contemporaneous documentation or corroborative evidence. For example, there might have been a letter or an email between the parties in which their common position was set out. Perhaps unfortunately for Curran, the most timely documentation (apart from the two emails just referred to) setting out the parties’ agreement is the June 2011 lease and the Further Amended Option Deed. These documents do not support Curran’s position because there was no material change in the terms and no basis to find an obligation upon AIL of the kind which Curran now alleges. If Curran sought to obtain from AIL as consideration for the five year extension an annual guaranteed compensation payment, then it ought to have sought an amendment to the terms of the previous agreements.
133 Thirdly, I have reservations about the reliability of Frank Curran as a witness. While he was not dishonest, he struck me as a person who, subconsciously or unconsciously, has convinced himself of the correctness of his position and has fashioned his recollection of events in a manner most advantageous to his company’s interests. To this extent, he was not as impressive as Ms Overall. With one exception, she answered questions responsively and tried to tell the truth to the best of her recollection. Because she was not personally involved in the conversations between Johns and Frank, her evidence was in a general sense of limited utility.
134 The exception to which I refer was the suggestion that AIL suffered financial difficulties and this affected its ability to pay Curran moneys which were due. Ms Overall became more evasive and less comfortable with questions in this area. However, her concern appeared not to be about the issue of a liability to Curran. Rather, it was apparent from her answers that she was anxious to avoid any suggestion that AIL traded while insolvent or could not meet its debts as they fell due. She was keen to avoid any suggestion that AIL’s officers might have personal liability for any trading losses AIL might have.
135 Fourthly, after AIL and Curran negotiated the extension and it became clear that AIL was not making annual compensation payments, Curran did not respond in the manner I would have expected given the complaints it made in the case. By email dated 24 August 2011 after getting Ms Overall’s email of 19 August 2011, Frank wrote to Ms Overall saying, inter alia,
“…I was disappointed in and totally reject your assertion that AIL have no liability for crop compensation in respect of the 2012 financial year.
In April-May 2007 when AIL carried out extensive earthworks on CA2 in preparation for an almond plantation, it rendered the block unsuitable for normal cereal cropping.
Some 18 months ago I discussed this matter with Graham Johns and as recently as last week with Rex Booker where it was generally agreed that given the land had been prepared for the plantation of almonds, there were considerable hurdles to be overcome before any cereal cropping could take place on CA2.”
136 Then in a further email on 29 August 2011 from Frank to Ms Overall, Frank wrote to Ms Overall saying, inter alia,
“In April 2010 when Graham came over to discuss and ask us to extend the Option Agreement, he assured me that the crop compensation, on land not already planted out to almonds on CA2, would continue. I am sure that Graham will be able to verify this when he returns from leave.”
137 On the evidence before the court, that was the only reference made to the assurance which Johns allegedly gave Frank in April 2010 about ongoing crop compensation payments. If Curran were genuinely aggrieved on the grounds alleged, I would have expected Curran to write to AIL complaining of Johns’ behaviour and/or to ring, text or write to Johns complaining to him personally.
138 Subject to Frank Curran’s 29 August 2011 email, the evidence indicated that:
· Curran did not initiate any written complaint to AIL setting out Johns’ misleading behaviour;
· Curran did not make a written complaint to Johns setting out his misleading behaviour;
· Curran did not directly contact Johns to complain about his misleading behaviour;
· Curran did not take any steps to follow up Johns when he returned from leave (as indicated in his 29 August email);
· After receiving Overall’s letter dated 31 August 2011 where Overall said that AIL relied on its rights under the June 2011 lease and amended option agreement and he understood that neither Johns nor Rex Booker had made any representations contrary to that position, Curran did not take issue with Overall’s statements.
· Curran did not make any written or oral complaints to Booker about the conduct of AIL or Johns.
139 These events unfolded in circumstances where Curran was represented throughout by its solicitors, Cahills of Bendigo. On 15 February 2017, Cahills wrote to AIL’s then solicitors in the following terms:
“We refer to the current lease between the parties and now enclose an email which the vendor received from your client on 19 August 2011 advising that it was not planning a retail project for the 2012 financial year and that the vendor was at liberty to plant a crop on the balance of the land. The dilemma which the vendor now faces is that the purchaser has since completed substantial earthworks to the remaining land and has ripped tree lines across the land to a depth of 1 metre. This has resulted in the land being too rough for the use of tractors (a tractor would be liable to tip as a result of the ripping). The cost of restoring the land would be such that the vendor could not obtain a net return from the land for approximately three years. In these circumstances the vendor has requested that we ask the purchaser to reconsider its decision not to pay crop compensation in the 2012 financial year and also if it might notify us as soon as possible as to its likely intentions in respect of purchasing the land in the future.”
