Higgins v ACT (No 2)
[2024] ACTSC 400
•16 December 2024
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Higgins v ACT (No 2) |
Citation: | [2024] ACTSC 400 |
Hearing Date: | 17 October 2022 – 21 October 2022 |
Decision Date: | 16 December 2024 |
Before: | McWilliam J |
Decision: | (1) On or before 14 February 2025, the parties are to bring in agreed or competing short minutes of order to give effect to these reasons. (2) The matter is listed at 9:30am on 20 February 2025 to deal with the question of final relief and costs. |
Catchwords: | EQUITY – Leases – scheme of development – whether common vendor – whether reciprocity of obligations established – whether any scheme enforceable against a lessee that was years later in time and without notice on title EQUITY – Non-derogation from grant – whether Territory (and statutory authority) under obligation not to permit the use of golf course land in a way that would render the plaintiff’s land materially less fit for the purpose for which the lease was granted CONSUMER LAW – Misleading and deceptive conduct – whether representations made about use of land for a golf course were based on reasonable grounds |
Legislation Cited: | Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) ss 6(1)(g), 27, 28, 29, 29(1), 30, 30(2) Australian Capital Territory (Self-Government) Act 1988 (Cth) pt V, ss 7, 36, Competition and Consumer Act 2010 (Cth) Sch 2, ss 4, 18, 236 Conveyancing Act 1919 (NSW) s 89(1) Land Titles Act 1925 (ACT) s 58, 58(1), 58(2), 59 Legislation Act 2001 (ACT) ss 183, 184 Planning Act 2023 (ACT) ss 16, 17, 262 Planning and Development Act 2007 (ACT) (repealed) ss 10(1), 10(3), 11, 13, 14, 237 Real Property Act 1886 (SA) s 69 Seat of Government (Administration) Act 1910 (Cth) s 9 Trade Practices Act 1974 (Cth) ss 51A, 52, 82 |
Cases Cited: | Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 Austerberry v Corporation of Oldham (1885) 29 Ch D 750 Aust-One Investment Pty Ltd v New World Investments Pty Ltd [2023] NSWCA 22; 111 NSWLR 39 Baxter v Four Oaks Properties Ltd [1965] Ch 816 Browne v Flower [1911] 1 Ch 219 Brunner v Greenslade [1971] Ch 993 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 Chatsworth Estates Company v Fewell [1931] 1 Ch 224 Cousin v Grant (1991) 103 FLR 236 Deguisa v Lynn [2020] HCA 39; 268 CLR 638 Dovuro Pty Ltd v Wilkins [2003] HCA 51; 215 CLR 317 Elliston v Reacher [1908] 2 Ch 374 Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd [1998] HCA 15; 193 CLR 154 Gosford RSL Club Ltd v Gosford Race Club Ltd (Unreported, Supreme Court of New South Wales, Bryson J, 18 December 1997) Gosford RSL Club Ltd v Gosford Race Club Ltd [1998] NSWCA 96 Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200 Hooper v Rogers [1975] 1 Ch 43 Hosking v Haas (No 2) [2009] NSWSC 1328; 14 BPR 27407 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; 217 CLR 640 Insurance Australia Limited t/as NRMA Insurance v Asaner [2016] NSWSC 614 In re Dolphin’s Conveyance; Birmingham Corporation v Boden [1970] Ch 654 In re Wembley Park Estate Co Ltd’s Transfer London Shephardi Trust v Baker [1968] Ch 491 Ireland v WG Riverview Pty Ltd [2019] NSWCA 307; 101 NSWLR 658 Kelly v Barrett [1924] 2 Ch 379 Kizbeau Pty Ltd v WG & B PtyLtd (1995) 184 CLR 281 Macedonian Orthodox Church Incorporated v ACT Planning & Land Authority [2015] ACTCA 32; 208 LGERA 434 Mackenzie v Childers (1889) 43 Ch D 265 Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494 Nottingham Patent Brick & Tile Co v Butler (1885) 15 QBD 261 Palmer v Fletcher (1663) 83 ER 329 Pirie v Registrar-General (1962) 109 CLR 619 Potts v Miller (1940) 64 CLR 282 Re Dennerstein [1963] VR 688 Reid v Bickerstaff [1909] 2 Ch 305 Re Louis and the Conveyancing Act [1971] 1 NSWLR 164 Re Mack and the Conveyancing Act (1975) 2 NSWLR 623 Rosedale Farm (NSW) Pty Ltd [2010] NSWSC 1321; 15 BPR 28791 Sasson & Partners Pty Ltd v Fahevu Pty Ltd [1999] NSWCA 400 Shepherd Homes Ltd v Sandham (No 2) [1971] 1 WLR 1062 Specialist Diagnostic Services Pty Ltd v Healthscope Ltd [2012] VSCA 175; 41 VR 1 Spicer v Martin (1888) 14 App Cas 12 Springrange Pty Ltd v Australian Capital Territory [2010] ACTCA 17; 174 ACTR 15 Sutton v Shoppee (1963) SR (NSW) 853 Tulk v Moxhay (1848) 41 ER 1143 Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Weatherill v Bartlett [2017] NSWCA 175 Westfield Management Ltd v Perpetual Trustee Company Ltd [2007] HCA 45; 233 CLR 528 White v Bijou Mansions Ltd [1938] Ch 351 Winnote Pty Ltd (in liq) v Page [2006] NSWCA 287; 68 NSWLR 531 |
Texts Cited: | B Edgeworth, Butt’s Land Law (Thomson Reuters, 7th ed, 2017) D Mossop, The Constitution of the Australian Capital Territory (Federation Press, 2021) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) |
Parties: | Judith Frances Higgins ( Plaintiff) Australian Capital Territory (First Defendant) Gungahlin Golf Investments Pty Ltd (Second Defendant) Australian Capital Territory Planning and Land Authority (Third Defendant) |
Representation: | Counsel C Erskine SC with R Arthur ( Plaintiff) V Thomas with J Bird (First and Third Defendant) P Walker SC with J Larkings (Second Defendant) |
| Solicitors Badgery & Rafferty ( Plaintiff) ACT Government Solicitor (First and Third Defendants) Trinity Law (Second Defendant) | |
File Number: | SC 306 of 2019 |
Contents
The catalyst for the proceedings
The plaintiff’s claims and the relief sought
Overview of arguments of the defendants
The role of the first and third defendants
Issues
Issue 1 – Is there a scheme of development?
What is a scheme of development?
Requirements for a scheme of development to arise
Flexibility in the doctrine
When will a scheme of development bind a subsequent purchaser?
What constitutes notice?
The circumstances of the present case – a public/private joint venture
A joint venture agreement is signed, creating common vendors or owners
The early days of subdivision of the Estate and the covenants imposed
Financial strife and the return of the golf course land to the Territory
The construction of the Gold Creek Country Club
The plaintiff’s purchase of the residential land adjoining the golf course
Development subsequent to the plaintiff’s purchase
The second defendant’s purchase of the golf course land
The re:imagine proposal
Determination of Issue 1(a): A scheme of development is established
Did the scheme of development include the golf course land?
Determination of Issue 1(b): The scheme is enforceable in equity against the Government parties
Determination of Issue 1(c): The scheme is not enforceable against GGI
Issue 2: Derogation from grant of lease
Issue 3: Did the first defendant engage in misleading and deceptive conduct?
The statutory cause of action
The issues on the misleading and deceptive conduct claim
Identifying the conduct
The alleged misleading representations said to derive from the conduct
Assuming conduct which was misleading, did it have a sufficient causal connection to any loss claimed?
Is the claim statute barred?
Relief
Costs
Orders
McWILLIAM J:
1․Those who are lucky enough to live in the Australian Capital Territory will know that certain suburbs dotted around Canberra have a particular amenity derived from nature, whether it be due to particular views, open space or attractive greenery. A suburb’s attraction might be a hill, ridge, walking track, lake, or park. In Harcourt Hill Estate in Nicholls (the Estate), where Mrs Judith Higgins (the plaintiff) lives with her husband, it is the sweeping, tree-lined fairways of the championship-grade golf course attached to the Gold Creek Country Club. This case is about whether there are legal avenues to prevent the golf course from being reduced in size, or remedies available to Mrs Higgins if that occurs.
The catalyst for the proceedings
2․The Estate contains a number of residential blocks, one of which is owned by the plaintiff. The south-western boundary of the plaintiff’s property borders the golf course and overlooks the fairway for the 11th hole of the golf course.
3․The second defendant, Gungahlin Golf Investments Pty Ltd (GGI), is the registered proprietor of the Crown lease registered in Volume 2157 Folio 38 (Golf Course Lease), comprising 9 blocks that constitute the golf course.
4․In April 2018, GGI announced that it was seeking to “reimagine” part of the area on which the golf course is located. The public statements were to the effect that GGI was considering a more compact 18-hole golf course, or possibly a 12- or 9-hole course. Doing so would leave 49 hectares of the existing course (currently holes 10 to 18) available for alternate uses, including retail areas and housing.
5․This gave rise to a concern by the plaintiff that the proposal of GGI to downsize the golf course will have an economic effect on the value of any sale of her property in the future and brought about the commencement of this proceeding on 20 June 2019.
The plaintiff’s claims and the relief sought
6․The plaintiff sues GGI as the lessee of the golf course land, seeking effectively (through declaratory and injunctive relief) to injunct it from using the land adjoining her property for anything other than a golf course.
7․She sues the Territory and Australian Capital Territory Planning and Land Authority (ACTPLA) as being in the position of the landlord in respect of the Crown lease over the plaintiff’s property and the golf course lease held by GGI. ACTPLA has the power to grant Crown leases, and is sued as the delegate or alternatively, the agent, of the Territory. It is named as the Crown lessor in respect of the lease held by GGI.
8․The plaintiff’s claim encompasses three alternative causes of action arising out of her purchase of the said property:
(a)A claim in equity, seeking enforcement of a scheme of development;
(b)A further claim in equity, seeking to enforce a non-derogation from the grant of lease; and
(c)A claim in statute for misleading or deceptive conduct under the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)).
9․In respect of the scheme of development case, the plaintiff primarily sought relief binding all parties in the form of a declaration that the Estate is a “scheme of development”, whereby each of the plaintiff and the defendants are bound by way of restrictive covenants benefiting the scheme.
10․The plaintiff alleged that the Estate is burdened by a restrictive covenant, which broadly provides that the land owned by GGI may not be used for a purpose other than as an 18-hole golf course. Such restrictions upon use are said to benefit the residential land in the Estate.
11․She principally relied on the fact that the Estate was originally conceived as one that would be “integrated” with an 18-hole golf course, whose amenity featured prominently in the marketing of the blocks in the Estate as it was developed. This was said to give rise to a common building scheme in equity, also known as a scheme of development, under which the Golf Course Covenant is sustained and may be enforced.
