Gaye (No 1) Pty Ltd v Allan Rowlands Holdings Pty Ltd

[1993] HCATrans 113

•

4

.

~

•

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Darwin No 06 of 1992

B e t w e e n -

GAYE (NO. 1) PTY LTD

Appellant

and

ALLAN ROWLANDS HOLDINGS

PTY LTD

Respondent

MASON CJ
DEANE J

DAWSON J

TOOHEY J

GAUDRON J

Gaye(4) 1 11/5/93

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 11 MAY 1993, AT 10.16 AM

Copyright in the High Court of Australia

MR B.J. SHAW, QC: If the Court pleases, I appear with my

learned friend, MR T.P. MURPHY, for the appellant.

(instructed by Stedman & Cameron)

MR S.R. SOUTHWOOD: If the Court pleases, I appear on behalf

of the respondent. (instructed by Ward Keller)

MASON CJ: Yes, Mr Shaw.

MR SHAW: If the Court pleases, the writ in this matter was

issued on 16 May 1985.	It concerned an agreement
of 8 August 1983 which	appears in the appeal book
at page 70.

MASON CJ: 

We have read the judgment, so there is no need to

take time on the chronology unless it happens to be
important to some aspect of the argument you are

putting.

MR SHAW: 

Your Honour, it is important, I suppose, for two

reasons: the first is that the appeal which was
before the Full Court in the Northern Territory is

confined to paragraph 3 of the notice of appeal to

that court which appears at page 122. That appears

inferentially, I suppose, from the judgment in the

Full Court, but it was pursuant to an order made by

His Honour Mr Justice Angel on 13 June 1991 which

is, in fact, not in the appeal book, by which

His Honour ordered that the appeal against the

judgment of Mr Justice Kearney made on

2 October 1990 and referred to in paragraph 3 in

the appellant's amended notice of appeal be heard

separately and prior to the appeal from

His Honour's earlier judgment. So the appeal, as

it were, has been split in two, and simply the

illegality point was dealt with in the Full Court,

and that is all this Court is concerned with.

The other relevance of the chronology is this:

when the illegality point was raised for the first

time before Mr Justice Kearney in October of 1990,

there being no pleadings relating to that matter,

one of the questions which arose was whether or not

an application to amend the pleadings would be

allowed.
The application was to amend the pleadings so as to include a pleading relating to illegality and

that application was refused on the basis that the

application was made so late and because the

plaintiff may have been prejudiced by the delay and

reference was made to the possibility of there
being a statute bar to recovery of the moneys which

had already been paid.

Gaye(4) 2 11/5/93

So that the situation is one in which there

has been an application to amend the pleadings, the

application has been refused on discretionary

grounds, and there has been no appeal from that.

So that it is not simply a case where the question

is, "Will the Court deal with the question of

illegality arising, ex facie, on the terms of the

agreement?" but the question arises where an

application has been to amend and that has been

refused. Apart from that, I do not think,

Your Honour, the chronology has any immediate

significance.

The Full Court, although all members of it

agreed, did not proceed all on the same grounds.

His Honour the Chief Justice, at page 137,

discusses first of all, beginning at line 9, what a

"transaction" is, and then he goes on to deal with

what a transaction purporting to subdivide might

be, and he says, at line 19:

a "transaction purporting to subdivide land

emphasises the purpose or intent of carrying
out the act of subdividing. (see Macquarie -

"purport", inter alia, "purpose or object".)

So His Honour has accepted as indicating the

meaning of the word "purporting" or "purporting to"

as a verb as having the same meaning as it would

have if it were noun, since he has adopted the

meaning of the word as a noun.	And he goes on and
says:

As with some other concepts (eg "attempt" in

criminal law) the exercise becomes one of

investigating whether the circumstances go

beyond the boundaries of vague statements of

intent, preliminary preparations of an

ambiguous nature or unexplored hypotheses on the one hand; or whether, on the other hand,

or statements of intent have progressed to a the situation has been reached where actions	point where the enterprise is clearly underway
and clearly moving to a planned conclusion. At that point the enterprise can be properly
described in the terms of its intended conclusion ie in this case "a transaction purporting to subdivide land".
So, His Honour seems to take the view that

because the end object or purpose was to achieve a

subdivision, the transaction was one purporting to

subdivide land.

Then, His Honour goes on at page 139 at the

bottom to say that the case is governed by

Gaye(4) 3 11/5/93

George's case, and that is the effect of the next three or four pages of His Honour's reasons.

His Honour Mr Justice Martin adopts, at

page 160, the same kind of view of "transaction
purporting to" at line 13 at page 160, His Honour

says:

Looking at the definition of

"subdivision" and s83(2) of the Planning Act,

what is rendered void is a transaction, the

purpose of which is to render separate parts
of the land available for separate occupation

and use, in contravention of Part V of the

Act. There can be no doubt that a contract is

a transaction and the whole purpose of the

contract in question here (with all its
deficiencies) is to divide the subject land

into two parts and to either transfer or lease

one part to the purchaser. It is not
necessary that the transaction or activity
under consideration should of itself have the
effect of making separate parts of land
available for separate occupation, it is only

necessary that the activity or transaction

involves that purpose or objective.

And then on page 161, after dealing with

Part V of the Planning Act at line 13, His Honour

says:

Furthermore, clause 7 of the contract

contemplates that if a subdivision leading to

a transfer is not possible, then separate

parcels of the land will be made available,

one of which will be for the separate use and

occupation of the purchaser by means of a

lease. This provision is in contravention of

Part V. At least the earlier provisions paid

regard to there being some formal
requirements, the latter does not.

So that His Honour adopts the view that

"purporting to" looks to the purpose or objective

of the overall transaction and says that the matter

is concluded by the provisions of clause 7.

His Honour Mr Justice Angel at page 165 says on the

top line:

I respectfully agree with the learned

Chief Justice that the agreement does

constitute "a transaction purporting to

subdivide land" .

And then he sets out some submissions made on

behalf of our client and at page 165 says:

Gaye(4)	11/5/93 I cannot ~ccept this submission. In my view,
clause 7 itself contravenes s83 of the Act, providing as it does for the rendering of separate parts of land available for separate·
occupation or use.
So His Honour, as does Mr Justice Martin,

founds his conclusion on the provisions of clause 7 and he does not expressly say, at any rate, that he

adopts the same construction of "transaction

purporting to subdivide".