Again, this letter is notable because it makes no complaint about Johns’ conduct in giving Frank certain assurances about compensation in order to obtain an option extension.
140 The failure to raise what has now become an important issue for Curran is reflected also in Curran only seeking to introduce and rely upon paragraph 6A of the amended statement of claim after the trial began. If the allegation were as important as Curran now asserts, why was it not a prominent feature of Curran’s claim from the commencement of the proceeding? No proper explanation was offered on this point. I consider that Curran’s contemporaneous actions when AIL did not make the expected payments undermines its case.
141 In summary, I am not satisfied that Curran has established the Johns representation.
142 The AIL representation was in the terms set out in paragraph 29 above. The email was undoubtedly sent to Curran. It expressed a desire to extend the call option for five years on the existing terms between the parties including the crop compensation arrangements. This meant that the terms of the Further Amended Option Deed and the June 2011 lease were materially the same (except for the call option date) as the written agreements operative between the parties immediately before the call option was extended. To that extent, the email was accurate because the call option was extended for five years on the pre-existing terms.
143 Curran sought to rely on the reference to “compensation arrangements” in the AIL representation as a basis for a misleading conduct allegation. Curran believed the reference to crop compensation was a shorthand description of the compensation payable to Curran for being unable to crop the CA2 land subjected to development work by AIL. Curran believed it had a continued entitlement to annual compensation payments arising from the terms of the Further Amended Option Deed and June 2011 lease. This belief was incorrect. The belief caused Curran to construe the AIL email in a particular way.
144 In my view, the email itself was not misleading or deceptive. Rather, the problem was caused by the parties’ mistaken beliefs about the legal relationship between them and the nature of their obligations and entitlements under that relationship. Curran believed it was entitled to annual compensation payments and thought it had a contractual entitlement to invoice for them. AIL believed it was obliged each time it surrendered a lease to pay crop compensation to Curran.
145 While AIL might be correct to contend that Curran relied upon its lawyers to check written documents embodying the agreements between Curran and third parties such as AIL, this does not affect Johns’ involvement in the matter. It is well established that it is enough for a misrepresentation to be one of the matters relied upon by a plaintiff to act in a certain way. It is wrong to say that a defendant will be legally responsible for a misrepresentation only if it is the sole factor inducing a plaintiff to act in a manner which causes loss and damage.
146 In summary, I do not consider that AIL engaged in misleading or deceptive conduct within section 18 of the Australian Consumer Law in its dealings with Curran.
Was Curran the victim of a negligent misrepresentation by AIL?
147 Curran’s claim for negligent misrepresentation was founded upon its reliance on the Johns representation and the AIL representation. Curran argued that it entered into the Further Amended Option Deed and the June 2011 lease as a result of relying upon those representations. As already indicated, I am not satisfied that Johns made the representation attributed to him or that the AIL representation was false and constituted a misrepresentation.
If AIL engaged in misleading and deceptive conduct, what loss and damage is Curran entitled to recover?
148 Assuming that AIL made the Johns representation and the representation in trade or commerce within the Australian Consumer Law and both representations were misleading or deceptive or likely to mislead or deceive, Curran needs to establish that it suffered loss and damage as a result.
149 The Victorian Court of Appeal set out a comprehensive summary of the applicable legal principles regarding issues of causation and loss under section 82 of the Trade Practices Act 1974 (Cth) (the forerunner of the current section 18 of the Australian Consumer Law) in BHP Billiton Olympic Dam Corporation Pty Ltd v Steuler Services GmbH & Co KG[28] as follows:[29]
[28][2014] VSCA 338.
[29][2014] VSCA 338 at [540].