12․The plaintiff sought a declaration that the Estate constitutes a scheme of development binding on the defendants, by which:
(a)The golf course land is restricted to being used only for the purpose of a golf course, for purposes ancillary to the golf course, and such other purposes as presently permitted by the Golf Course Lease (the Golf Course Covenant);
(b)The Golf Course Covenant is for the benefit of the residential land in the Estate, including the plaintiff’s property; and
(c)The Territory (as the initial grantor of the lease of the golf course land) is bound to ensure that the golf course land may be and is used only in accordance with the Golf Course Covenant.
13․In respect of the claim against the Territory, the first defendant, the plaintiff contended that it is obliged to prevent any change to the golf course proposed by GGI, either by enforcing the Golf Course Covenant or by not derogating from the grant of the lease to the plaintiff.
14․Against ACTPLA, a restraint order was sought, to prevent it from executing any variation of the Golf Course Lease that would be inconsistent with the Golf Course Covenant.
15․In respect of GGI, the plaintiff contended that, as registered proprietor of the Crown leases over the blocks constituting the golf course, being the land which benefits from the existing common building scheme affecting the Estate, she may enforce the alleged Golf Course Covenant against it to prevent any change in the use of the golf course land.
16․The plaintiff sought:
(a)A separate declaration that GGI using, or purporting that it may be able to use, the nine blocks of the golf course land for any purpose other than the purposes required by clause 3(a) of the Golf Course Lease, would be contrary to the Estate scheme of development; and
(b)An order restraining GGI from “using, asserting an entitlement to seek to use, announcing intention to seek to use, or seeking permission to use” the nine blocks of the golf course land for any purpose other than the purposes required by clause 3(a) of the Golf Course Lease.
17․In respect of the case based on non-derogation from grant, the plaintiff sought further declarations against the Territory that:
(a)The grant by the Territory of the lease registered in Volume 1776 Folio 19 was in breach of the scheme of development as it sets out restrictive covenants not enforceable by the plaintiff under the scheme of development;
(b)The execution by the Territory of any variation (by GGI) of the Golf Course Lease that permits the use of the golf course land for any purpose other than that set out in the Restriction would derogate from the grant by the Executive to the plaintiff of the Crown lease; and
(c)The acquiescence by the Territory to any claim of GGI to an entitlement to any variation as set out in (b) above would derogate from the grant by the Executive to the plaintiff of the Crown lease.
18․In respect of the claim for misleading and deceptive conduct, that statutory action is brought solely in relation to the conduct of the Territory. In the event that an enforceable scheme of development is not able to be maintained, the plaintiff claimed that the Territory, by itself and its agents including the ACTPLA, engaged in misleading and deceptive conduct contrary to s 18 of the Australian Consumer Law (or s 52 of its predecessor legislation, the Trade Practices Act 1974 (Cth) (TPA)).
19․The conduct involved the implied representation, through promotional material at the time the plaintiff purchased the relevant property, that the Territory would ensure the land on which the golf course operated would continue to be permanently used only for a golf course or for purposes ancillary to such use.
20․The plaintiff sought an order for damages against the Territory in an unspecified sum.
Overview of arguments of the defendants
21․The defendants each argued that no scheme of development arose which included the golf course and its facilities. The Territory and ACTPLA (Government parties) argued that neither of them could be categorised as the common vendor covenanting under the scheme, and that any such scheme is not enforceable against either of those entities.
22․The Government parties relied upon the mechanics of the system of land tenure in the ACT and the various statutory powers authorising the grant and management of Crown leases throughout the development of the Estate and golf course land. They submitted that the Territory, being a body politic established under s 7 of the Australian Capital Territory (Self-Government) Act 1988 (Cth) (Self-Government Act), cannot properly be characterised in practical or in any other terms, as the grantor of Crown leases.
23․The Government parties submitted that title to the land subject to the alleged scheme of development properly derives from different entities acting in different capacities as follows:
(a)The plaintiff’s property: Title to the plaintiff’s property, as a property within the Estate, derives from a company known as Harcourt Hill Pty Ltd (HHPL), which, pursuant to the terms of the 1993 Deed executed between the Territory and HHPL, granted the Crown lease to the plaintiff in its own right and not as an agent of the Territory. This assignment was part of a commercial contractual arrangement associated with the development of the Estate.
(b)The golf course land: Title to the golf course land derives from ACTPLA, acting on behalf of the ACT Executive, which is an entity created by Part V of the Self-Government Act, comprised of the Chief Minister and Ministers chosen by the Chief Minister, and is, as such, a discrete entity not to be conflated with the Territory. This assignment was an exercise of a statutory function under Territory planning legislation.
24․If a scheme of development arose, it was established in relation to the residential component of the development only.
25․GGI separately argued that if a scheme of development did arise:
(a)The Golf Course Covenant alleged by the plaintiff is a positive covenant and hence cannot run with the land (that is, the pleaded scheme is unenforceable against GGI); and
(b)In any event, it was a bona fide purchaser of the land without notice of any scheme of development and accordingly, is not bound by the restrictions contained in any scheme that is found.
26․The Government parties further argued that no derogation from grant of lease had occurred or was proposed to occur.
27․The misleading and deceptive conduct claim was opposed by the Territory, arguing that at no time, but specifically the time the residential block was sold to the plaintiff, did it engage in misrepresenting that it would ensure the land on which the golf course operated would continue to be permanently used only for a golf course or for purposes ancillary to such use. A further defence was pleaded that any such claim was statute-barred.
The role of the first and third defendants
28․There is some dispute between the parties over the role of the first and third defendants in this proceeding, due to the complexities of the system for managing land in the ACT. Land in the ACT is held on Crown lease from the Commonwealth, but much of the land, including that in dispute here, is managed by the Territory on behalf of the Commonwealth.
29․It is therefore important to briefly explain who owns land in the Territory and how it is managed, for the later discussion of the arguments by the defendants around whether the Territory is properly to be viewed as a common vendor.
30․Following the commencement of self-government in 1988, land ownership and management in the Territory is governed by the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) (PALM Act). Land in the Territory is held upon Crown lease from the Commonwealth as required by s 9 of the Seat of Government (Administration) Act 1910 (Cth). That is, all land in the Territory is owned by the Commonwealth.
31․The land in the Territory is then divided into either Territory Land or National Land: ss 27 and 28 of the PALM Act and managed as follows:
(a)National Land is managed by the National Capital Planning Authority under the control of the Commonwealth (because it is land that is intended to be used by the Commonwealth): ss 6(1)(g) and 27; and
(b)Territory Land is managed by the ACT Executive: s 29(1)(a).
32․The ACT Executive is created by s 36 of the Self-Government Act. Under s 29(1)(b) of the PALM Act, the ACT Executive may (among other things) “grant… and administer estates in Territory Land”. It does so in part through the now-repealed Planning and Development Act 2007 (ACT) (PD Act).
33․ACTPLA is established under s 10(1) of the PD Act. The chief planning executive is the planning and land authority: s 10(3). Section 11 of the PD Act provides that the Territory is bound by the actions of ACTPLA (emphasis added):
Anything done in the name of, or for, the planning and land authority by the chief planning executive in exercising a function of the authority is taken to have been done for, and binds, the Territory.
34․Section 237 of the PD Act then provides (emphasis added):
The planning and land authority is authorised to grant, on behalf of the Executive, leases that the Executive may grant on behalf of the Commonwealth.
…
35․Further, although the ACT Executive manages Territory Land “on behalf of the Commonwealth”, the Territory is liable for anything done under s 29 of the PALM Act. That is, the Territory is liable for anything done in the performance of its functions as Territory Land manager: s 30 of the PALM Act.
36․Section 30(2) of the PALM Act expressly provides (emphasis added):
30Territory liable as manager
…
(2)Where:
(a)a liability arises in respect of:
(i) land at a time when it is Territory Land;
…; and
(b)the liability arises from a covenant given by the Commonwealth at any time in its capacity as owner of the land;
the liability is vested in the Territory and ceases to be a liability of the Commonwealth.
37․Thus, even though the Commonwealth owns the land, because the area in question is Territory Land, it is managed by the Territory and any liability in relation to that management is vested in the Territory.
38․As the plaintiff submitted, through this statutory framework, ACTPLA is the agent of the ACT Executive (whether express or deemed). Although ACTPLA may be the entity named on the Crown lease held by GGI in respect of the golf course land, it is named on behalf of the ACT Executive as the statutory land manager, whose actions then make the Territory liable pursuant to s 30 of the PALM Act.
39․The Territory argued ACTPLA was a separate statutory body and that through statutory delegation, the Territory had little control over what ACTPLA did (ss 13 and 14 of the PD Act provided for limited directions the Executive may give to ACTPLA).
40․The short answer to that point is that such lack of control may well be a difficulty of the Territory’s own creation. As pointed out by David Mossop, writing extra-judicially in The Constitution of the Australian Capital Territory (Federation Press, 2021) at 175, the language of s 29 of the PALM Act does not clearly support an approach of statutory delegation to another body. In my view, and with the aim of construing an important piece of planning legislation with an eye to validity, the statutory scheme set out above is better viewed as one creating at least deemed agency on the part of ACTPLA, as the plaintiff submitted, and as the clear words emphasised in ss 11 and 237 of the PD Act suggest.
41․For completeness, since this case was heard, the Planning Act 2023 (ACT) (Planning Act) has been enacted, with ss 16 and 17 of that statute correlating to what was previously ss 10 and 11 of the PD Act. Section 16 of the Planning Act creates the Territory Planning Authority. Through the operation of ss 183 and 184 of the Legislation Act 2001 (ACT), although the name and the constitution of the entity is changed (in that it is now a corporation rather than a body corporate), the reference is taken to be a reference to the entity by its new name. When final orders are made, it may be appropriate that an order is made amending the name of the third defendant.
42․Section 17 of the Planning Act then similarly provides:
17 Authority represents the Territory
(1)Anything done in the name of, or for, the territory planning authority or the chief planner in exercising a function of the authority is taken to have been done for, and binds, the Territory.
…
43․The power contained in s 237 of the PD Act is similarly replicated in s 262 of the Planning Act. There is thus no difference in the framework under the successor to the PD Act.
Issues
44․The umbrella issues for determination of each cause of action are as follows:
Issue1 – Scheme of development:
(a)Whether there is a scheme of development incorporating the golf course land, resulting in the restrictive covenants claimed;
If so,
(b)Is it enforceable against the Government parties?
(c)Is it enforceable against GGI?
Issue 2 – Derogation from grant of lease: Whether the grant of the lease to the plaintiff was for a particular purpose so that the lessor may not now take away the means of enjoying that which has been granted.
Issue 3 – Misleading and deceptive conduct: Whether the Territory engaged in the misleading and deceptive conduct claimed.
45․Within each of those actions, the parties broke their arguments down into a number of further discrete issues, which are addressed below.
Issue 1 – Is there a scheme of development?
46․The approach I have taken is as follows:
(a)Explain what a scheme of development is and when it may arise.
(b)Consider whether what occurred in the circumstances of the present case created a scheme of development. That requires traversing how the land came to be subdivided, including matters such as whether there was a common vendor, what restrictions were placed upon the land at the time of sale of each lot, and what was the intention behind the application of those restrictions. The evidence in this regard was voluminous.
(c)If a scheme of development arose, consider whether the scheme is enforceable against each of the defendants.