MASON CJ:	It is not clear to me that the Chief Justice did not also found himself on clause 7, when you look
at the last two sentences in the continuation of
the paragraph at the top of 138. They are preceded
by references to clauses 5, 6 and 7.
MR SHAW:	Your Honour, it is just unclear precisely what

provisions His Honour had in mind. His Honour

seems to have taken a more general view, saying,

well, if it is the purpose or objective, that is

fatal. The other two members of the Court, or at

least one of them, seems to say well, clause 7

itself does subdivide, leaving out the purporting,

as it were.

MASON CJ:  Yes.

Now, if one goes to the contract at page 70,

what it provides is that the defendant, being the
grantee of an option over the land described in

agricultural lease No 739, will receive $60,000 and

will exercise the option. Going to the top of

page 71, it will "complete the contract"; and then

we come to the relevant clauses, clauses 5, 6 and

7. Clause 5 provides:

That the Purchasers shall, at the first

opportunity, arrange for the Vendor's land to

coloured red on the plan attached

be subdivided in such a way that the land

hereto ..... and being that piece of land which
lies between the road coloured blue on the
plan and the river coloured green on the said
plan.

And going down to 6

TOOHEY J: That sentence, Mr Shaw, does not seem to have an

end, does it?

DEANE J: It lacks a verb.

MR SHAW:  Your Honour is perfectly correct. It is perfectly

clear, on the other hand, what it means.

Gaye(4)	11/5/93
DEANE J:	Is it, or may not that be the critical point in

the case?

MR SHAW:  No, Your Honour, because going to clause 6, it

says:

That on the sealing of the subdivision and

subsequent approval thereof by the Northern

Territory Land Registration Office the Vendor

agrees within fourteen days of such approval
to execute a transfer in fee simple of the

land coloured red ..... to the Purchasers

for ..... sixty thousand dollars ($60,000).

And then clause 7 says:

That in the event of a subdivision of the land

not being possible then the Vendor agrees to execute an assignable lease in perpetuity of the land coloured red on the plan attached

hereto to the Purchasers.

Provided that should a lease in perpetuity not

be legally possible then the Vendor will grant

to the Purchasers such assignable lease for

the longest term as may be permitted by the

law of the Northern Territory.

TOOHEY J:  How do you suggest that clause 5 should be read,

Mr Shaw? What words need to be inserted for it to

read grammatically, or even to make sense?

MR SHAW:  "The purchasers shall arrange for the vendor's

land to be subdivided in such a way that the land
coloured red is subdivided from the rest of the
land."

Now, going to clause 7, which is the clause on

which at least two of the members of the court
founded themselves, it will be seen that what it

provides for is if you cannot have subdivision in

accordance with 5 and 6, then there is to be a

lease for the longest term that the law permits.

Now, assuming for the moment that the grant of any

lease at all would be in breach of the provisions

of the Planning Act, then in our submission that
clause would simply lead to the conclusion that
what was provided for in the events that turned out

was~ lease of no duration at all, in other words

no lease. But in fact that is not so because if

one looks at the provisions of the Planning Act,

the Planning Act, in section 4, defines

"subdivision" in a way which is referred to in the

judgments in section 4(1):

Subdivision in relation to land, means an

activity which involves -

Gaye(4) 6 11/5/93

(a)	the rendering of separate parts of the
land available for separate occupation or use -

and so on. And subsection (2) says:

Land is not subdivided by the grant of a

lease, licence or other right to occupy or use

a part of that land unless the lease, licence

or other right is for a term exceeding 12

years.

MASON CJ: Five years? Twelve years, in my copy.

MR SHAW:  I am told, Your Honour, that that has been

amended. It was five and is now 12.

MASON CJ:  I see.

GAUDRON J: But, my Act says it was in force at 25 June

1987.       So do we not go back to 1983 for the

relevant - - -

MR SHAW:	1983, yes.
GAUDRON J:	Yes.
MASON CJ:	So it is five years?

MR SHAW:  It is five years. So that it is submitted that

clause 7, in fact, does· not provide the foundation

for the conclusion to which the Full Court came,

which at least two members of the Court thought it

did. That is because the provisions of section

4(2) do not seem to have been brought to the

Court's attention.

Now, that leaves the other question which seems to have been the principal matter which

concerned the Chief Justice, and possibly Justice

Martin as well. What I have handed up are copies of two

dictionaries, one the Macquarie, the other the

Oxford English Dictionary. Going to the Oxford

first, there is a definition of "purport" as a

noun, and then "purport" as a verb. The first

meaning is:

To have as its purport, bearing, or tenor; to

convey to the mind; to bear as its meaning; to

express, set forth, state; to mean, imply.

and b. is:

Followed by inf. (of a picture, statue,

document, book, or the like; rarely of a

Gaye(4) 7 11/5/93

person): To profess or claim by its tenor.

(Said without pronouncing as to the truth or

validity of the claim).

and 2.:

To mean, intend, purpose. rare.

and then it says:

Hence purported

as an adjective for:

professed, alleged.

Going to the Macquarie Dictionary, it says, as a

transitive verb:

to profess or claim:

and the example is:

a document purporting to be official. 2. to

convey to the mind as the meaning or thing

intended; express; imply

and then, as a noun:

tenor, import, or meaning. 4. purpose or
object.

The Court will recall that it was to the fourth meaning that His Honour the Chief Justice

referred in the course of his reasons.

In our submission, the meaning which the court

gave to the phrase is inappropriate. The better meaning is the kinds of meaning expressed by the

Macquarie dictionary as a verb or the earlier

meanings in the Oxford dictionary and, in our	submission, that is reinforced by a consideration
of the consequences of the meaning adopted by the
court since it presumably means that any contract, the object of which is to achieve a subdivision, is
void. That would mean, presumably, that if I enter
into a contract with a licensed surveyor to survey
the land and draw up a plan of subdivision, in order that I may offer the land for sale in due course in subdivided lots, that too might fall.

The reliance which is placed on George's case

is, it is submitted, misplaced.

MASON CJ:  I have not followed what you say "purporting"

means. What do you say, in the light of this

dictionary definition, "purporting" in 83(1) means?

Gaye(4)	11/5/93
MR SHAW:	What we suggest it means is claiming by its tenor

to subdivide.

MASON CJ: Claiming by?

MR SHAW: Its tenor.