“There are several relevant principles governing the issues of causation and loss under s 82 of the TPA that are important to keep in mind:
(1) A plaintiff is entitled to recover as damages a sum representing the prejudice or disadvantage it has suffered in consequence of its altering its position under the inducement of the misrepresentations made by the defendant;
(2) Under s 82(1) of the TPA, as under the common law, a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage;
(3) In determining whether a plaintiff has suffered loss or damage under s 82(1), it is usually necessary to compare the position that the plaintiff is in having been misled, with the position it would have been in but for the misrepresentation; by undertaking this comparison a court can determine whether the plaintiff is worse off as a result of relying upon the misrepresentation made by a defendant;
(4) Section 82 requires identification of a causal link between loss or damage and conduct done in contravention of the Act; the question of causation is relative to the purpose of s 82, applied to the circumstances of a particular case;
(5) Determining the question of causation will often involve considering how much worse off the plaintiff is as a result of entering into the transaction which the representation induced it to enter than it would have been had the transaction not taken place. This entitles the plaintiff to all the consequential loss directly flowing from its reliance on the representation, at least if the loss is foreseeable;
(6) Analysing the question of causation only by reference to what is, in essence, a “but for” test has been found wanting in other contexts and it should not be treated as an exclusive test of causation under s 82 of the TPA either; especially where there is more than one cause of the loss;
206 Curran submitted that the assumption was formed and encouraged at several stages throughout its relationship with AIL, namely:
(a) during the discussion between Johns and Frank at the end of 2007. Frank claimed in his discussion with Johns that Johns said that the crop compensation clause of $60 per acre would have to be invoked until the land in CA2 was purchased so that Curran received compensation for not being able to use the land for cropping.
(b) by AIL’s payment of crop compensation to Curran for the financial years ending 2007 to 2011.
(c) during a further discussion between Johns and Frank in April 2010, where Johns said in effect to Curran that AIL sought an extension of the Amended Option Deed for a further five years and agreed to Curran’s requirement that the crop compensation arrangements in the lease also remain the same.
(d) in Ms Overall’s email to Frank dated 30 April 2010 where she said:
“I refer to your discussion with Graham Johns regarding extending the Option Agreement that was entered into on 24 November 2006, as amended by the Amendment Deed on 10 June 2008, for volume 8060 folio 660.
As you are aware, Almond Investors Land Pty Ltd would like to extend the Call Option Period for a further 5 years (that is until 15 June 2015). We would like to do so on the existing terms (including the existing crop compensation arrangements as requested by yourself)…”
207 Thus, doing the best I can from Curran’s material, it appeared that the convention which Curran relied upon was that annual payments were to be made by AIL to Curran to compensate Curran for its inability to undertake cropping on that part of CA2 which was not used for growing almonds. Primarily, this comprised areas which had been ripped but were otherwise not actually used at the time for almond growing.
208 In respect of Ward J’s second element, Curran submitted it had suffered significant detriment, which comprised:
(a) granting for no special payment or fee the extension of the call option for a further five years; and
(b) receiving no compensation in the period 2012 to 2015 for Curran’s inability in practical terms to use the balance of the property not given over to commercial almond growing projects.
209 As to the final element, Curran did not detail how it would be unfair or unjust to permit a departure from the assumption. Curran merely contended that it had placed itself in a position of significant disadvantage. It did not specify the nature of the “significant disadvantage” if the departure from the assumption were allowed.
210 Curran did not seek to address in any detail the different understandings of the parties: while Curran assumed it had a guaranteed annual payment of crop compensation, AIL assumed the lease required it to pay compensation for land which Curran could not use when AIL surrendered leases. While there were a number of leases after the original 2007 lease, there were no new leases after 2011.
AIL’s submissions
211 In short, AIL submitted that the claim in conventional estoppel could not be made out because:
· there was no expressly shared common assumption. What is necessary is a “consistent, clearly identifiable assumption as to what the precise nature of the legal relations between them was”.[63]
[63]BB Australia Pty Ltd v Karioi Pty Ltd (2010) 278 ALR 105, 111.
· Curran relied upon its lawyers advice in determining his position, which he insisted on receiving before executing formal legal documents, rather than relying upon any representation by AIL upon which AIL intended Curran to rely.
Analysis
212 Curran’s framing of the assumption was vague, seemingly being founded in a combination of: the Johns representation, the email representation, the payments made between 2007 and 2011 and the further discussion between Frank Curran and Johns in 2010. Curran did not specify precisely what the conventional understanding was between the parties. The court was left to infer this from the evidence referred to by Curran, as well as the other evidence in the case. This is an unsatisfactory approach to take. A party’s submissions ought to clearly specify both the legal and factual material in support of its case. Particularly is this so, where a party bears the legal onus of proof.