What is a scheme of development?
47․A scheme of development, also described as a common building scheme, is an equitable concept that arises where the owner of a parcel of land has subdivided the land and sold off the subdivided lots with a particular development scheme in mind. In Cousin v Grant (1991) 103 FLR 236 (Cousin), Miles CJ referred (at 244) to the “essential character” of a scheme of development by reference to Baxter v Four Oaks Properties Ltd [1965] Ch 816 (Baxter) at 825 (emphasis added):
… for well over 100 years past where the owner of land deals with it on the footing of imposing restrictive obligations on the use of various parts of it as and when he sells them off for the common benefit of himself (in so far as he retains any land) and of the various purchasers inter se a court of equity has been prepared to give effect to this common intention notwithstanding any technical difficulties involved.
48․The significance of the emphasised words is to draw attention to (1) the starting point of a single owner; (2) the presence of restrictive obligations, (3) for a common benefit, and (4) the presence of a common intention. The concept thus involves a “community of interest” that exists under the scheme. In order to preserve that community or scheme, equity imports a reciprocity of obligations: Elliston v Reacher [1908] 2 Ch 374 (Elliston) at 385. It is not necessary that the rights and obligations of the participants be identical: Reid v Bickerstaff [1909] 2 Ch 305 (Reid) at 319.
Requirements for a scheme of development to arise
49․A useful guide to when a scheme of development will be sufficient to enable a claimant to enforce a covenant on the basis of that doctrine is to be found in Elliston, where Parker J set out the following features at 384:
(a)Both the plaintiff and defendant, or their predecessors in title, derive title to the land from a common vendor;
(b)Prior to selling the lands to which the plaintiff and defendant are respectively entitled, the common vendor laid out the estate, or a defined portion thereof, for sale in lots, with each lot being subject to restrictions to be imposed on all lots consistent only with some general scheme of development;
(c)The restrictions were intended by the common vendor to be, and were, for the benefit of all lots intended to be sold, whether or not they were also intended to be for the benefit of other land retained by the vendor; and
(d)The parties or their predecessors in title purchased their lots on the footing that the restrictions, subject to which their purchases were made, were to enure for the benefit of the other lots included in the scheme, whether or not they were also to enure for the benefit of other lands retained by the vendors.
50․Those features have since been cited frequently in considering common building schemes (including in Deguisa v Lynn [2020] HCA 39; 268 CLR 638 (Deguisa) at [11]). They may be seen to capture the deriving of land from a common vendor, a defined general scheme, an intention by the vendor that the restrictions benefit all lots, and an acceptance by the purchasers of those restrictions, to benefit all lots.
51․It must be emphasised, however, that although these features are cited frequently in cases considering schemes of development, they are a guide, broadly directed to assessing whether there is:
(a)an identifiable scheme; and
(b)a common intention that purchasers will be mutually bound by (and mutually entitled to enforce), a defined set of restrictions.
52․The two might overlap; for example, an inference of intended reciprocal obligations was not drawn where there was no laying out of the estate in plots as part of a definite scheme in In re Wembley Park Estate Co Ltd’s Transfer London Shephardi Trust v Baker [1968] Ch 491 at 500.
Flexibility in the doctrine
53․In Cousin, Miles CJ referred to Elliston and stated at 245 that “the tests enunciated by Parker J do not lay down immutable principles”. His Honour went on in Cousin to explain at 245 the principle that has relevance to the circumstances of the present case, namely that a strict reading of the four features in Elliston, which may produce “technical difficulties”, should not be favoured over consideration of the overarching components of the doctrine relating to common intention and common interest, citing Baxter and In re Dolphin’s Conveyance; Birmingham Corporation v Boden [1970] Ch 654 at 663.
54․The flexibility has been described in B Edgeworth, Butt’s Land Law (Thomson Reuters, 7th ed, 2017) (Butt’s Land Law) at 635-636 [10.640] as follows (footnotes omitted):
The modern trend is to relax the stringency of the four Elliston v Reacher requirements and to look primarily for the intention between the common vendor and the respective purchasers to impose a “local law” under a mutually enforceable system of covenants. Equity then gives effect to this common intention “notwithstanding any technical difficulties involved” in creating the covenants. Because the central concept is reciprocity of obligations, the four requirements are a guide, not an inviolable formula to be strictly applied in all cases.
…
Examples of flexibility in the doctrine
55․The authorities in the various bundles provided by the parties provide different examples of that flexibility. I have extracted those that I consider to be of relevance to my reasoning in respect of the circumstances of the present case.
(a)A flexible “common vendor”: It has been accepted that multiple vendors may work in collaboration (that is, with a common intention) to subdivide and sell their respective holdings: Re Mack and the Conveyancing Act (1975) 2 NSWLR 623 at 629-30 (Re Mack). See also Butt’s Land Law at 636 [10.640].
(b)Express reference not necessary: The covenant need not be expressly nor precisely stated as long as the restrictive obligation and the mutuality of it was clear. This is consistent with the proposition that in dealing with restrictive covenants, equity readily gives effect to the common intention of the parties: Brunner v Greenslade [1971] Ch 993 at 1006, approved unanimously by the High Court in Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd [1998] HCA 15; 193 CLR 154 (Forestview) at [16]. In Cousin, Miles CJ cited with approval (at 245) Re Louis and the Conveyancing Act [1971] 1 NSWLR 164 (Re Louis), where Jacobs JA said at 178:
It is possible to envisage a case where there was never one covenant contained in a conveyance and yet there might be a common building scheme, because purchasers purchased on the basis that there would be such covenants. If they did so then the obligations of the proposed covenants would be enforceable between all the parties concerned, including the common vendor.
A similar point is made in Kelly v Barrett [1924] 2 Ch 379 at 399 where Pollock MR of the Court of Appeal said:
… if there was or is evidence from which a scheme can be found to exist it does not fail because it is not to be found in express terms, if it can be collected from the nature of the transactions and the relevant facts.
(c)Identical covenants not required: It is also not essential that the covenants over the various lots be identical, or even similar, as long as any variation remains consistent with an overall reciprocity of obligation: Reid at 319; White v Bijou Mansions Ltd [1938] Ch 351 at 362, each of which was cited, among others, in Butt’s Land Law at 637 [10.660].
(d)Lots sold over a period of time: A scheme of development can arise where the common vendor sells the lots over a period of time. The question of fact is whether the purchasers knew that the vendor was intending eventually to sell all the lots as part of the scheme, in which case the covenants would be mutually enforceable between the purchasers of all the lots: Nottingham Patent Brick & Tile Co v Butler (1885) 15 QBD 261 at 268 (affirmed on appeal) and cited in Butt’s Land Law at 636 [10.640]. Bergin CJ in Eq approved of the passage (albeit referencing an earlier version of the text) in Hosking v Haas (No 2) [2009] NSWSC 1328; 14 BPR 27407 at [12].
(e)Lots may be sold without restrictions: A scheme is not negatived by the fact that some of the lots were sold without restrictions. It is not necessary that the vendor must impose the same, or any, restrictions on all lots which are sold: see Re Mack at 635 and the cases there-cited.
56․Schemes of development can apply in circumstances of leasehold land as well as freehold land: Spicer v Martin (1888) 14 App Cas 12 (Spicer) at 25; Browne v Flower [1911] 1 Ch 219 (Browne) at 224. Such schemes have been held to exist in the Territory, in circumstances of commercial leases: Cousin at 245, 247.
57․The flexibility of the doctrine is significant in this case because of the nature in which the Estate was developed.
The importance of restrictive covenants in a scheme of development
58․In the extracts from the authorities above, attention was drawn to the presence of obligations which restrict the use of land. The essential features of a restrictive covenant were described by Kitto J in Pirie v Registrar-General (1962) 109 CLR 619 at 627, by reference to the doctrine established in Tulk v Moxhay (1848) 41 ER 1143 (Tulk). For present purposes, it suffices to explain that a restrictive covenant is an agreement that restricts the use of land, and which runs with the land, meaning that it is effective not just between the parties who originally agreed upon the promise, but also between subsequent assignees of the land: see J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2015) (Equity Doctrines & Remedies) at 1206 [44-005].
59․Some understanding of what is meant by restrictive obligations or covenants is important because it is now well-established that a covenant that requires a positive act only cannot be restrictive and will not bind the land: Aust-One Investment Pty Ltd v New World Investments Pty Ltd [2023] NSWCA 22; 111 NSWLR 39 (Aust-One Investment) at [167]-[168].
60․Austerberry v Corporation of Oldham (1885) 29 Ch D 750 is an early example of a case where a positive covenant was not enforceable because it did not run with the land. In that case, the covenant related to the building and subsequent maintenance of a road passing through the property which would also be accessible to the public subject to tolls. It was stated at 773-774 (emphasis added):
But here the covenant which is attempted to be insisted upon on this appeal is a covenant to lay out money in doing certain work upon this land; and, that being so, in my opinion — and the Court of Appeal has already expressed a similar opinion in a case which was before it — that is not a covenant which a Court of Equity will enforce: it will not enforce a covenant not running at law when it is sought to enforce that covenant in such a way as to require the successors in title of the covenantor, to spend money, and in that way to undertake a burden upon themselves. The covenantor must not use the property for a purpose inconsistent with the use for which it was originally granted: but in my opinion a Court of Equity does not and ought not to enforce a covenant binding only in equity in such a way as to require the successors of the covenantor himself, they having entered into no covenant, to expend sums of money in accordance with what the original covenantor bound himself to do.
61․However, the form of wording of a covenant may mask its true substance. “[T]he question is not whether a covenant is negative in wording but whether it is negative in substance”: Shepherd Homes Ltd v Sandham (No 2) [1971] 1 WLR 1062 at 1067. A covenant may be negative in substance although its language is expressed in a positive form, as seen in Tulk at 1143 where the terms of the covenant were:
…keep and maintain the said piece of ground and square garden, and the iron railing round the same in its then form, and in sufficient and proper repair as a square garden and pleasure ground, in an open state, uncovered with any buildings, in neat and ornamental order… for the inhabitants of Leicester Square… to have… the privilege of admission… into the said square garden and pleasure ground.
62․The test of whether a covenant is truly negative in character is whether it can be complied with by complete inaction: Equity Doctrines & Remedies at 1211 [44-055].
63․In the present case, there are arguments about whether the obligation pleaded as part of the scheme of development – in essence, the obligation to use the golf course land only for a golf course and associated facilities – was, in substance, positive or negative.
64․In Gosford RSL Club Ltd v Gosford Race Club Ltd (Unreported, Supreme Court of New South Wales, Bryson J, 18 December 1997) (Gosford), upheld on appeal in Gosford RSL Club Ltd v Gosford Race Club Ltd [1998] NSWCA 96, Bryson J considered a restrictive covenant, described as Covenant (b), which provided that the land in question “should only be used as a Bowling and Recreation Club”. In that case, the covenant was recorded on the land register. His Honour accepted at 24-25 that due to the changes in the neighbourhood and other circumstances, the use had become unviable, such that the covenant sterilised the land. In the course of considering the nature of the covenant his Honour dealt with whether it was properly characterised as restrictive, stating at 34-35, 37:
Restrictive covenants are an exception to the law of contract and the pre-existing land law and when they were recognised as equitable interests in land, recognition was limited to burdens and restrictions and did not extend to operation to impose positive obligations, such as covenants to repair or positively to carry on any activity.