MASON CJ: That is to effect itself a subdivision,

MR SHAW:  Or claiming to effect itself a subdivision.

Your Honour, in our submission, the reason for

"purporting" is that because the statute makes it

illegal and ineffective, no contract which is

actually in contravention of the Act can have the

effect of subdividing. So what is being said is,

"If you do enter into a contract which would itself

have the effect of subdividing, except for the

statute, then that is caught", and in Graham v

Walker, 104 CLR 366, George's case was considered by this Court, consisting of Chief Justice Dixon and Justices Kitto and Windeyer, in circumstances

in which the contract in question there was an

option which was only exercisable on the terms of
the option in circumstances in which a plan of

subdivision had already been sealed and approved

and, it was said, "Never mind, the purpose of the

contract was to achieve a subdivision and that is

brought down by George's case".

And at page 377, about six or seven lines from

the bottom, Chief Justice Dixon said:

In support of the present appeal it is

contended that the Court's decision upon that
defence is an authority governing the

construction of s. 568 of the Local Government Act 1946. The answer is that the statutory as well as the contractual instruments

respectively governing the two cases are

materially different. It is necessary to use

the expression "statutory instruments" because

in George's case the defence depended perhaps

less on the statute than upon regulations made
thereunder. Section 23 of the Town Planning

and Development Act 1920 provided that it

should not be lawful for any person among

other things to subdivide any land into

allotments or otherwise or resubdivide any

existing allotment or parcel for building or

any purpose or for any person to offer for

sale or sell or convey transfer or otherwise

dispose of any existing allotment or parcel of

land except in accordance with the Act, an

expression which included the regulations. A

regulation required that any person desiring
to offer for sale or sell etc. should cause a

plan to be prepared showing the boundaries and

Gaye(4) 9 11/5/93

complying with certain sections of the Act.

The Town Planner might then issue a

certificate of approval of a plan lodged with

him. Then the owner must deposit the

certificate and copies of the plan in the

Lands Titles Office. A penalty was imposed by

s.44 on any person who subdivided disposed of or dealt with land in contravention of any of these provisions.

Then His Honour goes on and sets out what had happened in the court below and a number of the

arguments. And page 379, about 10 or 12 lines

down, after having set out the reasoning of

Chief Justice Murray of South Australia, said:

Chief Justice Knox read the regulations as imposing an obligation to obtain approval

before any lot was sold. His Honour proceeded

to say "If the true meaning of the regulations

be, as I think it is, that the steps

prescribed must be taken before any sale or

offer to sell an allotment is made, the

provision in the contract that it was 'subject

to the provisions of the Act being complied

with' can have no effect, for the requirement

of the Act and Regulations that the
certificate of approval should be obtained and

deposited with the plan before any sale of the

land could lawfully be made could never be

complied with in respect of this contract. For these reasons I am of opinion that the contract of 15th November 1925 contravened the

provisions of the Town Planning and

Development Act and was therefore illegal and

invalid".

Isaacs J. construed the Act as prohibiting the making of a contract absolutely or

conditionally. Starke J. concurred for

reasons which while similar appear to hinge

upon the fact that the Act rendered unlawful

not only conveyances and transfers of
allotments but also the acts of offering for

sale or selling such allotments.

So what George's case turned on was the fact that

the Act there and the regulations made under it

were construed as applying to - because of their terms where they expressly referred to offer for

sale or desiring to sell or selling - to any

contractual act as well as acts which amounted to

subdivision or an actual rendering of the separate

parts available for separate use or occupation.

Here, all one has is a provision that - and

this is in section 83:

Gaye(4) 10 11/5/93

(1) No person shall enter into a transaction

purporting to subdivide land in contravention

of this Part.

(2) A.transaction purporting to subdivide land

in contravention of this Part is void.

So what the statutory provisions are here directed

to are transactions "purporting to subdivide land

in contravention" of the part. There is no

reference to persons desiring to sell, offering for

sale, selling and so on. So, in our submission,

the decision in George's case really does not go to

this case at all, and what one has to do is look at

those provisions, look at the provisions of the
contract and see whether the provisions of the
contract are caught by the statutory provisions or

not.

When one looks at clauses 5, 6 and 7, what one

sees is that there are contractual provisions which
provide that the purchasers are to arrange for a
subdivision. Then it provided that on subdivision
having been arranged, there will be a transfer out
of the land coloured red. It goes on to say if you

cannot do that, then instead of the transfer out of

the now subdivided land coloured red, there will be

a lease of the land coloured red for as long a

period as is lawful.

So that, far from this contract actually

rendering the parts available for separate use and
occupation, what it seeks to do is to arrange for
attempts to be made to achieve a subdivision so

that part of the land may subsequently be

transferred out, and a further provision, that if

it turns out that that is not possible, then there

is to be a lease for as long as might be lawful.

TOOHEY J:  So you do not put this, apparently, in the

category of a conditional contract so much as

simply a contract which, by its terms, does not run

counter to section 83?

MR SHAW:  Your Honour, it depends what one means when one

says that.

TOOHEY J: Well, a number of the town planning cases have

turned on contracts that have been made subject to
the approval of the relevant authority. This is

not expressly in those terms.

MR SHAW:  No, Your Honour, and the contract obviously seeks

to operate before there has been any approval, so

that one cannot say that it is a condition

precedent of any obligation at all that there be a

subdivision, because clearly there was an

Gaye(4) 11 11/5/93

obligation to pay the money, an obligation on the

vendor to exercise the option, and an obligation on

the purchasers to arrange for a subdivision once

the option had been exercised.

But, it is submitted that there is a condition

in the sense that Your Honour has suggested, to the

subdivision pursuant to actual subdivision,

pursuant to clauses 5 and 6, namely, that it be

possible to arrange a subdivision lawfully, and if

that cannot be done, then there is no obligation.

So that, in that sense, the transfer out under

clause 6 is conditional, but I do not think,

Your Honour, that we could submit that the contract

is conditional, in the sense of not operative at

all until after - - -

TOOHEY J:	No, I understand that, thank you.
MR SHAW:	So that, in one sense, we would say it was

conditional, in another, not. But the submission

really comes to this, that the contract, when it is

looked at, it is true, has the end object of

bringing about circumstances in which land will be made available for separate use and occupation, so

long as that is legally possible.