213 Secondly, I am not satisfied that any understanding was mutually held by the parties.
214 The necessity of proving the existence of a mutual assumption in establishing a claim for conventional estoppel was outlined in Brereton J’s frequently cited judgment in Moratic Pty Ltd v Gordon,[64] where His Honour stated:[65]
“On the other hand, conventional estoppel, a creature of the common law, is focussed on the consensual basis of the parties’ relationship: it operates when both parties have adopted the same assumption as the basis of their relationship…”
[64][2007] NSWSC 5.
[65]Ibid at [33]; Mineralogy Pty Ltd v Sino Iron Pty Ltd [2017] FCAFC 55; Doueihi v Construction Technologies Australia Pty Ltd (2016) 333 ALR 151; Franklins Pty Ltd v Metcash Trading Ltd (2009) 264 ALR 15.
215 AIL submitted that it made payments to Curran because crop compensation was due to be paid for land surrendered under the leases between 2007 and 2011. Curran did not make submissions directly addressing this point. However, it appeared to assert it was entitled to annual payments to compensate it for its inability to use the land, irrespective of AIL’s decision to surrender the leases. During Frank’s evidence, he explained:
“…We agreed that I would be compensated, because of the fact I couldn't crop the land I would be compensated $60 an acre for not being able to crop it. …
It was to be an annual payment on land that wasn’t developed.”
216 AIL’s understanding of the arrangement between the parties was said to be evidenced in the correspondence between Johns, Overall and Frank.[66] On 30 August 2011 Johns wrote to Ms Overall:
[66]See email from Mr Johns to Frank dated 30 August 2011; email from Overall to Frank dated 31 August 2011.
“All I recall saying was that there would be no changes to the existing agreement other than an extension to the Option Period for another five years.”
Similarly, in a letter from Wayne Overall to Frank Curran dated 31 August 2011, Overall stated:
“…AIL relies on its legal rights under the Lease dated 8 June 2011 and the Option to Purchase (and amendments).”
217 Additionally, at trial Ms Overall, explained that she would calculate crop compensation based on the number of surrendered acres leased, and that AIL had a:
“pattern of entering into a lease for the entire land, only having sales for a portion and then having the balance surrendered that actually continued throughout 2009, 10 and 11”
218 In her evidence, Ms Overall said that she was head of legal and compliance. She explained that every year AIL wanted to give itself the best chance of making as many sales as possible and so it leased all the land it could. Then if a project did not attract enough sales to fill the area leased, the area not required was surrendered. Ms Overall said part of her role at AIL was to deal with invoices including those received from Curran seeking compensation. In her email to Frank dated 8 February 2010, she explained the methodology: from the area of CA2, namely 884 acres, she subtracted the area already leased/purchased by AIL and multiplied it by $60. Johns had told her that this was his understanding of how the agreements with Curran worked. Johns was a director of AIL and Ms Overall saw no reason to challenge his view. She simply relied on Johns’ understanding of the documents. Ms Overall spoke with Johns about his email of 30 August. He said that he had not promised or guaranteed Frank annual crop compensation. But he did agree that the only term changed in the lease would be the expiry term of the option.
219 In my view, Curran relied on evidence which was equivocal. This undermined Curran’s assertion that the parties had mutually adopted the assumption that crop compensation payments would be annual, irrespective of land surrendered and separate from the parties’ obligations under the written agreements between them.
220 AIL’s payments between 2007 and 2010 were consistent with both AIL paying pursuant to the annual leases, as well as Curran’s assertion of a separate annual entitlement. Equally, Ms Overall’s statement that AIL intended to continue with the “existing crop compensation arrangements” did not specify what the existing arrangements were.
221 Having found that there was no clear common assumption between the parties, it is unnecessary for me to consider the submissions made on detriment.
Summary
222 In conclusion I find that Curran was not entitled to advance an argument for conventional estoppel. In any case, Curran has failed to establish its claim for an estoppel by convention. Curran’s failure to prove a clear and consistent assumption and its lack of detailed submissions, particularly in respect of the mutuality of the alleged convention adopted by the parties, leaves the court with no choice other than to conclude that Curran has not proven this part of its case on the balance of probabilities.