…
Covenant (b) is in my opinion restrictive in nature and not positive, and the RSL Club can comply with Covenant (b) by making no use of the land, as well as by using it as a bowling and recreational club. The form of words used is unremarkable for the common case of a restrictive covenant which prevents some uses of land or limits its use to one.
65․Whether the covenant pleaded here involves a negative obligation, so as to create a restrictive covenant, is considered further below.
66․It may also be relevant here that a restrictive covenant need not be enforced if the character of the neighbourhood has changed such that there is no real purpose in enforcing the covenant: Chatsworth Estates Company v Fewell [1931] 1 Ch 224 at 229-230.
When will a scheme of development bind a subsequent purchaser?
67․In this case, GGI argued that it was a purchaser for value without notice of the restriction and accordingly, to the extent that a scheme of development arose, it was not bound by the restrictions that may otherwise have attached to the land purchased by it.
68․Of a number of exceptions, some of which were discussed in Sutton v Shoppee (1963) SR (NSW) 853 at 873, the material one for the purposes of this case is as follows:
…the equitable obligation will cease to bind any subsequent owner acquiring any lot in the subdivision from a purchaser by purchase for value and without notice of the restriction.
69․Cases such as Re Louis at 179, per Jacobs JA (with whom Helsham J agreed), are to similar effect, in referring to the validity of restrictions provided for by a scheme of development ceasing upon the acquisition by a purchaser for value without notice.
What constitutes notice?
70․The issue was most recently considered by the High Court in Deguisa in considering what was necessary to provide notice of a scheme of development under the Torrens system in South Australia, which, along with Queensland and the ACT, is a jurisdiction where there is no provision for the registration of restrictive covenants. Unlike the ACT, the system in SA concerns freehold land.
71․The question arising before the High Court was, when a person dealing with registered proprietors of land is taken to have been “notified” under s 69 of the Real Property Act 1886 (SA) of an interest on the title, and the extent of searches required to so be notified.
72․Section 69 of the said statute relevantly provided that, subject to qualifications immaterial to the present matter:
The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the certificate of title of such land, be absolute and indefeasible ...
73․A unanimous High Court in Deguisa referred to its earlier decision in Westfield Management Ltd v Perpetual Trustee Company Ltd [2007] HCA 45; 233 CLR 528 (Westfield) at 531-532, which dealt with the interpretation of an easement entered on the NSW Register in relation to both the benefited and burdened blocks of land. At the outset of the judgment, the High Court stated at [4] (references omitted):
It was only in the landmark decisions of the Privy Council in Frazer v Walker and the High Court in Breskvar v Wall that it was fully accepted that the Torrens system established a system of title by registration rather than one of registration of title. That understanding of the scheme of the Torrens system informed this Court's decision in Westfield Management Ltd v Perpetual Trustee Co Ltd. In that case, the Court unanimously affirmed that the dealings recorded on the certificate of title, together with the information appearing on that folio of the Register Book, provide a purchaser taking his or her title to land from the registered proprietor “with the information necessary to comprehend the extent or state of the registered title to the land in question” so that information extraneous to the certificate of title was immaterial to the indefeasibility of the purchaser's title. As will be seen, the path to the resolution of the principal issue in the present case is significantly illuminated by the approach in Westfield.
74․The High Court then considered the interaction between common building schemes and the Torrens system at [12]-[13] (references omitted, emphasis added):
12. Under the Act, restrictive covenants in common building schemes cannot be registered. Indeed, it has been observed that “there is no evidence that the notification or registration of restrictive covenants was within Torrens' field of vision”. In New South Wales, Victoria, Western Australia, Tasmania and the Northern Territory, legislation has made specific provision for the creation and notification of restrictive covenants; but South Australia, Queensland and the Australian Capital Territory have not made any such provision.
13. The present case is not concerned with whether a covenantor is bound by his or her promise to the covenantee, but with whether the title to land in ownership of a successor in title to the covenantor is affected by the interest of the owner of another parcel of land in the enforcement of the covenant, the benefit of which attaches to that other person's land. While the provisions of the Act speak of encumbrances, liens, estates or interests as possible qualifications of, or burdens upon, the title of a registered proprietor of land, there is no express reference in the Act to restrictive covenants, or to the interest of the covenantee as a species of interest that may burden or qualify the title of the registered proprietor. The cases do not suggest, and the appellants did not argue, that restrictive covenants enforceable under the general law as part of a common building scheme are in some way so alien to the scheme of the Act that the equitable rights and obligations so created cannot be accommodated to the provisions of the Act. But if the benefit and burden of mutual restrictive covenants are to affect the registered title of a purchaser of a parcel of land subsequent to the original covenantors, steps must be taken to ensure the notification on the certificate of title of each parcel of land burdened by a restrictive covenant and the other lots intended to be benefited by that covenant as part of the common building scheme.
75․The significance of the emphasised words is to highlight that the case was expressly dealing with a purchaser “subsequent to the original covenantors” and not whether a covenantor is bound by their promise to the covenantee.
76․The Court later stated at [66] (reference omitted):
In Westfield, this Court held that it is contrary to the purpose of the Torrens system to seek to establish the intention or contemplation of the parties to an instrument registered under the NSW Act by reference to material extrinsic to the instrument. In a unanimous judgment, Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ said:
“Together with the information appearing on the relevant folio, the registration of dealings manifests the scheme of the Torrens system to provide third parties with the information necessary to comprehend the extent or state of the registered title to the land in question. …”
77․Ultimately the applicable statement of principle for the present case is captured at [88] (emphasis added):
A person who seeks to deal with the registered proprietor in reliance on the State’s guarantee of the title of the registered proprietor disclosed by the certificate of title in the Register Book (or its electronic equivalent) is not to be put on inquiry as to anything beyond that which is so notified. A common building scheme can operate consistently with the scheme of the Act in relation to the enforceability of the benefit of a restrictive covenant only if those rights are notified on the certificate of title of the burdened land, or by express reference in a memorial on the certificate of title to other registered instruments which contain that information. Anything less is inconsistent with the natural and ordinary meaning of the text of s 69 and the purpose of the Act.
78․In reaching this conclusion, the Court discussed (at [72]) the rationale behind restricting enforceability to rights notified on a certificate of title. It can be summarised as:
(a)The object of the legislation is to simplify land titles and make land ownership transparent.
(b)Where there is a common building scheme, the objectives of simplification and transparency will not be achieved unless all the lots benefited by a restrictive covenant can be identified by a potential purchaser from information on the certificate of title.
(c)That identification ensures that a potential purchaser is able to make fully-informed decisions in relation to the concerned land, such as whether to buy the land, to bargain for a different price, or to seek to negotiate a release of the burden from the other lot owners.
(d)In functional terms, “the notification of which s 69 speaks can be effective only if a person dealing with the registered proprietor of land is informed by memorials on the certificate of title of the identity of each of the other lots in the common building scheme. Anything less falls short of fulfilling the function that notification on the certificate of title serves within the scheme of the Act.”
79․The High Court later referred at [76]-[77] to the case of Re Dennerstein [1963] VR 688 (Dennerstein), where Hudson J dealt with the Victorian analogue of the SA statute. A similar issue arose in Dennerstein as to whether a common building scheme affecting the applicant’s land prevented the erection of certain buildings. The High Court referred to the reasoning of Hudson J, which was to similar effect, namely that the legislation was intended to provide transparency to purchasers of land. His Honour found (at 696) that to make it incumbent upon a prospective purchaser to search a lodged plan of the subdivision of the estate, in order to determine whether the sale of allotments in the estate has been made under or pursuant to a common building scheme:
… would render conveyancing a hazardous and cumbersome operation, and, in the case of dealings in land under the operation of the Transfer of Land Act, would defeat the object of the Act and destroy in large measure the efficacy of the system sought to be established thereby.
80․Whether the above reasoning can be applied without modification insofar as the leasehold system in the Territory is concerned is a live issue. The same transparency and certainty objectives underly the leasehold system, as seen in s 58 of the Land Titles Act 1925 (ACT) (LT Act), which is in materially similar terms to s 69 of the SA statute set out above. Section 58(1) of the LT Act provides (emphasis added):
Notwithstanding the existence in any other person of any interest, whether derived by grant from the Crown or otherwise, which but for this Act might be held to be paramount or to have priority, a person becoming registered as proprietor of land or of any interest in land under this Act shall, except in case of fraud, hold the land or interest, subject to such interests as are notified on the folio of the register for the land, but absolutely free from all other interests whatsoever ...
81․The provision is also subject to a number of exceptions, which are immaterial here. Section 58(2) then provides:
The land which is included in the register is taken to be subject to the reservations, exceptions, conditions and powers (if any) contained in the grant thereof.
82․Section 59 of the Land Titles Act then provides (emphasis added):
59 Purchaser from registered proprietor not to be affected by notice
Except in the case of fraud no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any registered interest shall be required or in any manner concerned to inquire or ascertain the circumstances in or the consideration for which the registered proprietor or any previous registered proprietor of the interest in question is or was registered or to see to the application of the purchase money or any part thereof, or shall be affected by notice, direct or constructive, of any trust or unregistered interest, any rule of law or equity to the contrary notwithstanding; and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud.
83․The emphasised words (read together) extract the words in the section that apply to this case.
84․There is an important distinction with regard to leasehold land in the Territory, in that at a conceptual level, the Crown lessor remains able to control the use of the land, because it is the lessor and retains an interest in the land. However, the reasoning in Westfield, which was later relied upon in Deguisa, has also been applied in substance at appellate level in Macedonian Orthodox Church Incorporated v ACT Planning & Land Authority [2015] ACTCA 32; 208 LGERA 434 (Macedonian Church) at [53]-[54]:
53. As already noted, land in the ACT is held under Crown leases. Such leases are registered under a Torrens title system (see the Land Titles Act 1925 (ACT), particularly ss 58, 59 and 71). Thus, principles for the interpretation of dealings with land that are registered under a Torrens system apply to land held in the ACT generally in the same way in which they apply to registered interests in land under a freehold system (see Bowler v Hilda Pty Ltd (2001) 112 FCR 59 at 74; [55] (Gyles J), with whom Dowsett J at 68; [27] agreed in relation to the use of extrinsic evidence in this context).
54. The principles relating to the availability of extrinsic materials in identifying the nature of interests in land conferred by instruments registered in a Torrens system register were considered in Westfield Management Limited v Perpetual Trustee Company Limited (2007) 233 CLR 528 (Westfield), …
85․The Court also cited with approval the earlier decision of Springrange Pty Ltd v Australian Capital Territory [2010] ACTCA 17; 174 ACTR 15 (Springrange) at [12]-[13] which was to similar effect. Although both Macedonian Church and Springrange were decisions that predated Deguisa, there is nothing that would allow this Court to reach a different conclusion as to the applicability of the reasoning in Deguisa in the legislative context in the Territory.
