Higgins v Australian Capital Territory
[2020] ACTSC 19
•7 February 2020
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Higgins v Australian Capital Territory |
Citation: | [2020] ACTSC 19 |
Hearing Date: | 9 December 2019 |
DecisionDate: | 7 February 2020 |
Before: | Crowe AJ |
Decision: | See [107] |
Catchwords: | PRACTICE AND PROCEDURE – Applications in Proceedings – where the first defendant and the second defendant have filed Applications in Proceedings seeking to strike out sections of the plaintiff’s Statement of Claim – where there is no proper basis to seek injunctive or declaratory relief from the first defendant – where the Statement of Claim fails to provide a proper basis for the relief sought SCHEME OF DEVELOPMENT – elements of cause of action – where there is an arguable claim against the second defendant – plaintiff given leave to replead |
Legislation Cited: | Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) ss 28, 29, 31 Land Planning and Development Act 1991 (ACT) s 10 Planning and Development Act 2007 (ACT) s 11 |
Cases Cited: | Ainsworth v Criminal Justice Commission (Qld) (1992) 175 CLR 564 Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150 Cousin v Grant (1991) 103 FLR 236 Deguisa & Anor v Lynn & Ors [2019] SASCFC 107 Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421 Elliston v Reacher [1908] 2 Ch 374 Forestview Nominees Pty Ltd v Perpetual Trustees WA Limited (1998) 193 CLR 154 Honest Remark Pty Ltd v Allstate Exploration NL [2006] NSWSC 735; 234 ALR 765 Lawrence v South County Freeholds Ltd [1939] Ch 656 Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd (1997) 72 FCR 261 McColley v Commonwealth of Australia [2014] ACTCA 21 Orison Pty Ltd v Strategic Minerals Corporation NL (1988) 81 ALR 183 Specialist Diagnostic Services Pty Ltd (Formerly Symbion Pathology Pty Ltd) v Healthscope Ltd [2012] VSCA 175; 41 VR 1 Spicer v Martin (1888) 14 App Cas 12 |
Texts Cited: | Adrian Bradbrook and Susan MacCallum, Easements and Restrictive Covenants (LexisNexis Butterworths, 3rd ed, 2010) I C F Spry, The Principles of Equitable Remedies (Law Book, 4th ed, 1990) |
Parties: | Judith Frances Higgins (Plaintiff) Australian Capital Territory (First Defendant) Gungahlin Golf Investments Pty Ltd (Second Defendant) |
Representation: | Counsel R Arthur & Ms A Costin (Plaintiff) V Thomas (First Defendant) P Walker SC & J Larkings (Second Defendant) |
| Solicitors Badgery & Rafferty Lawyers (Plaintiff) ACT Government Solicitors (First Defendant) Trinity Law (Second Defendant) | |
File Number: | SC 306 of 2019 |
Crowe AJ
On 20 June 2019 the plaintiff, by Originating Claim (OC), commenced proceedings against the Australian Capital Territory (the Territory) and Gungahlin Golf Investments Pty Ltd (GGI). The plaintiff sought relief in the following terms:
1.A declaration that the second defendant using, or purporting to be able to use, Block 14 Section 86 Nicholls for any purpose other than
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 of fairways and putting greens
would be contrary to the scheme of development constituted by the Harcourt Hill Estate.
2.An order restraining the second defendant, by itself or its servants or agents, from using, asserting an entitlement to use, announcing intention to use or seeking permission to use Block 14 Section 86 Nicholls for any purpose other than
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 of fairways and putting greens.
3.Further, or in the alternative to Order 1, a declaration that execution by the Executive of a variation of the Crown lease entered in Register Book Vol 2157 Fol 38 in order to permit the use of Block 14 Section 86 Division of Nicholls and Block 11 Section 88 Division of Nicholls for a purpose other than
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 of fairways and putting greens
would derogate from the grant by the Executive to the plaintiff of the Crown lease entered in Register Book Vol 1601 Fol 43 over Block 34 Section 123 Nicholls.