223 I also note that further detailed arguments were raised by AIL in its written and oral submissions. Most of these were left unanswered by Curran, or cursory attempts were made to address them.
Is AIL entitled to recover the sum of around $241,000 paid to Curran as crop compensation as money paid under a mistake?
224 AIL cross-claims for the amount of $241,706.59 already paid to Curran to be repaid under the doctrine of mistake.
225 In its written submissions, AIL relied on the statement of principle of French CJ in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd:[67]
“When money is paid under a mistake of fact, the person paying the money may recover it from the recipient in a common law action for money had and received. Recovery depends upon whether it would be inequitable for the recipient to retain the benefit. Retention may not be inequitable if the recipient has changed its position and thereby suffered a detriment.”
[67](2014) 253 CLR 560 at [1].
226 AIL submitted that it believed it was contractually obliged to make the following payments to Curran when in fact it was not:
· $58,080.00 for “2007 crop compensation” on or about 13 March 2008;
· $51,955.20 for “2008 crop compensation” on or about 5 February 2009;
· $48,597.19 for “2009 crop compensation” on or about 24 February 2010;
· $42,240.00 for “2010 crop compensation” on or about 19 August 2011;
· $40,905.17 for “2011 crop compensation” on or about 29 October 2013.[68]
[68]This amount is inconsistent with the amount of $40,834.20 claimed at paragraph 21 of the Defence to the Amended Statement of Claim and cited at paragraph 146 of the draft judgment. However it appears from CB253 that the higher amount is correct.
227 Accordingly AIL submitted that, prima facie, it was entitled to recover the sum of the above amounts, namely $241,777.56,[69] by operation of the doctrine of mistake.
[69]This total also diverges from the amount claimed in the Defence to the Amended Statement of Claim, namely $241,706.59. However it appears from CB519-23 that the higher amount is correct.
228 The nature of the mistake was that AIL believed that it was required to pay crop compensation for land in CA2 which was variously described as:
(a) “not purchased/leased for existing projects”;
(b) “remaining acres of CA2 not yet taken up by AIL”;
(c) “not used” in projects; or
(d) “balance of the land remaining on CA2 that is not currently involved in an AIL almond project… This crop compensation payment is due as per clause 20 of the Interim Head Lease executed … on 4 June 2010”.
229 AIL further submitted that, for the reasons set out in its defence and earlier in its submissions, no crop compensation was owed to Curran pursuant to clause 6.3 of the Further Amended Option Deed or clause 20 of the June 2011 lease because the requirements for payment were not triggered.
230 I have found that neither clause 6.3 of the Further Amended Option Deed nor clause 20 of the June 2011 lease required AIL to pay crop compensation to Curran. In the absence of any contractual obligation to Curran, I consider that AIL has a prima facie entitlement to the return of the money paid to Curran as a claim for money had and received.
231 In support of its claim, AIL pointed to parts of the evidence which it said established that the mistake was genuine and not discovered until some time much later:
(a) Ms Overall said that she sought legal advice in 2015 because Almond had received crop compensation invoices from Curran;
(b) Mr Tkalcevic raised a concern about the legal position and basis for challenging the invoices in December 2015;
(c) the fact that the advice about the 2007-2011 invoices was received after the amounts had been paid and after the writ in these proceedings had been issued;
(d) in response to the suggestion by Curran’s counsel that the counterclaim was “a device in this litigation at the last possible point”, Ms Overall said, “it wasn’t until we delved into the level of detail that this court case requires did we realise the extent of our mistake”.
232 Finally, AIL submitted that there was no evidence that it acted in any way unconscionably or took advantage of Curran. It said further that merely asking for its mistake to be corrected was not unconscionable or unjust – AIL was merely asserting a right that was not asserted before.
233 Curran in its written submissions denied that AIL held a mistaken belief “as it was in law and in the premises at all material times under an obligation to pay”.
234 I note in passing that AIL correctly pointed out in closing submissions that whether a mistake is one of law or fact is no longer relevant since the case of David Securities Pty Ltd & Ors v Commonwealth of Australia.[70] Accordingly, insofar as Curran appears to argue that AIL cannot avoid its alleged obligation to pay on the basis of a mistake as to law, that submission is misguided.
[70](1992) 175 CLR 353.