86․Drawing together what these authorities mean for the position in the Territory, applying Deguisa at [13], if a scheme of development is established through the application of the equitable principles discussed above, it may still be enforced in equity against the covenantor who created the scheme by a covenantee.
87․However, under the Torrens system, insofar as a later purchaser buying into the scheme is concerned, an awareness of the network of covenants said to constitute the scheme is not sufficient ‘notice’ if the scheme and its extent is not present on the registered title itself or on an instrument noted on the title. Steps must be taken to ensure the notification on the certificate of title of each parcel of land burdened by a restrictive covenant and the other lots intended to be benefited by that covenant as part of the common building scheme.
88․In the present case, as the legislation makes no provision for registration of a scheme of development, such notice is to be obtained from the dealing that is registered – that is, from the terms of the lease that is registered, or the extrinsic documents that may be sufficiently incorporated by reference.
The circumstances of the present case – a public/private joint venture
89․In the early 1990s, the ACT Government identified what was then Block 9 Section 1 in the suburb of Nicholls, adjacent to the new Gold Creek Tourist Centre, as a suitable location for a “resort-style residential development”. The development was to be an estate comprised of 1,567 houses built around a golf course, a country club and a hotel. The site was some 304 hectares of land.
90․This was to become the “Harcourt Hill Estate”. The early stages of the development involved three entities:
(a)the Territory;
(b)HHPL; and
(c)Cygnet Corporation Pty Ltd (Cygnet).
91․At the time, Cygnet was a NSW-based private development consortium.
92․HHPL was set up, shortly before arrangements were formalised, in early 1993, as a corporate vehicle to help facilitate the project. The purpose of HHPL was to hold the Crown lease over the land, to enter into contracts and to make payments on behalf of a committee appointed to manage the joint venture.
93․HHPL was owned jointly by the ACT Government and Cygnet, with 6 directors appointed, three from the ACT Government and three from Cygnet.
A joint venture agreement is signed, creating common vendors or owners
94․A joint venture agreement was signed on 3 September 1993 by the Territory, Cygnet and HHPL (JV Agreement). A Committee of Management was established to manage the joint venture. It had two representatives from the Territory and three from Cygnet. Profit share was intended to be in a 50/50 ratio.
95․The JV Agreement outlined the intended purposes of the joint venture, which included, inter alia:
(a)Acquiring a holding lease over Block 9 Section 1 in the Division of Nicholls (the Holding Lease), such land being classified as Territory Land under the PALM Act;
(b)Carrying out works on the site in accordance with a proposed Deed of Agreement (the 1993 Deed);
(c)Once they had been established, selling the residential land, the golf course, the country club and the hotel site; and
(d)Creating the necessary documentation to bring about the development.
96․The Holding Lease and the 1993 Deed were each signed on 14 October 1993. The 1993 Deed was entered into between the ACT Territory Executive (on behalf of the Commonwealth) and HHPL.
97․Also on 14 October 1993, HHPL entered into a Project Management Agreement with a private project management company, and Cygnet entered into an agreement with a building and construction services company.
98․The JV Agreement defined the land upon which the golf course was built by reference to five blocks.
99․The 1993 Deed mapped and defined the Harcourt Hill Estate boundaries and dealt with mandatory planning requirements. It specified various requirements for a golf course and country club. It outlined the provision of the holding lease by the Territory. It did not allocate individual residential blocks, but it included the below planning requirements diagram (colours added for clarity):
100․From the above diagram, the early intention of the development can be seen: a resort-style estate, with residential blocks built around the green space of the golf course.
101․The definitions section at the start of the 1993 Deed records the following definition of “Golf Course” as the term is used in the deed:
“Golf Course” means an 18 hole international championship standard golf course with an additional 3 holes practice fairways, putting greens, driving range and course maintenance facility and equipment.
102․Annexure A1 to the 1993 Deed includes a “Site Master Plan” of the Harcourt Hill Estate project, including a preliminary golf course design. At A1.1, there is a list of works to be completed by the developer (being HHPL) under the deed, including:
(h)an international championship standard golf course, driving range, practice holes and country club as detailed on the Site Masterplan at Sheet 2 of this Annexure;
103․The development of the Estate was to proceed in stages. As various stages were completed, and the land was subdivided, HHPL was granted new leases over the completed blocks and retained a holding lease over the remainder of the land. This process was outlined in the Holding Lease, which also included specimen leases for any new leases granted during the course of development.
104․As a result, the precise block numbers that comprised the golf course land changed over the years as the subdivision of the estate occurred. Their purpose and the intention as between the parties to the Holding Lease and 1993 Deed and the purchasers of the residential blocks of land in the Estate did not.
105․One such specimen holding lease was Schedule 6 to the Holding Lease, titled “Core Resort Holding Lease – Golf Course and Country Club”. Importantly, it included a purpose clause (clause 2(c)) which provided that the lessee would covenant with the Commonwealth: “To use the premises only for the purpose of a Golf Course Country Club and associated facilities”.
The early days of subdivision of the Estate and the covenants imposed
106․By the end of March 1994:
(a)Construction of the golf course had commenced and was scheduled for completion in 1995.
(b)The subdivision of residential land had commenced – being Stage 1 – planned as 363 blocks.
(c)A standard contract for sale was prepared for HHPL, for use in respect of any sale of standard residential blocks in the Estate to private buyers. It included a draft schedule that set out a number of development and building covenants for standard residential lots. The draft covenants included a series of negative undertakings given by the purchaser of the block to HHPL about the construction and use of residential buildings.
107․A number of examples of transfers annexing the standard lease for purchasers of residential blocks in the Estate were in evidence. They were consistent with the lease signed by the plaintiff in respect of the block that she presently owns, the terms of which are set out below. The contents of the covenants annexed to the leases included:
(a)restrictions on using buildings for advertising;
(b)restricting external plumbing so that they were not visible from public places; and
(c)restrictions on materials used for external walls of buildings.
108․Insofar as the golf course land is concerned, there were two covenants affecting it (emphasis added):
4. No garden shed …, clothes line or clothes drying area may be erected on the Land unless fully screened from view from any adjoining land, public place or road…
…
6. On land having a frontage to the Gold Creek Country Club, no fencing may be erected on the Land which adjoins the golf course other than fencing erected by the Transferor and that fencing may not be changed, other than for maintenance and repairs, and the obligation to carry out maintenance and repairs at his own expense rests with the Buyer.
109․The standard lease contained a clause which dealt with the Territory’s control over the covenants:
The Transferor or, if it is wound up or otherwise ceases to exist, the body politic established by Section 7 of the Australian Capital Territory (Self Government) Act 1988 has power by deed to waive, vary or release any of these covenants.
110․The standard lease also contained clauses defining “Transferor” to include “his successors, nominees or assigns”, and “Transferee” to include “his executors, administrations successor or assigns”.
111․The standard lease also contained the following clauses (mutatis mutandis in each lease):
17. The Land affected by these covenants is the Land and the following blocks in the division of Nicholls
[List of blocks identified by section and block number]
18.The land burdened by these covenants is the Land.
19.The parcels of land benefited by these covenants are the blocks referred to in clause 17 other than the Land.
112․Between 1994 and approximately December 2002, construction of the various stages continued. The final certificate of completion was granted in February 2004. Along the way, the Holding Lease was subject to a series of partial determinations, surrenders and regrants as each stage was completed and subdivision occurred.
113․As the various residential blocks were subdivided and sold, more blocks were added to the list of parcels of land benefited by the covenants in the leases that were signed by purchasers. There are two points to note about the covenants that were successively recorded on the lots of land purchased:
(a)In each subsequent stage of the development, new lots gave the benefit of their covenants to all lot holders then in existence; however, the transfers for the new leases did not record that they received a reciprocal benefit in return from the original lot holders.
(b)It is uncontroversial that the golf course land was not included in that list of blocks benefited on any of the leases, including that ultimately signed by the plaintiff.
Financial strife and the return of the golf course land to the Territory
114․Progress was far from smooth. In 1997, Cygnet experienced financial difficulties. It was agreed that the golf course land would be handed back to the Territory.
115․On 31 October 1997, the JV Agreement was amended to give effect to this agreement. The land to be transferred was defined as the “Golf Course Estate” and comprised five blocks. New financial arrangements were put in place. By deed signed 2 December 1997, the arrangements were finalised. By 20 January 1998, the land had been handed back to the Territory.
116․Management of the land and its assets was subsequently overseen by the relevant asset management office in the ACT Executive. The land outside of subsequent holding leases (being the land comprising the golf course) was held as unleased land.
The construction of the Gold Creek Country Club
117․The Gold Creek Country Club was constructed in 1999 following community pressure. This was considered at Cabinet level in the Territory. Its significance in the chronology of the development arises because the plaintiff relied on its construction as evidence of the continued binding nature of the scheme of development for which she contended.
The plaintiff’s purchase of the residential land adjoining the golf course
118․The plaintiff purchased the current property from HHPL in July 2001. It was the second block of land she had purchased in the Estate, having sold the previous block earlier in 2001. The transfer for the current property was registered in the plaintiff’s name in August of that year. The covenants given by the plaintiff upon transfer were substantially the same as those previously discussed above, being negative covenants ostensibly for the benefit of other residential lots. They were annexed to the Memorandum of Transfer.
119․As discussed above, the lease executed by the plaintiff contained a list of the blocks identified as benefiting from the burdens on the plaintiff’s land. The list did not include any of the blocks upon which the golf course is currently built.
120․In oral evidence, the plaintiff testified that she bought a block of land in that location because of its feeling of exclusivity, the ability to construct a new house which was larger than would be possible in alternative locations, and that it adjoined the golf course.
Development subsequent to the plaintiff’s purchase
121․Further development and subdivision of the Harcourt Hill Estate continued over the next few years. The final stage of development was stage 14(1), which appears to have been approved in mid-2003 and was completed in February 2004.
The second defendant’s purchase of the golf course land
122․GGI’s purchase of the golf course land was settled in May 2006. The evidence was that in the years prior to the purchase, the country club and golf course (which was being run by Gold Creek Country Club Pty Ltd) were making substantial losses. Between 2004 and 2005, the ACT Land Development Agency (LDA) had put out a tender for the purchase of the land, which had been unsuccessful. Following further negotiations with a prospective buyer, the Konstantinou Group (which incorporated GGI for the purposes of the purchase and operation of the country club and golf course), a deal was struck.
123․Specifically, GGI became Crown lessee of 12 blocks of land in the Estate. The purchase was from the LDA, which was acting “as the delegate of ACTPLA” (the third defendant). The purchase included the grant of an additional development right to GGI, being the amendment of the Crown lease to increase the maximum gross floor area for all buildings on the purchased land from 5,000m2 to 15,000m2. The Crown lease was granted on 31 May 2006. The lease included a purpose clause which restricted GGI’s use of the land.
124․Evidence of the negotiations between GGI and the LDA prior to sale reveal that GGI had plans for major works on the golf course land, including construction of new accommodation and various improved and expanded sporting facilities.