And, if it is enough that, as it were, the

parties had in their minds that their hope and

expectation was that when they did what was

provided for in the contract, there would be a

subdivision, and if that sort of contract is struck

out by section 83, we have no argument. But in our

submission, section 83 is simply not directed to

that sort of circumstance at all.

MASON CJ:  It is only directed to contracts which provide

for an unlawful subdivision.

MR SHAW: Yes, Your Honour, yes, and far from that, this

contract contemplates that it might not be possible

to do it for one reason or another and makes

provision for what is to happen in those
circumstances. And, plainly enough, makes

provision which, in the present circumstances,

assuming that a subdivision in accordance with

clauses 5 and 6 was not possible, makes provision

for a five year lease.

TOOHEY J: But presumably that is why the contract makes no

provision for the return of money or for a

situation in which no rights are assigned by the

vendor to the purchaser. It seems to contemplate

that whatever happens, the purchaser will get

something out of the contract.

Gaye(4) 12 11/5/93

MR SHAW:  It is thought, and as it turns out perfectly

rightly, that at the very least some sort of lease

was going to be possible, lawfully, without

infringing any of the provisions of the law.

TOOHEY J:  Yes, it is curious, and perhaps has nothing to do

with the case in hand, but the $60,000 is the
consideration payable by the purchaser, whatever

interest the purchaser eventually ends up with.

MR SHAW: Well, that is true, Your Honour, and it is

certainly true that there is an attempt to achieve

a fee simple or a lease in perpetuity or whatever

it might be; in other words, the largest interest

that is possible at law. But it is simply

contemplated that if for some reason you cannot do

the best, then next best will do.

If I might go to the outline of submissions,

the first two paragraphs simply deal with the

matters that I have been urging on the Court on the

construction of the contract. The third paragraph

deals with this question of the meaning of
"purporting to", the fourth paragraph deals with

severance. Fazal Deen was the case.about the

bailment of gold in a safe. The bailment in

relation to the gold was illegal because the

regulations at the time required ownership in the

gold to be transferred to the Commonwealth, but

nevertheless those provisions were severed out and the bailment provisions relating to the safe stood

and, in our submission, if clause 7 can stand by

itself, then clauses 5 and 6 can be severed out. If clauses 5 and 6 can stand by themselves, then clause 7 can be severed out.

DEANE J:  What would happen to the payment clause on that

argument, the payment being for the whole contract.

MR SHAW:	Your Honour, it would simply remain as it is.
DEANE J: Well, is not the fact that you have to say that a

strong argument against severance?

MR SHAW:  It is submitted not, Your Honour, and the reason

for that is that the contract clearly contemplates

that if you cannot do x, try and do Y, and - - -

DEANE J: But that misses the point, does it not? I mean,

the situation is not a matter of you cannot do X,

the situation is you can or you may be able to do

x, but the way the contract deals with it, assuming

this far against you, is not permissible.

MR SHAW: All I was really putting, Your Honour, was this:

the contract seems to take the view that the

parties were prepared for the purchase to have the

Gaye(4) 13 11/5/93

best that could be arranged and all I am really

putting is that if that is what it really amounts

to then this is one way of getting the best that

could be arranged, that is all.	Then the outline
goes on to deal with clause 7.	I have dealt with

paragraph 7 in relation to clause 7, paragraph 6
points out that clause 7 only comes into operation

in an event which depends on subsequent events and

paragraph 8 really relies on the matter I mentioned

at the beginning about the application to amend,

which was refused. If the Court pleases.

DEANE J: Mr Shaw, can I ask you this. What is the current

position in relation to approval of this

subdivision?

MR SHAW:  Your Honour, what happened was that the plan which

was attached to the contract was a rough plan. It

had on it as one boundary the road coloured blue.

In fact - - -

DEANE J:  We have got Justice Kearney's judgment on that

aspect of it.

MR SHAW:  What happened was that a plan of subdivision was

prepared in relation to one version of the road
coloured blue but that was not, as His Honour held,
a subdivision in accordance with what the contract

intended because the man who had drawn up the plan

had got the wrong road coloured blue. Your Honour

will remember that in fact there was not a dispute

about the whole length of the road coloured blue,

there was just a little bit. But there was a plan

of subdivision prepared in relation to the wrong

road coloured blue, if I can call it that. I do

not know whether in fact there is a plan of
subdivision actually prepared in relation to the

right plan coloured blue, if I can put it that way,

Your Honour.

DEANE J: But nothing has been approved?
MR SHAW:	I am not sure - if Your Honour would excuse me.

My learned friend thinks, and I do not know that I

could say I think - I would have to say I

feel - that the plan of subdivision which was

prepared on the wrong basis was approved, but

nothing has been done about getting approval of a

plan of subdivision on the right basis.

DEANE J: What my question was directed to, and far be it

for me to suggest that this case should be

prolonged any further, but if you were to succeed

would there not be a question about whether the trial judge's declaration of trust could stand, notwithstanding lack of approval?

Gaye(4) 14 11/5/93

MR SHAW:	Yes, there would.
DEANE J:	Does that mean that if you were to succeed, any

orders made by this Court should leave that

question open for the Full Court of the Supreme

Court?

MR SHAW:	Yes, Your Honour. All those questions would be open because the appeal has been divided in this sort of odd way, and presumably if the Court were
to decide in our favour, for example, then it might
be that on an appeal as to the rest of the judgment
the proper conclusion was that His Honour's
declaration about where the road was was correct,
but he ought not to have made the declaration in relation to the trust. That is possible.

DEANE J: Well, perhaps all it means is that we need to be

careful that we do not confirm the trial judge's

declaration of trust.

MR SHAW:  Indeed, Your Honour. One needs to leave that part

of the appeal, if I can call it that, untouched.

TOOHEY J:  Mr Shaw, talking about what we should leave

untouched or otherwise, on the question of pleading

the Court of Appeal, the Full Court, decided that

it was unnecessary to plead the question of

illegality because the contract was, on its face,

illegal. If you make good your earlier

submissions, then the question does not arise. If

you do not make good those submissions, where are

we? I mean, there is a sort of line in between.

It may be that the Court could say that the

contract was illegal, but not on its face illegal;

then we are back in the area of the necessity to

amend pleadings.