235 Beyond asserting that it would be unconscionable to require Curran to repay the moneys (but not explaining why), Curran’s submissions did not address in detail the other elements of the doctrine of mistake. Importantly, apart from the assertion of unconscionability, Curran did not plead or argue any defence to AIL’s claim to repayment of the money. For example, Curran did not raise the defence of change of position so that it would be unconscionable to require Curran to return the moneys.[71] Indeed, Curran expressly disclaimed any reliance upon the change of position defence.
[71]This was correctly observed by AIL’s counsel in closing argument.
236 The remainder of Curran’s written submissions focused on the effect of section 27 of the Limitation of Actions 1958 (Vic), which will be discussed later.
237 During closing submissions I asked Curran’s counsel whether it said that the payments were made in error because both parties misunderstood the circumstances in which compensation ought to be paid. Counsel said that it did not. Rather, Curran said there was no relevant mistake because AIL was a sophisticated investment fund that had legal advice from “some very major” firms. Accordingly, Curran said that it was “ridiculous” to suggest that AIL would have paid the money to Curran had it not been under a legal obligation to do so.
238 The gist of Curran’s submissions appears to be that AIL’s claim that it was mistaken regarding its payment obligations is implausible, primarily because it retained lawyers from major firms during the relevant period. Accordingly, Curran submitted that the mistake should have been picked up at the very beginning. This line of argument appears to be directed at the reasonableness or otherwise of AIL’s mistaken belief.
239 From the whole of the evidence, I am satisfied that AIL made the compensation payments which it now seeks to recover under a mistaken view of its obligations. The mistake was probably one of law rather than fact. However, to the extent that there was a mistake, its precise nature is irrelevant. In circumstances where Curran did not plead and prove a defence to this claim, I conclude that AIL is entitled to the repayment of the compensation payments claimed which were made in respect of the years 2007 to 2011.
If AIL prima facie is entitled to the return of the moneys paid to Curran, is its counterclaim, or any part thereof, statute barred?
240 If AIL believed that it was contractually obliged to make the compensation payments to Curran when legally it was not, then it has a prima facie entitlement to recover those payments from Curran.[72] The parties do not dispute that AIL paid and Curran received $241,706. The underlying dispute was AIL’s belief that it had to pay compensation for the land in CA2 which was not bought or leased for almond projects. Ms Overall paid the invoices from Curran on the basis of her reliance upon advice from Johns that AIL should make the payments. It appears that Johns believed AIL was obliged to pay compensation to Curran and, as a director of AIL, he authorised those payments. Frank believed that, under the terms of the option and lease agreements between Curran and AIL, Curran was entitled to the annual compensation payments from AIL at the price of $60 per acre.
[72]David Securities Pty Ltd & Ors v Commonwealth of Australia (1992) 175 CLR 353; Pentridge Village Pty Ltd v G&S Potenza Pty Ltd [2014] VSCA 50 at [23].
241 Even if AIL is prima facie entitled to claim the moneys paid to Curran, Curran contends that such a claim is statute barred due to the Limitation of Actions Act. Curran says the money claims were not brought within 6 years of the payments being made, in accordance with section 5 of the Limitation of Actions Act. The various payments made by AIL were made on the following dates:
· $58,080.00 on or about 13 March 2008;
· $51,955.20 on or about 5 February 2009;
· $48,597.19 on or about 24 February 2010;
· $42,240.00 on or about 19 August 2011;
· $40,834.20 on or about 29 October 2013.
242 Curran initiated the proceedings on 15 February 2016 and AIL filed its defence and counterclaim on 28 November 2016. This means that AIL’s claims in relation to payments made before November 2010 are prima facie statute barred.
243 AIL relied upon section 27 of the Limitation of Actions Act which provides that the commencement of the limitation period “shall not begin to run until the plaintiff has discovered the … mistake … or could with reasonable diligence have discovered it”.
244 Curran contends that this provision will not assist AIL because, with reasonable diligence, it could have discovered the mistake far sooner. Curran submits that:
(a) in all its dealings with Curran, AIL retained expert solicitors who drew the relevant option and lease documents for AIL. The firms included Minter Ellison, Allens Arthur Robinson and McMahon Clarke Legal;
(b) Overall consulted a barrister in August 2011 and the topic of compensation was discussed.