125․In December 2013, GGI applied to subdivide some of its leased blocks. The subdivision was approved, including alteration of the permitted land use. The third defendant (on behalf of the Commonwealth) granted a new Crown lease on 1 December 2014. The Golf Course Lease as amended also included a purpose clause. Relevant for the present dispute was the following that appeared in the clause (and in the materially same terms as the purpose clause in the earlier 2006 lease):
3.THE LESSEE FURTHER COVENANTS WITH THE COMMONWEALTH as follows:
PURPOSE(a) To use the premises for the purpose of an outdoor recreation facility that must consist of a golf course with grassed greens and a minimum of eighteen (18) holes that may include practice fairways and putting greens;
AND IN ADDITION only the part of the premises at Block 14 Section 86 Division of Nicholls identified by cross hatching on the plan at Attachment 1 may also be used for one or more of the following purposes:
(i)commercial accommodation use LIMITED TO guest house, hotel, and motel;
(ii)indoor recreation facility;
(iii)outdoor recreation facility; and
(iv)club and/or child care centre ANCILLARY TO outdoor recreation facility and/or indoor recreation facility
...
126․This clause (the purpose clause) is the “covenant” that the plaintiff alleges she is entitled to enforce as part of an equitable scheme of development.
The re:imagine proposal
127․Despite the new owners improving the financial situation of the country club and golf course, the operation continued to be unprofitable.
128․In April 2018, GGI prepared and sent two letters to residents and businesses respectively in the Nicholls area. The letter to residents relevantly provided (emphasis added):
This week we launched a community consultation program called re:imagine Gold Creek Country Club. It is an invitation to the community of Gungahlin to provide ideas and input to the development of a new vision for part of the Gold Creek Country Club.
The Gold Creek Country Club has undertaken a strategic review of the golf course and its viability and where we want to be positioned in the next 5, 10 and 15 years. As a result, we will be looking to move to a compact 18-hole golf course (or possibly a 9 or 12 hole course) at some point over the next three to five years. We believe this is an opportunity to breathe new life into our Club and ensure its financial viability into the future. While the redesign and construction of the new course will not occur for at least 3 years, when constructed it will leave 49 hectares of the existing course (currently holes 10-18) available for alternate uses.
129․The letters went on to seek input from community and business as to what the freed-up land could be used for.
130․The plaintiff’s land backs onto the 11th hole of the golf course. This part of the course is one of the holes that the above letter notes may become available for alternate usage.
Determination of Issue 1(a): A scheme of development is established
131․Applying the authorities set out above, on the whole of the evidence that was before the Court, I find that a scheme of development was established.
132․First, the purchasers of the residential lots, including the plaintiff, and the golf course land derived their title from a common vendor, in the sense explained above. As both the plaintiff and the Government parties ultimately submitted, and again, as the authorities discussed above make clear, a single common vendor is not an essential requirement for a scheme of development to arise.
133․However, in practical terms, the Territory was the common vendor. Although the leases stipulated the Commonwealth as the legal owner and transferors signed the leases on its behalf, as the statutory regime explained above makes clear, the Territory is the entity responsible (liable) for actions taken in respect of the development of Territory Land.
134․It was the Territory who desired the development of a suburb of high amenity with a championship-grade golf course in the middle of the Estate and associated facilities. It was the Territory who put the project out to tender for that objective to be achieved. It was the Territory who retained a degree of control over the project. To the extent that there was a joint venture and a corporate vehicle involved (HHPL), that is properly to be viewed as the commercial means by which the Territory achieved its desired scheme of development. The same may be said for Cygnet’s involvement in the initial joint venture and development. They may be better described at that point in the process as multiple vendors with a common intention. Such an arrangement also comes within the doctrine.
135․Although there may have been an express clause in the 1993 Deed providing that “[n]othing in this Deed shall be deemed to create the relationship between the parties of a partnership or of principal and agent”, the parties could not contract out of the Territory’s statutory responsibility for the land (at least not in circumstances where the Territory remained directly involved in the management of HHPL), nor could they contract out of the operation or intervention of equity, which looks to substance and not form.
136․I therefore do not accept the Government parties’ submission that the different capacities in which, and mechanisms by which, the Territory disposed of various lots of land ought to prevent those lots from being subject to a scheme of development. Notwithstanding the attempt to distinguish Re Mack from the present facts, the reasons of Wootten J at 629 illustrate that the equitable doctrine is grounded not in the identity of the vendor, but in a community of purpose in establishing a scheme and the expectations it instils in purchasers thereunder (emphasis added):
I can see no rational foundation for saying that a building or development scheme can only be established by a single vendor and not by two or more acting in collaboration. In this very case it appears that the estate was created, and the subdivision into residential lots carried out, by two owners, Dwyer and Wooster, each of whom owned part of the land included. I can see no reason why they should not have been able, without bringing the land into a common ownership, to collaborate in creating a common building scheme for the whole estate, and why the courts should not support the legitimate expectations of those who bought lots on the faith of the restrictions in terms imposed on purchasers.
137․Second, there was an identifiable scheme here. That is an essential requirement. In respect of the residential blocks, the affected land was clearly identified. The blocks affected were recorded on the transfers for each stage, and added to each transfer executed as successive tranches of land were developed in the Estate. It is clear, as the plaintiff submitted, that the documentation is imperfect insofar as it does not record blocks of land in earlier stages as providing a reciprocal benefit; however, the residential blocks to which the scheme applied were sufficiently identified and the nature of the (negative) burdens on the residential lots for the collective benefit were also clearly identified.
138․Third, there can be no question that successive purchasers of the residential blocks purchased on the footing that they were mutually bound by, and mutually entitled to enforce, a defined set of restrictions. To the extent that the scheme extended to residential blocks, they were contained in the leases.
Did the scheme of development include the golf course land?
139․The real issue is whether the golf course land was included in that identifiable scheme of development, notwithstanding that such land was not noted on the transfers signed by purchasers of residential blocks.
140․I find that it was, because such land was expressly identified, the restrictions as to use were also sufficiently identified, the vendor’s intention was identified and communicated, and the purchasers of the residential units purchased on the mutual footing that the restrictions on the various lots in the scheme, including the restrictions as to the use to which the golf course could be put, were to enure for the benefit of other lands in the scheme.
141․First, the golf course land was consistently and expressly identified throughout the course of the development:
(a)From 1993, it was identified in the 1993 Deed as depicted in the plan replicated above.
(b)From 1997, it was identified in the amended JV Agreement, as comprising the following block identifiers:
(i)Section 87 Block 1 Nicholls;
(ii)Section 88 Block 1 Nicholls;
(iii)Section 86 Block 2 Nicholls;
(iv)Section 85 Block 1 Nicholls; and
(v)Section 89 Block 1 Nicholls.
(c)It was then part of the land surrendered by HHPL on 20 January 1998 and held by the Territory.
142․Although parts of the original golf course land parcels were subdivided and renamed, the golf course land was at all times identified up to 31 May 2006, when a Crown lease was issued to GGI over the golf course land by reference to the present block and section numbers. The lease was then varied in 2014, although the block numbers remained the same.
143․Second, the restrictions on the use of the land were also identified, in the JV Agreement, the Holding Lease, the 1993 Deed, the variations to the 1993 Deed, and the successive holding leases dealing with the golf course land, the winding up of HHPL and the return of the land to the Territory via statutory entities. As set out above, the documents define the golf course land and its purpose. The documents restrict the construction of buildings (facilities) to certain parts of the land. They define where the clubhouse is to be situated.
144․The restriction identified is also negative in character and thus one falling within the doctrine. It is a common case of a restrictive covenant which prevents some uses of land or limits its use to one. One way that the restriction may be complied with is for express use as a golf course. The other way that it may be complied with is by making no use of the land.
145․Third, the restrictions as to use and purpose of the golf course land were intended by the Territory as the statutory common vendor to be, and were, for the benefit of all lots intended to be sold. The golf course and its associated facilities was the fundamental amenity provided by the scheme of development. It was deliberately marketed that way with a view to the Territory securing premium value for the lots that were sold, and such fundamental amenity remains.
146․That brings the circumstances squarely within the inferred intention contemplated by Parker J in Elliston at 384:
…the vendor’s object in imposing the restrictions must in general be gathered from all the circumstances of the case, including in particular the nature of the restrictions. If a general observance of the restrictions is in fact calculated to enhance the values of the several lots offered for sale, it is an easy inference that the vendor intended the restrictions to be for the benefit of all the lots…
178․The maxim “no one can derogate from his own grant”, on which this aspect of the plaintiff’s claim is based, was articulated by Parker J in Browne at 225-226:
…Under certain circumstances there will be implied on the part of the grantor or lessor obligations which restrict the user of the land retained by him further than can be explained by the implications of any easement known to the law. Thus, if the grant or demise be made for a particular purpose, the grantor or lessor comes under an obligation not to use the land retained by him in such a way as to render the land granted or demised unfit or materially less fit for the particular purpose for which the grant or demise was made. …
179․The covenant of non-derogation is implied into every lease as a matter of law: Palmer v Fletcher (1663) 83 ER 329.
180․The lease in question here is the plaintiff’s lease. The plaintiff argued that the Territory was under an obligation not to permit the use of the golf course land in such a way as to render the land the subject of her lease materially less fit for the particular purpose for which the grant of the lease was made.
181․The plaintiff argued that, having regard to both the purpose clause and the context and circumstances of the grant of the lease (citing Harmer v Jumbil (Nigeria) Tin Areas Ltd [1921] 1 Ch 200; and Aussie Traveller Pty Ltd v Marklea Pty Ltd [1998] 1 Qd R 1 ), the Territory granted a Crown lease to the plaintiff on the understanding that the block would have golf course frontage for which she would pay a premium to enjoy the particular amenity of that location.
182․As outlined above, the plaintiff alleges that GGI’s proposed development of part of the golf course land would destroy that amenity, thereby making her property “materially less fit” for the purpose for which it was granted, citing Specialist Diagnostic Services Pty Ltd v Healthscope Ltd [2012] VSCA 175; 41 VR 1 (Specialist Diagnostic).
183․The Government parties argued that the principle of non-derogation from grant operates such that a lessor may not take away the means of enjoying that which has been granted. The principle in relation to leasehold interests may be viewed or conceptualised as an implied agreement by the lessor not to do anything to disturb (or derogate from) the lessee’s entitlements under the lease. A claimant must establish that the conduct would derogate from the particular purpose for which the lease in question was granted, rendering it materially less fit for that particular purpose: Specialist Diagnostic at [112], [139]. I accept that submission.
184․There are two difficulties with the plaintiff’s claim based on derogation from the grant of lease. The first is that the purpose for which the plaintiff’s lease was granted was for a residential dwelling. While a person can buy a room with a view, they cannot buy the view. Taking away the view (by whatever means) may mean that the plaintiff’s property has lower amenity and consequently be less valuable. However, it is a live issue whether that amounts to a residential dwelling that is materially less fit for the purpose of use as a single-use residential dwelling, being the only purpose referred to in the plaintiff’s Crown lease.