MR SHAW:  Indeed, Your Honour. The point I was really

making was this: it is all very well to say if the

court sees a contract which is illegal on its face,

then it will not enforce it. But when one gets to

a situation where an application has been made to

raise the question of illegality in the course of a

hearing, and for whatever reason the application

has been refused, it seems to be a very odd

circumstance if somebody is allowed to raise a
question of illegality which they have not been

permitted to plead. That seems crazy.

TOOHEY J: There are two arguments, at least two strands

involved, are there not: whether it is right to

say that the court must heed an illegality which is

apparent on the face of a document; and the other

strand is if it is not apparent on the face of the

document what should the court do about it when the

defendant seeks to raise the point late in the day?

Gaye(4) 15 11/5/93

MR SHAW:  In our submission - and this may be taking too

practical a view of it, Your Honour - but it is

surely difficult to say that this contract was

illegal on the face of it when there one was from

1983 until 1990 with the thought not having

occurred to anybody, and then suddenly somebody had

this bright thought.

TOOHEY J: Yes, I see the force of that but if, in fact, it

be the case - let us carry your submission a step further - that it is not illegal on its face, but

let it be assumed for the moment that it be held to

be illegal, where does that place the plaintiff in

relation to the conduct of the action thus far?

MR SHAW:  In our submission, if the position is that it is

not illegal on its face, then it is something which
has to be pleaded and cannot be raised unless it
has been pleaded, and that seemed to be the effect

of the cases.

TOOHEY J: Are you suggesting that that is the end of it so

far as the appeal is concerned; that is, that the

appellant must succeed?

MR SHAW:  Yes, it would be the end of it on that argument,

yes, Your Honour.

TOOHEY J: And yet the Full Court has not directed its

attention to the pleading of the point.

MR SHAW:  No, it has not. That is because it took the view

that the thing was illegal on its face.

TOOHEY J: But are you saying that if this Court took the

view that the contract was illegal but not illegal

on its face, it should then turn its attention to

whether an amendment should be allowed even at this

stage?

MR SHAW:  If the Court came to the conclusion that it was

illegal but not illegal on its face, then, in our

submission, the Court would have to ask itself:

ought an amendment be allowed at this stage?

TOOHEY J:	In other words, you are asking this Court to deal with that point if we reached that stage, not remit the matter to the Court of Appeal?
MR SHAW:	I suppose that is another way of dealing with it,

Your Honour. I was not really, I suppose, looking

to the ultimate disposition of the matter but

simply saying that where one has had an application

to amend and that has been refused and the order

stands, it seems to be a very odd circumstance that

the very point which a party has not been permitted

to raise on his pleading he can nevertheless be

Gaye(4) 16 11/5/93

successful on. Something ought to be done to fix

that up somehow if one comes to that.

TOOHEY J:  I suppose one can sympathize with that approach,

but from our point of view the question is: if we

reached the point of holding that the contract was

illegal but not illegal on its face, do you ask us

to remit then to the Court of Appeal a decision as

to whether the defendant should be allowed to amend

its pleading, or do you invite us to deal with the

matter and reject an amendment?

MASON CJ:  I suppose it is a bit difficult for you to answer

that question.	You do not know what the argument
is against you.	How could the agreement be illegal

but not illegal on its face?

MR SHAW:  I agree; there is that problem, Your Honour. What

I am really pointing out is that there seems to be,

on this procedural matter, a real problem so far as

the point is concerned, just because of what seems
to be a logical inconsistency in saying you cannot

plead it but you can succeed on it.	I accept,
Your Honour, that that is - - -

MASON CJ:  It is a vulgar procedural matter. We should move

to matters of greater substance, Mr Shaw.

MR SHAW:  Your Honour, vulgar perhaps, but common sense, we

would say.

TOOHEY J: And it may be important from your point of view.

MR SHAW: Maybe, yes. If the Court pleases.

MASON CJ: Yes, Mr Southwood.

MR SOUTHWOOD: If Your Honours please. Firstly, in terms of

the appeal book, Your Honour, there appears to be

an error in that, what was the relevant document

before the Court of Appeal was the amended notice

of appeal, which has been handed to Your Honours.	That amended notice makes it plain that the issue
of whether permission should have been given to
amend the defence or not was a subject which was
debated before the Court of Appeal, and what was
the position is it was not necessary to determine
that, because it was decided that the contract was, ex facie, illegal.

In terms of the starting point, we would

submit that the matter really comes down to a

consideration of Part V of the Planning Act and

then a consideration of the particular agreement,

which is the subject of the appeal.

Gaye(4) 17 11/5/93

In terms of Part V of the Planning Act, it is

the position that Part V essentially sets up a

scheme for the subdivision of land if the land is

to be subdivided in accordance with the Act. That

scheme, we have summarized it, placitum S, on

page 2 of the outline of the respondent's

submission.

The next step is then really giving

consideration to section 83 of the Planning Act and

what subsection (1) of section 83 does is provide

that:

No person shall enter into a transaction

purporting to subdivide land in contravention

of this Part.

And then, in subsection (2) it provided that:

A transaction purporting to subdivide land in contravention of this Part is void.

Because of the effect of subsection (2), namely,

that such transactions are void, it is then

necessary to look at the ostensible effect of any

agreement and consider whether the agreement is in

compliance with the provisions of Part V, or not.

We say that this agreement essentially fails

because section 84 of the Planning Act, as was

applicable at the time, expressly provided that:

A person shall not subdivide land otherwise

than in accordance with -

a copy of the plan of authorized survey relating to

that subdivision, deposited in the office of the

Surveyor-General, under section 12(3) of the

Licensed Surveyors Act.

There seems to be some slight confusion in

His Honour the Chief Justice's reasoning in that he

seems to take into consideration the subsequently

amended provisions of sections 84 and 85. Those

sections were amended by Act 75 of 1983, which was

assented to on 28 November 1983. However, those

amendments, because they post-date the agreement,

are not applicable to the agreement and in terms of

the primary effect of section 84, that - - -

MASON CJ:	Can you provide us with copies of the relevant sections, as they relate to this transaction before
the amendment, because I suspect that we have a
copy of the legislation that came into operation on the 25th, or was in force at 25 June 1987.
MR SOUTHWOOD:	As at 1987, Your Honours?

Gaye(4)	18	11/5/93
MASON CJ:	Yes.	If you can provide us with one copy

Mr Southwood, we can have it photostatted.

MR SOUTHWOOD: If Your Honours please. If I can hand up to

Your Honours the copy of the Act I have as was

applicable at the time.	The relevant sections are
set out at page 27.