245 In my view, the mere fact that AIL engaged well respected legal firms to draft the call option and lease documents does not, of itself, establish anything relevant to the question of when the mistake was reasonably discoverable. The plaintiff did not question AIL’s witness about the extent to which AIL discussed with any of its solicitors the question of the annual compensation payments to Curran. Indeed, I am not certain there was evidence showing that the solicitors knew that AIL was making these payments. Without this kind of evidence, I do not see how I can be satisfied that AIL could have discovered through its dealings with the various solicitors that there was a problem regarding the compensation payments made to Curran between 2007 and 2011.
246 As to the consultation with the barrister, there was no specific oral evidence at trial about the advice sought, the advice received or the nature of the discussions which occurred. However, Curran submitted that the court should infer that the discussion included the compensation payments. This submission was based upon the context and content of emails passing both between Frank and Ms Overall, and Ms Overall and Johns before Overall met the barrister.
247 The subject matter of the emails was described as “crop compensation” and dealt explicitly with the question of compensation. In his email of 24 August 2011 at 7:42am,[73] Frank expressed his disappointment in AIL’s assertion that it had no liability for crop compensation in respect of the 2012 financial year. He rejected the assertion. Frank said that when he discussed the matter with Johns about 18 months ago and recently last week with Rex Booker, it was agreed that, given the land had been prepared for the plantation of almonds, there were considerable hurdles to be overcome before any cereal cropping could take place on CA2. Frank said that in recognition of the fact that CA2 was not suitable for normal cropping, AIL had paid crop compensation on the balance of the block for the last 4 years and Frank expected that to continue until the block was fully developed.
[73]CB549.
248 In response, on 25 August 2011[74] Ms Overall advised Frank that she had forwarded his email to her colleagues, her father and Nicholas Tkalcevic, because she was going on maternity leave.
[74]CB551.
249 Frank’s response to Ms Overall on 29 August 2011[75] referred to his discussions with Johns in April 2010 where Johns assured him that the crop compensation could continue in relation to land on CA2 not already planted out to almonds.
[75]CB554.
250 The next email in this sequence, dated 29 August 2011 and bearing the heading “Crop Compensation”, was from Ms Overall to Johns in which she said: “Further to my earlier email, Wayne [Overall] has an appointment with Elisabeth Peden [barrister] tomorrow morning to discuss this issue. He would appreciate it if you could give him any comments that you may have (via phone or email) before then”. Johns responded by email the next day and referred explicitly in the last paragraph to the topic of the continuation of the crop compensation payments.
251 In the circumstances, I consider that there is a sound basis for the contention that AIL could have discovered with reasonable diligence by late August 2011 that there was no obligation to make the annual compensation payments. From the emails referred to, it seems likely that the issue of crop compensation payments was among the matters canvassed at the meeting with counsel at the end for August 2011. AIL led no other evidence about the details of the conference such as the matters discussed or the advice given. The plaintiff asked no questions relating to the conference. Details relating to AIL’s meeting with counsel are peculiarly within the knowledge of AIL. Had AIL wished to avoid an inference that the continuing crop compensation payments were a topic of discussion and/or advice, it could have adduced evidence on the issue. It did not do so. Having regard to the matters set out above, my view is that AIL could, with reasonable diligence, have discovered the mistake about the annual crop compensation payments by the end of August 2011. If this finding is correct then none of AIL’s claims for repayment is statute barred because the claim for the moneys was made within 6 years of this time.
252 If I am wrong about the 2011 date and the mistake was not discovered until 2015 or 2016 when seeking advice in connection with this litigation, again, none of AIL’s claims for repayment is statute barred.
Conclusion
253 In summary, I make the following findings in this case:
(a) the construction of clause 20 of the June 2011 lease and clause 6 of the Further Amended Option Deed is such that Curran was not entitled to receive, and AIL was not obliged to pay, annual compensation payments in relation to CA2.
(b) AIL did not engage in misleading or deceptive conduct towards Curran. Nor was AIL negligent in its dealings with Curran.
(c) even if Curran had established misleading or deceptive conduct and/or negligence, it did not prove its claim for loss and damage.
(d) Curran’s claim based on equitable estoppel failed;
(e) Curran’s claim based on conventional estoppel failed. There were legal impediments to bringing this claim. Apart from that, the argument failed on its merits.
(f) AIL’s claim based on mistake succeeded. The counterclaim was not statute barred.
254 I will hear the parties on the form of final orders and costs.
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