185․Conveniently, it is unnecessary to make a finding about that because of the second difficulty with this alternative claim. The Territory, or the statutory planning body ACTPLA (or presumably now its successor the Territory Planning Authority), has not yet done anything to permit the use of the golf course land, and in particular the fairway of the 11th hole of the golf course adjoining the plaintiff’s land.
186․In failing to include a covenant on an annexure to the golf course land transferred to GGI in 2006, the Territory did not thereby permit any change in the restriction as to use arising from the scheme of development. Such restriction continues to apply in substance, through the use clause included in the Crown lease.
187․Neither the Territory nor ACTPLA has taken any steps to amend the clause dealing with the use of the golf course land at all. While I may have been prepared to consider the argument on a quia timet basis with declaratory rather than injunctive relief under consideration, accepting there is no bright line as to how imminent a threat has to be (Hooper v Rogers [1975] 1 Ch 43 at 50), the evidence at the time of hearing did not go so far as to suggest that any such change was imminently on the horizon insofar as the future development of the land in question was concerned.
188․Putting aside whether the current dispute has any impact on the purpose for which the Crown lease to the plaintiff was granted, the Territory’s failure to take action to protect the amenity and value of the plaintiff’s leased land in the manner alleged does not constitute conduct that breaches or is anticipated to breach the covenant of non-derogation.
Issue 3: Did the first defendant engage in misleading and deceptive conduct?
189․The plaintiff’s alternative claim was that the Territory engaged in misleading and deceptive conduct contrary to either s 18 of the Australian Consumer Law, or the statutory predecessor which applied at the time the plaintiff purchased her lot, being s 52 of the TPA (the parties are at odds as to when the cause of action was completed).
190․The implied representation at the heart of this aspect of the claim is that the Territory would:
… ensure that the land on which the golf course operated would continue permanently to be used only for that purpose and purposes ancillary to the golf course use to preserve the amenity and value of residential blocks…
191․As the claim was put in the alternative to the scheme of development pleaded, and the scheme has been established, I have dealt with this aspect briefly, for completeness.
192․By my findings above on the scheme of development, the plaintiff has succeeded in establishing that the Territory intended the golf course land to be subject to the restriction as to use for the benefit of the residential lots on an enduring basis; that is, the Territory’s intention was that the restriction on the golf course land would apply to successors on title.
193․The corollary of the plaintiff’s success in respect of her claim in equity against the Territory is that the plaintiff must fail on the statutory action against the Territory. That is because the claim in misleading and deceptive conduct rested on the premise that the Territory in fact never intended that there be a golf course enduring for the term of the residential leases, but merely that there be a golf course operating on the land only until all blocks of residential land in the Estate were sold, thereby misleading the plaintiff into buying the land at a premium price on that basis. The plaintiff has established the opposite. Accordingly, the complete answer to the plaintiff’s claim based on misleading and deceptive conduct is that if the representation relied upon by the plaintiff was made, it was a representation about a future matter, made at the time with reasonable grounds.
The statutory cause of action
194․Section 18(1) of the Australian Consumer Law provides, and in a similar vein to s 52 of the TPA:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive.
195․Where the representation concerns a future matter, as is the case here, s 4 of the Australian Consumer Law is relevant (an earlier version of which was contained in s 51A of the TPA). It suffices in this case to state the general substance of the provision. It is that if the person does not have reasonable grounds for making the representation at the time it is made, the representation is taken to be misleading.
196․The approach the Court takes to such actions is to firstly identify the impugned conduct and then secondly to consider whether that conduct, considered as a whole and in context, is objectively misleading or deceptive, or likely to mislead or deceive: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 (Campbell) at [25] and [32] per French CJ, [114] per Gummow, Hayne, Heydon & Kiefel JJ; and Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12; 202 CLR 45 at [100]-[103].
197․If it was, a claim for damages may be available under s 82 of the TPA (now s 236 of the Australian Consumer Law), which provides for a 6-year limitation period as at the date the plaintiff became the holder of legal title to the subject land (and 3 years if the date is taken from when the plaintiff is said to have relied upon the statements and entered into the contract for sale on 6 July 2001). The Court will need to consider issues such as whether the loss claimed was “by” the conduct, being the language of s 82 of the TPA (now “because of” the conduct), and the quantum of any such loss.
The issues on the misleading and deceptive conduct claim
198․Here, there was no issue that the conduct pleaded was in trade or commerce. The dispute concerned:
(a)Whether the Territory engaged in the conduct alleged – The Territory argued that:
(i)It did not make the statements (set out below) the subject of the implied representation. The promotional material containing the statements said to have been relied upon was produced and disseminated not by the Territory, but rather by HHPL, with which it denied any agency relationship for the purposes of marketing and sale of the residential properties; and
(ii)The implied representation was not that pleaded by the plaintiff, but that the developer intended to develop a golf course that would be an integral part of a premium residential estate for the foreseeable future.
(b)Whether the conduct was misleading or deceptive, or likely to mislead or deceive – The Territory argued that the representation that it contends was made (by HHPL) was precisely what occurred, and accordingly, was not misleading in any way.
(c)If so, whether any misleading conduct had a sufficient connection to any loss claimed – The Territory argued that the relief sought was in the nature of expectation loss, which does not ordinarily attract damages for contravention of statutory misleading and deceptive conduct provisions: Ireland v WG Riverview Pty Ltd [2019] NSWCA 307; 101 NSWLR 658 at [83].
(d)If so, whether the operation of the limitation period of 6 years operates to defeat the statutory claim – The Territory argued that on any proper assessment of the cause of action, it accrued when the plaintiff purchased her property in 2001 and was therefore statute-barred.
Identifying the conduct
199․In Campbell at [32], French CJ stated that in considering whether conduct is misleading or deceptive, it is important to clearly identify the conduct to be characterised. If the conduct is a statement made orally or in writing, for example, it will be relevant to consider whether the statement is one of historic or present fact, or whether it is of an opinion, a value judgment or an estimate.
200․The conduct alleged in the pleading here was that of a representation arising from “promotional material” provided to prospective purchasers of residential blocks in the Estate. The plaintiff pleaded that the promotional material promoted the sale of residential blocks within the Estate in terms which described the Estate as having a unique residential amenity deriving from the integration of the golf course with the residential development. The expressions used in the promotional material included the following:
(a)“Harcourt Hill Estate is an integrated and premier resort development”;
(b)“Harcourt Hill residential and resort development presents a unique opportunity to build and enjoy an active lifestyle so close to home… [including] enjoying an early round of golf at ‘my club’… before setting off to work”;
(c)“Blending a new concept in residential resort development with high standards of design and meticulous planning”;
(d)“Many have a golf course frontage”;
(e)“The ACT Government now has full responsibility for the Gold Creek Country Club Golf Course. The course will be maintained to its current high standard with a permanent clubhouse and associated facilities will be progressively provided.”
(f)“Focused on the highly regarded Gold Creek Country Club golf course, … the Estate offers superb views, quiet residential environments, ready access to a range of existing facilities and an existing high standard of development”;
(g)“The Gold Creek Country Club offers an 18 hole championship course, three practice holes and a great driving range. For non golfers, and indeed all residents of the Estate, it provides a beautiful manicured landscape which adds considerable value to the Estate. The Country Club will include tennis courts, squash courts, a gymnasium and heated swimming pool.”
(h)“Starting with a vision to develop the finest residential resort project in Australia, Harcourt Hill Estate is now a reality in Canberra and the A.C.T. … With its unique 18 hole championship golf course design, Gold Creek Country Club, sporting facilities, recreational and community amenities, Harcourt Hill is the symbol of living in the 21st Century.”
201․The material before the Court established that the statements pleaded above were made to prospective purchasers through advertising material. The material was also prepared and disseminated by HHPL. Can it be said that the conduct (what was stated to purchasers) was conduct of the Territory? This a different question to the consideration of whether there was a common vendor at equity above. It is also a different scenario from that which was litigated in Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592, which involved a real estate agent incorporating an inaccurate survey diagram supplied by the vendor of a property into an advertising brochure, which was then provided to potential purchasers of the property. As set out above at [94]-[105], this was a joint venture project in which both the Territory and HHPL (and Cygnet) participated.
202․On the balance of probabilities, I would have accepted that the Territory was bound by the statements that were made by HHPL. Notwithstanding any express contractual term that HHPL was not to be deemed the Territory’s agent by anything in the Deed, they were consistent with the Territory’s clear planning objective and requirements for the development of the Estate, which HHPL, as the authorised entity marketing the properties, was carrying out. The information that was promoted was with direct and indirect input from the Territory.
The alleged misleading representations said to derive from the conduct
203․The above statements are descriptions of fact about the development at Harcourt Hill in Nicholls. The facts are of the type of the development and the amenity it has and will have. The conduct concerns the development both at the time when purchases were made and in the future.
204․As stated above, the plaintiff alleged that from this promotional material arises an implied representation that the Territory would ensure that the golf course land “would continue permanently to be used” only for that purpose and purposes ancillary thereto. This was clarified during the hearing to mean for the life of the lease granted to the lessee (99 years).
205․Further, that implied representation caused the plaintiff to purchase land in the Estate on the footing that it could be sold at a price reflective of the continued presence of the golf course adjacent to that land.
206․The plaintiff contended that the representation was misleading or deceptive in that:
(a)The Territory took no steps in fulfilment of the implied representation to prevent the detrimental effect on the market value of land in the Estate;
(b)The Territory did not intend to ensure that the land on which the golf course operated would continue permanently to be used only for that purpose and purposes ancillary to the golf course, but intended to do so, if at all, only until all blocks of residential land in the Estate were sold; and
(c)Insofar as the implied representation involved future matters, the Territory had no reasonable grounds on which to make the representation (picking up the evidentiary onus contained in s 4 of the Australian Consumer Law).
207․As the Territory submitted, the evidence supports a finding that the Territory intended, at all relevant times, that a golf course would continue to be operated on the golf course land. In particular:
(a)Correspondence dated 30 October 1997 from Neil Morgan, Deputy Under Treasurer to the Managing Director of Canberra Investments Corporation Limited stated, regarding ‘golf course… redevelopment opportunities’:
The Territory is not willing to support or acknowledge a proposal to seek to vary the Territory Plan in relation to the golf course. … No proposal to vary the Territory Plan has been considered in relation to the golf course.
(b)In further correspondence dated 15 January 1998 from the Harcourt Hill Residents’ Action Group to Mr Morgan, setting out in writing the verbal representations he had made to the group during a meeting regarding the Government’s intentions regarding the future development of the country club. In particular, Mr Morgan had given:
… clear and unequivocal assurance that the ACT Government had no intention of allowing the land presently encompassing the golf course to be redeveloped for residential purposes and that the Government was committed to maintaining the course at a high standard.
(c)On 29 January 1998, Mr Morgan sent a letter to the Harcourt Hill Residents’ Action Group confirming that the golf course would “be maintained at a high standard” and there was “no proposal for residential development”.
(d)The documents prepared for interested purchasers to participate in the tender process in 2004 include a reference to purchaser inputs at clause 1.3:
The purchaser will be required to bring to the project: … A commitment to maintain the current level of standards and services.