MASON CJ:  So all we need do is copy page 27 in this

document?

MR SOUTHWOOD: That is so, Your Honour, yes.

TOOHEY J:  Mr Southwood, from your point of view do those

amendments affect the position so far as the appeal

is concerned?

MR SOUTHWOOD:  The amendments are not applicable,

Your Honour, but they do not affect the reasoning, we would say, which His Honour the Chief Justice

adopted. Essentially His Honour started from the

proposition that there had to be an approved plan

in existence prior to any subdivision work being

commenced, whereas in terms of the relevant wording

of section 84, what was required before there was

any transaction purporting to subdivide land was

that there be a plan of authorized survey simply

lodged with the Surveyor-General.

It is really to that very mischief which

occurs in this case, namely the confusion as to

what was the appropriate boundary of this land,

that section 84 was directed. We say that because

of that the position is very similar to the Court's
decision in George v Greater Adelaide and is

consistent with the analysis of that case by Chief

Justice Dixon on pages 378 and 379 of the decision

in Braham v Walker, namely that in the case of

George v Greater Adelaide there was this regulation

requiring that any person desiring to offer for

sale or sell, et cetera, should cause a plan to be

certain sections of the Act. prepared, showing the boundaries in complying with In this case, although the question of sale

does not immediately arise, the effect of

section 84 is that before there is a subdivision,

or a transaction to that effect, there must be this

plan of authorized survey lodged with the Surveyor-

General. So that what this agreement does is

purport to subdivide the land in accordance with

the plan which is annexed to the agreement and

which is contained on pages 70, through to 72 of

the appeal book. When consideration is given to

clause 5 what is specifically provided for is:

Gaye(4) 19 11/5/93

THAT the purchasers shall ..... arrange for the

land to be subdivided in such a way that the
land coloured red -

That is, the land delineated on the plan, which is not an approved plan of survey and it does not make the agreement at any stage conditional upon such a

survey being done, nor does it make the agreement

subject to such agreement, but essentially provides

that steps should be taken to effect a subdivision

as is delineated on the plan, that plan not being a

plan or authorized survey and as soon as that is

done, if it is approved, then clause 6 sets out a

timetable for the transfer of that specific parcel

of land.

If it is unsuccessful, what the agreement does

is essentially provide for an alternative form of

consideration, namely the granting of a lease in

perpetuity and if that is not permissible, a lease

for the longest term, which may be permitted by the

law of the Northern Territory.

MASON CJ: Are not clauses 5, 6 and 7 contemplating in the

first instance arrangements for the subdivision of

the land in conformity with law?

MR SOUTHWOOD:  No, we would say, Your Honour, it is unclear

as to precisely what the arrangements are which are

being contemplated by clauses 5 and 6.

MASON CJ:  Well, what do you make of the opening wo 0·is of

clause 7:

THAT in the event of a subdivision of the land not being possible -

what is the impossibility there contemplated?

MR SOUTHWOOD:  The impossibility there being contemplated

would be firstly, I suppose, a refusal of the

relevant authority, in this instance the authority

is not accurately defined, granting consent to that

specific subdivision.

MASON CJ: Well, does that not support the view that they

are contemplating as a primary method of execution

of the agreement the obtaining of appropriate

approvals in accordance with the Planning Act?

MR SOUTHWOOD: 

What the effect of the agreement is is

essentially to transfer from the respondent to the
appellant a specific piece of land as is defined in

the annexed plan, and there are obligations

immediately imposed to achieve that effect. If

that cannot be achieved, there is then substituted

an alternative mechanism for achieving that express

Gaye(4) 20 11/5/93

thing, namely a lease in perpetuity, subject to the

proviso. So the overall effect of the agreement,

the purport of the whole of the agreement is to in

effect, transfer either the title for the use of a

specific piece of land which has not been surveyed

as is required by section 84 from the appellant to

the respondent.

MASON CJ:  What are the references in clause 6 to the:

sealing of the subdivision and subsequent

approval thereof by the Northern Territory

Land Registration Office.

MR SOUTHWOOD: Firstly, there is no such office in the

Northern Territory as the Land Registration Office.

What is contemplated by Part V of the Planning Act

in terms of a subdivision is that the consent, or

what is defined as a consent authority, should be

obtained. Once that is obtained, the survey plan is then approved by the Surveyor-General and then the final mechanisms in relation to the creation of

a separate title are attended to.

DEANE J:	By whom?
MR SOUTHWOOD:	By I think it is the Registrar-General at the

end of the day, Your Honour.

MASON CJ: What is the equivalent of, say, the Land Titles

Office in New South Wales?

MR SOUTHWOOD: That would be the Office of the Registrar-

General.

MASON CJ: Well, is that a mistaken reference to the Office

of the Registrar-General, that reference to

Northern Territory Land Registration Office?

MR SOUTHWOOD:  It may be a mistaken reference. No

application at any stage has been made to rectify

that reference, but the critical thing, we would

submit, is not so much that clause 6 contemplates

such steps being attended to at some point in the
chain but the fact that consideration has passed as

at the date specified in September 1983 and from

that point in time there is a process which is

binding on each of the parties aimed at achieving a

specific purpose, namely either the transfer of the

title or the use through a lease to the respondent.

And that cannot be made in contemplation of

compliance with the Act because all of that is set

in process and is binding on the parties prior to -

after consideration has passed, namely the $60,000

has been paid, and the obligations arise in terms

of achieving that goal one way or the other,

Gaye(4) 21 11/5/93

regardless of whether the appropriate consent is

obtained.

DEANE J:  What if the agreement had contained a clause which

said, "Nothing in this agreement will involve the

rendering of separate parts of the overall land
available for separate occupation or use unless and

until all necessary consents are obtained, the

Surveyor-General" - or whatever he is called -

"approves the relevant survey plan, and the titles

office registers the subdivision".

MR SOUTHWOOD:  If the formulation of such provisions was to

amount to a condition subsequent, we would say that

that would - - -

DEANE J:	I said "unless and until".
MR SOUTHWOOD:	"Unless and until"; then it could be

achieved. In other words, if a similar kind of arrangement with an appropriate option, so that

there was not a binding obligation with the

specific purpose of transferring the specific piece

of land as described in the agreement, as long as

it avoided that purpose and those elements becoming

binding prior to the time that, firstly, the
appropriate authority, authorized plan of survey

was lodged, and subsequently the relevant consents

achieved, then such an arrangement would

potentially be effective.

TOOHEY J:  So it is not your argument that a conditional

contract of the sort that has surfaced in some of

the other town planning cases would offend

section 83 of the Planning Act?

MR SOUTHWOOD:  No, Your Honour. The critical question is

simply to see when the obligations arise in terms

of transferring one way or another a specific piece

of land. If those obligations arise and are

binding prior to the conditions coming into effect,

that is, the consent conditions, then the contract

would be void. Alternatively, if that was

appropriately set up, then such a transaction would

remain on foot because it could not be said to be a

process which had been commenced and was in the

course of its execution in the sense found by

His Honour the Chief Justice.

The critical thing is really to consider

whether the effect of the agreement is to transfer

or create rights which are binding prior to the

necessary steps being followed pursuant to the

Planning Act. We would submit that that is

essentially the approach adopted by the

Chief Justice is his reasoning. He started out by

considering at page 132 of the appeal book the

Gaye(4) 22 11/5/93

relevant requirements of section 83 and he

determined there essentially -

that a person should not subdivide land

otherwise than in accordance with a plan of

survey approved the Surveyor-General.

He then went on to consider whether there had been

an authorized arrangement as was contemplated by

the Act, and whether there was approval as required

by the consent authority and the Surveyor-General.

Then on page 136 he gave consideration to the

question of what was the definition of

"subdivision", and he accepted that the definition

of "subdivision" was that as is contemplated by

section 4 of the Planning Act.

He then considered what was the meaning of "to subdivide" and found that -

to subdivide is the act or process of
subdivision as defined, namely the rendering
of separate parts of land available for

separate occupation or use.

He then went on consider at page 137 whether the

agreement disclosed -

"a transaction purporting to subdivide

land" -

and stated that if the agreement is "a transaction

purporting to subdivide land" it is void because it

cannot be in accordance with the authorized plan.So

in other words, if the mechanics of a subdivision

had been commenced and were binding, then it was

unlawful and void because there had been no

appropriate plan of survey lodged.

He considered that the meaning of

"transaction" was something which involves the

performance or act of subdividing, and then went on

to consider the effect of clauses 5, 6 and 7 at

page 138 of the appeal book, and went on to state

there that the parties were bound to carry the

process to its conclusion, namely, the rendering of

the specific parcel of land "available for separate

occupation" .. The effect of that is really to

defeat the tenor of Part V, the tenor of Part V

being to ensure that subdivisions are attempted in

a specific way, and in this case the question at

that point arises: assuming there is such a

transaction in place, if the transaction

contemplates compliance how can then it be in

breach if it contemplates compliance at that point

in time?

Gaye(4) 23 11/5/93

We say that in this particular agreement it

does not contemplate compliance in achieving the

end result of the agreement necessarily.	What it
provides is that if the subdivision as is
contemplated by clauses 5 and 6 fails, the

agreement is not at an end, the consideration is

not returned, but that a separate mechanism for
achieving subdivision then comes into operation,

namely the provisions provided by clause 7 of the

agreement.

In that regard, it is our submission that

clause 7 is not contemplating compliance with

Part V of the Planning Act. What clause 7 is

simply doing is saying that if we cannot get you

the title through the appropriate system, what we

will grant to you is a lease for the longest

possible time. In terms of a lease itself, the

question of Part V does not arise. What clause 7

effectively says is you have got perpetuity as the
term of the lease, forgetting about any questions

as to whether that would mean the lease was

enforceable or not. If you cannot get perpetuity,

then you have got a lease for the longest time

available in terms of the application of the law.

It is not saying that for the $60,000, we are

now going to turn around and give you a lease for

five years. It does not have that effect. If the

contract is looked at as a whole, that would be an

inappropriate construction of clause 7. It is

simply going to an alternative mechanism, should

the first mechanism break down, without any serious

contemplation having been given to what are the

actual provisions of the Planning Act.

TOOHEY J:  Does the proviso have any meaning if "longest

term" is not related in some way to section 4(2),

the reference to "five years"?

MR SOUTHWOOD: There is difficulty with determining what

would be the appropriate duration of the lease as
is contemplated by clause 7.	It is very difficult

to specify a time because what - - -

TOOHEY J:  Is there anything in the law of the Northern

Territory that prescribes the maximum term for

which a lease may be granted?

MR SOUTHWOOD: There is no particular Act apart from the

provisions in the Real Property Act which require

for registration at certain points in time.

Effectively the common law position prevails, as I

understand it, Your Honour, that you cannot have a

lease in perpetuity because the duration of its

term would be uncertain and therefore it would fail

for uncertainty, but there would be nothing to

Gaye(4) 24 11/5/93

prevent you, for instance, from having a lease for

100 years or a lease for 2000 years, provided that

the time was as specified.

In terms of the other authorities which have been referred to, in particular, the decisions of

Braham v Walker, Lombardo v Development

Underwriting, and Landall Construction Developments

v Bogaers. There is, set out on pages 3, 4 and 5,

an analysis of each of those authorities, and it is

essentially our submission that the later

authorities turn on different sections and on

different agreements, and therefore are not of any

real assistance in terms of analysing the

compliance or non-compliance with the provisions of

Part V of the Planning Act.

In Braham v Walker, we say, as I have

indicated to Your Honours, the analysis of the
reasoning of George v Greater Adelaide, as is set

out at pages 377 through to 380, are consistent

with the sort of approach which should be conducted

in construing this agreement and, particularly, the

consequences of a failure to comply with section 84

of the Planning Act as it was in .....

Section 84 essentially provides that:

A person shall not subdivide land otherwise

than in accordance with -

the precise plan. And that puts it in the same

category as the effect of the regulations

contemplated in George v Greater Adelaide, namely,

that the sale could not take place until certain

steps had been taken, pursuant to the regulation

and the Act. Here, a transaction which has, as its

purported effect, can not take place either until

at least there is a plan of authorized survey.

In so far as the question is whether the

document is illegal, ex facie, or not, we say,

because of the time when consideration passes, and
because of the time when the obligations arise

under the agreement, that the process is set in

train by the agreement, the purpose or effect of
the agreement being to subdivide off that specific

piece of land as is described in the annexed plan,

and in those circumstances, it is clear that the

agreement is, ex facie, illegal, and in those
circumstances, the authorities, which are referred

to in paragraph 13 on page 5 of the outline of

submissions, are very definitely to the effect that

it is not necessary to plead the illegality.