(e)In May 2006, the Crown lease granted to GGI contained the purpose clause requiring GGI to use the golf course land for the purpose of an outdoor recreation facility that must consist of a golf course with grassed greens and a minimum of 18 holes. The 2014 Crown lease had the same restriction.
208․In addition to the evidence discussed previously regarding the scheme of development, this specific evidence confirms that the Territory had both the intention and the means to carry out – first through the development itself, and secondly, through the initial issue of the Crown lease and the purpose clause – precisely what it had represented would form the integral part of the Estate for the life of the residential leases purchased by people including the plaintiff.
209․That the scheme was unenforceable against GGI, because the folio for the golf course land, created in 2006, did not record sufficient information to alert GGI to the existence of the scheme of development, does not retrospectively turn statements made upon reasonable grounds at the time into misrepresentations.
Assuming conduct which was misleading, did it have a sufficient causal connection to any loss claimed?
210․If I am wrong in respect of the alternative finding that the conduct was not misleading, there may have been difficulties for the plaintiff in establishing that she has suffered loss or damage “by” the conduct. The question is what loss or damage has been caused by the conduct contravening the statute: Marks v GIO Australia Holdings Ltd [1998] HCA 69; 196 CLR 494 (Marks) at [41] per McHugh, Hayne and Callinan JJ.
211․Plaintiffs who succeed in establishing misleading conduct are entitled to loss or damage suffered ‘by conduct’ done in contravention of the Australian Consumer Law. The causal connection must be established between the relevant conduct and the loss and damage suffered: Campbell at [102] per Gummow, Hayne, Heydon and Kiefel JJ. The conduct does not have to be the sole cause of the loss or damage, and a causal connection may be satisfied by acts done in reliance upon the misrepresentation. If those acts result in economic loss, that will ordinarily be recoverable: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 (Wardley) at 525-526 per Mason CJ, Dawson, Gaudron and McHugh JJ.
212․As to how to assess such economic loss, the assessment usually involves a comparison between the position in which the person who suffered the loss or damage is in and the position the person would have been in had there been no contravening conduct: Marks at [42] per McHugh, Hayne and Callinan JJ.
213․Where misleading conduct has induced a claimant to purchase an asset, damages are commonly assessed by reference to the difference between the price paid for the asset and its true value at the date of acquisition: Potts v Miller (1940) 64 CLR 282 (Potts) at 299-300.
214․The High Court in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; 217 CLR 640 (HTW Valuers) has said at [35] that this rule is “not universal or inflexible or rigid”. Assessments of compensation or value at one date are commonly made taking account of all matters known at the later date when the court’s assessment is being carried out: HTW Valuers at [39], where the High Court adopted the approach taken in Kizbeau Pty Ltd v WG & B PtyLtd (1995) 184 CLR 281 at 291-296.
215․Here, I have passed over the evidentiary difficulties raised by the Government parties concerning the plaintiff’s reliance. That matter is assumed on the reasoning that follows. The plaintiff’s claimed loss was that because prospective purchasers cannot be certain, as at the present date, that the amenity of her land will not be affected in the future, she is and will be unable to sell her land at a price which she would have had anticipated receiving by reason of the continued presence of the golf course. The plaintiff has not yet sold the property. This means the circumstances are such that the plaintiff’s claimed loss is contingent on a sale that has yet to occur.
216․If I had accepted that there was misleading conduct, and that it had resulted in any diminution in the value of the plaintiff’s property at the time it was revealed that there was a possibility for development of the golf course land, I would have found that to be in the category of expectation or contingent loss. The following difficulties arise:
(a)The circumstances giving rise to the impugned loss (being the foreshadowed but not-yet-approved development of the golf course land) have occurred many years after the plaintiff purchased the current property in the Estate. Even without the protection afforded by an enforceable right against the current lessee (GGI) it remains worth significantly more than that for which it was purchased. Damages based on the true value at the date of acquisition (the Potts basis) is not the remedy the plaintiff is pursuing.
(b)To the extent that the loss is one of expected lower value of the asset, cases such as Weatherill v Bartlett [2017] NSWCA 175 at [22] suggest that where a plaintiff purchases an asset having relied on misleading information, expectation loss is not an appropriate measure of the damage, because that is not the prejudice or disadvantage sustained as a result of altering her position under the inducement of the misleading conduct (applying Marks at [46]).
(c)The plaintiff claims that her loss materialised in 2018, but on one view, she has not yet suffered any loss. As the defendant submitted, if the plaintiff did put the property on the market, it may sell at a price that she would have expected to receive if the representation had been true, within a normal marketing period, or a longer marketing period. She may be unable to sell it at that price and be forced to accept a lower price. The loss is thus prospective, or contingent on a sale that is yet to occur. As discussed further below contingent loss (that is, loss that has not yet crystallised) cannot be compensated by an award of damages: Wardley at 533.
217․The above is sufficient to disclose the difficulties the plaintiff would have faced in establishing the cause of action. Given I did not find any misleading or deceptive conduct, it is preferable to refrain from making any alternative findings on a damages question that is entirely hypothetical. If the scheme of development found were to be set aside on appeal, it is likely the factual question of the Territory’s intention and the consequences that might have for the entire claim in misleading and deceptive conduct will need to be revisited, potentially with updated evidence required to quantify the plaintiff’s loss.
Is the claim statute barred?
218․In light of the above, the statutory defence of a claim that is statute barred does not arise for consideration. Again, with a view to assisting in narrowing the issues for any future litigation arising from this judgment, I will deal with it briefly.
219․The Government parties’ argument focused on 2001, being the time the plaintiff relied upon the asserted representation. It was argued that was also the time when the plaintiff suffered a detriment or disadvantage. The correct measure of her loss was the difference between what she paid for the property and the true value of that property at the time she purchased it, albeit that she adduced no evidence to prove such a loss.
220․The plaintiff argued that the statutory cause of action only became complete in 2018, when GGI announced its intention and campaign to vary the lease, as that was the time when the plaintiff says she suffered loss (being the drop in property value alleged in the expert report of Steven Flannery, property valuer).
221․The answer to this question depends upon how the loss is characterised.
222․In Wardley, the plurality stated at 525-6 (emphasis added, footnotes omitted):
By virtue of s.82(2) of the Act, the period of limitation begins to run at the time when the cause of action under s.82(1) accrues. As loss or damage is the gist of the statutory cause of action for which s.82(1) provides, the cause of action does not accrue until actual loss or damage is sustained. The statutory cause of action arises when the plaintiff suffers loss or damage "by" contravening conduct of another person. "By" is a curious word to use. One might have expected "by means of", "by reason of", "in consequence of" or "as a result of". But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s.82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v. Stramare (E & M. H.) Pty. Ltd., except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. …
In the context of the Act, the concept of loss or damage, like the concept of causation, must be applied in a wide variety of situations because the contraventions of Pts IV and V which give rise to causes of action under s.82(1) are diverse. Here we are concerned with contraventions of s.52(1) in the form of misleading conduct constituted by misrepresentations. In this situation, as at common law, acts done by the representee in reliance upon the misrepresentation constitute a sufficient connection to satisfy the concept of causation. And, if those acts result in economic loss, that is, loss other than physical injury to person or property, that economic loss will ordinarily be recoverable under s.82(1). In the context of the area of commercial conduct in which the Act operates, the reference to "loss or damage" in s.82(1) plainly includes economic or financial loss.
…
… The kind of economic loss which is sustained and the time when it is first sustained depend upon the nature of the interest infringed and, perhaps, the nature of the interference to which it is subjected. With economic loss, as with other forms of damage, there has to be some actual damage. Prospective loss is not enough.
When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But, as will appear shortly, detriment in this general sense has not universally been equated with the legal concept of "loss or damage". And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. …
223․The High Court went on to state at 532:
… In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred. …
224․If the loss discussed above is characterised as expectation or contingent loss, the consequence (if there was a contravention, and if it caused the loss pleaded) is that such loss only materialised in 2018 at the earliest, and potentially not yet at all. If a cause of action has crystallised, proceedings were commenced within 6 years and the claim is not barred by statute.
225․However, if the lease that the plaintiff received as a result of her purchase is treated as a loss akin to ‘damaged goods’, in the sense of a package of rights that was less than that to which she was entitled, there may be some support for the position adopted by the Government parties in Winnote Pty Ltd (in liq) v Page [2006] NSWCA 287; 68 NSWLR 531 at 542. That case involved a solicitor negligently advising the plaintiff in that case to enter into a real property lease rather than obtain a mining lease and exploration licence and failing to inform the client as to legislative changes rendering the mined substance the property of the Crown, but the consequences of the advice were only made apparent many years later.
226․Had it been necessary to decide, because I would have found that this was a case involving expectation or contingent loss, I would have also accepted that the claim was brought within time, although that would have posed evidentiary difficulties for the quantification of any actual loss suffered.
Relief
227․Given the range of potential outcomes on the causes of action, the plaintiff preferred that the Court address the findings on each of the causes of action first, and then provide a further opportunity to make submissions as to what (if any) remedies should be granted.
228․The Government parties submitted that the Court should determine the relief at the same time.
229․To avoid any future arguments about a potential denial of procedural fairness to any party on the final form of the relief to be granted, I will accede to the request to permit the parties an opportunity to submit on the nature of any relief that might follow from the findings in relation to the above issues.
230․However, to assist in that task, the orders should cover the following:
(a)The plaintiff has been successful against the Government parties insofar as establishing a scheme of development binding as between the plaintiff and the Territory. Noting that declaratory relief is discretionary, and again, subject to hearing the parties on final orders, in my view a declaration ought to follow to make the existence of the scheme of development clear (particularly if any part of the golf course land is returned to the Territory in the future).
(b)The plaintiff has been unsuccessful insofar as she sought to establish an enforceable scheme of development against GGI. Subject to the parties being heard on final orders, the appropriate order should be that the claim against the second defendant is dismissed.
231․As I understood the plaintiff’s submission, in the event that the plaintiff was unsuccessful as against GGI, the plaintiff wished to be heard further on the question of equitable compensation in addition to declaratory relief. The Government parties submitted that such relief as against them would be a cause of action unknown to the law. It may be that depending on other remedies granted, the need to resolve that dispute falls away. Accordingly, the opportunity to address on that question in light of the findings should be given. If any claim for equitable compensation is maintained, submissions will need to be provided as part of finalising the remedies sought (orally or in writing) as well as the quantum of any relief in that regard.
Costs
232․I propose to deal with the question of costs at the same time as the making of final orders. That includes any question of who should pay the second defendant’s costs in light of the findings that have been made as to why the scheme of development is unenforceable against that entity.
Orders
233․The orders I make are as follows:
(1)On or before 14 February 2025, the parties are to bring in agreed or competing short minutes of order to give effect to these reasons.
(2)The matter is listed at 9:30am on 20 February 2025 to deal with the question of final relief and costs.
| I certify that the preceding two hundred and thirty-three [233] numbered paragraphs are a true copy of the Reasons for Judgment of the Court. Associate: Date: |
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