So far as the question of what would be the

consequences of this transaction was not, ex facie

Gaye(4) 25 11/5/93

illegal, the ordinary consequence of that, we would

say, was that the matter should be remitted back to

the Court of Appeal to decide the question of

whether an amendment should be granted. However,

it is very difficult to see, in this case, how

there really is any alternative to the argument

which has been put. In other words, if the

question of illegality in terms of the effect of

the transaction is decided against the respondent,

it would be difficult to envisage any other

argument that may be available in terms of the

particular transaction which is the subject of the

appeal. In terms of ground 7 of the notice of

appeal - - -

DEANE J:  Mr Southwell, can I take you back a little bit? I

understand the way you put your case primarily and
that is also the way you construe the agreement,

but what if, contrary to your primary position, one

were ultimately to conclude that paragraphs 5, 6

and 7 should be read as meaning nothing amounting to subdivision would be done unless and until any

necessary consents, including Part V consent, were

obtained. Where would your argument go then?

MR SOUTHWOOD:  In relation to that, the position would be

that because of the time that the obligations

arise, the consequence of subsequent approval would not affect the nature of the transaction. In other

words, the transaction would still remain void.

DEANE J:  Even if the agreement is read as precluding any

interest arising in the purchaser, unless and until

necessary approvals are obtained.

MR SOUTHWOOD:  Yes, so far as an interest goes, because of

the contractual rights which are imposed on the

parties. In other words, the subdivision process

is set in train regardless of whether any interest

is created until a subsequent time.

DEANE J: Well, assume that the agreement is read as saying,

"We agree that the purchaser, subsequently the

vendor, will do whatever is necessary to obtain
approval for a subdivision. If that approval

cannot be obtained there will be no purchase of

land, but he will then do whatever he can to obtain

approval for a lease longer than five years. If

that cannot be obtained, there will be no such

lease but there will be a lease for less than five

years".

MR SOUTHWOOD:  We would say firstly it cannot be read that

way because of - - -

DEANE J:  I understand that.

Gaye(4) 26 11/5/93

MR SOUTHWOOD:  - - - when consideration passes, but assuming

that the contract were to be construed as a true

condition precedent as opposed to a condition

subsequent, then it could be regarded as being

effective. We say it cannot in any way be

construed that way.

TOOHEY J:  Is that because the purchaser had already paid the $60,000, or for that plus other reasons?

MR SOUTHWOOD: It is for essentially that reason,

Your Honour, but there are the other reasons which

are also set out in paragraph (b) on pages 2 and 3,

at the very top of 3, in terms of the outline of

submissions. In terms of the question of ground 7

of the notice of appeal, namely that which is set out on page 172 of the appeal book, Your Honours:

The Court of Appeal erred in dismissing the

Plaintiff's action No 281 of 1985 in

circumstances where the Plaintiff has paid

$60,000.00 to the Defendant which monies (plus

interest) the Plaintiff would be entitled to

recover on the basis of total failure of
consideration and/or restitution in these

proceedings.

It is our submission that that cannot be pressed as

an error on the part of the Court of Appeal. The

question of restitution arose in the context of

whether there should be an amendment to the defence

permitted or not. One of the arguments that was

put was that in terms of the possible right in that

regard, they failed because of the effect of the

interpretation of those principles as contained in

George v Greater Adelaide and also in terms of the

authorities such as Haas' case.

At no stage, either during the argument at

first instance when the question of illegality arose, did the plaintiff, as the appellant was

claim in the alternative restitution of the price	then, seek to amend its statement of claim and	that had been paid, nor, when the matter came on
before the Court of Appeal and was argued in that
limited way, did it seek directions in relation to
possible claims for restitution.

That is not to say that the appellant is

necessarily left without a remedy. Without making

any concession in regard to that, there is

obviously potentially some problems with the

limitation of actions and there would have been a

problem in any event potentially with the decision

in Weldon v Neal in terms of adding a further cause

of action at that late stage. That rule has

subsequently been abrogated in the Northern

Gaye(4) 27 11/5/93

Territory by section 48A of the Limitations Act but

that is expressed to be prospective depending upon

the date when various supreme court proceedings

have commenced.

But there is a provision, being section 44 of

the Limitation Act, which enables a plaintiff in
very broad circumstances to apply for an extension

of time in relation to any further remedy. That

would be, we would submit, the appellant's avenue

of trying to address that specific question were
the matter in terms of the question of illegality

to go against the appellant, but it is not a matter

which can be properly agitated on appeal.

Obviously the appropriate course for the Court

of Appeal to have adopted, given the fact that it

found that the transaction was ex facie illegal,

was to dismiss the claim in the form that it was

before it because otherwise the effect would be potentially to permit enforcement of an illegal
contract, which is contrary to the various

principles.

TOOHEY J:  What was the effect of the order made by the

Court of Appeal? The index shows the order as

appearing at page 167. On your approach,

Mr Southwood, if the Court was to be of the opinion

that the contract was illegal, in other words to

uphold your argument, then the appeal would be

dismissed, the order of the Court of Appeal,

subject to anything this Court might do, would
stand, with the consequence that the plaintiff's

action would remain dismissed.

MR SOUTHWOOD:  Yes, Your Honour.

TOOHEY J: Therefore any action for recovery of moneys would

have to be by way of fresh proceedings, presumably?

MR SOUTHWOOD:  Yes. Because even now there has been no

application made in any way to alter what was

the way that the matter has progressed, it has progressed on the basis that pleadings are

squarely an issue on the pleadings before either

unnecessary because of the fact that the

transaction is ex facie illegal. But that has not

precluded the plaintiff, the appellant, from
claiming in the alternative at any stage from

seeking to amend the claim, in the alternative,

restitution, should it fail on the argument as to

illegality.

Those essentially are the submissions on

behalf of the respondent, if Your Honours please.

Gaye(4)	28	11/5/93
MASON CJ:	Thank you, Mr Southwood.	Mr Shaw?

MR SHAW:	I do not wish to reply, if the Court pleases.
MASON CJ:	The Court will consider its decision in this

matter and will adjourn until 10.15 am tomorrow.

AT 12.03 PM THE MATTER WAS ADJOURNED SINE DIE

Gaye(4) 29 11/5/93