4.An order restraining the first defendant from executing a variation of the Crown lease entered in Register Book Vol 2157 Fol 38 so as to permit the use of Block 14 Section 86 Division of Nicholls and Block 11 Section 88 Division of Nicholls for a purpose other than
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 of fairways and putting greens
The OC was accompanied by a Statement of Claim (SoC). A copy of the SoC is attachment “A” to these reasons for decision. It is apparent from that pleading that the plaintiff intends to assert that the Territory caused land formerly identified as Block 9 of Section 1 of Nicholls to be developed and subdivided as a scheme of development in which part of the land was to be used only as an 18 hole golf course, with most of the remainder of the land to be used for residential dwellings.
Buyers of the residential land were required to enter covenants ensuring that residences to be erected on each parcel of land were built in accordance with certain minimum standards. The plaintiff purchased a residential crown lease adjacent to the golf course in 2001 on that basis. After a series of transactions between 1993 and 2006, GGI became in 2006, the registered owner of parcels of land including those which comprised the golf course. The purposes clause of the crown lease (which was substituted in 2014) required the owner to use the land
... For 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.
The plaintiff alleges that in April 2018 those that control GGI announced their intention to seek to redevelop the first nine holes of the golf course to be used for retail and housing purposes. This plan was intended to be implemented over a three-five year time period.
As an alternative cause of action, the plaintiff asserts that a use inconsistent with the purpose clause of the crown lease (extracted at [3] above) would amount to a derogation from the grant of her crown lease by the Territory.
Each of the Territory and GGI have filed Applications in Proceeding seeking to strike out parts of the SoC.
On 26 August 2019 GGI filed an Application seeking the following order:
1.Pursuant to rule 425 of the Court Procedure Rules 2006 (ACT), paragraphs 10, 11, 13, 14(c), 16, 21, 24(a), 24(b) and 26 of the Statement of Claim dated 20 June 2019 be struck out.
On 27 August 2019 the Territory filed an Application seeking an order that:
1.Pursuant to rule 425(1)(a) of the Court Procedure Rules 2006 (ACT), that paragraphs 3 and 4 of the Originating Claim, orders 3 and 4 in the Statement of Claim and paragraphs 25 and 26 of the Statement of Claim filed 20 June 2019, be struck out as disclosing no reasonable cause of action appropriate to the nature of the pleading.
The Applications in Proceeding were listed for hearing on 9 December 2019. Mr Walker SC and Mr J Larkings appeared for GGI, Ms V Thomas for the Territory and Mr R Arthur and Ms A Costin for the plaintiff. The following was tendered and admitted into evidence:
(1)The affidavit of Mr R Bayliss, sworn on 26 August 2019 (Exhibit “D1”);
(2)The affidavit of Mr R Bayliss, sworn on 18 October 2019 (Exhibit “D2”);
(3)Crown leases, dated 31 May 2006 and 1 December 2014, in relation to various parcels of land in Nicholls issued to GGI (Exhibit “D3”); and,
(4)The affidavit of Mr R Badgery, sworn on 14 October 2019 (Exhibit “P1”).
It is convenient to deal with the application of each defendant separately, commencing with that of GGI.
GGI’s Application in Proceeding
GGI’s submissions
Mr Walker SC argued that the terms of the relief sought by the plaintiff went well beyond that which could reasonably be obtained, even if the plaintiff was able to establish a scheme of development. He further submitted that the SoC was defective in that it did not adequately plead the facts necessary to assert the cause of action based on a scheme of development.
Mr Walker SC initially argued that if his client’s application was successful it could reasonably be anticipated that the plaintiff could be given leave to replead. After hearing the plaintiff’s submissions, and after taking account of proposed amendments to the SoC proffered during those submissions, Mr Walker SC retracted the above concession. He submitted that the claim should be struck out in its entirety to allow for the proceedings to be brought to an end.
Mr Walker SC argued that the SoC failed to properly plead a claim based on a scheme of development in that:
(1)It did not plead that the land bought by the plaintiff and GGI had been bought from a common vendor;
(2)It did not adequately identify the restraint or restriction attaching to the land owned by GGI;
(3)It did not adequately identify when the alleged scheme of development came into being; and,
(4)It did not adequately identify the land said to be subject to the alleged restraint or restriction.
Mr Walker SC took me to the Crown Lease which was issued on 14 October 1993 as the “holding lease” (Exhibit “P1”, RRB-1, tab C). It related to the whole of Block 9 of Section 1 of Nicholls (an area of 304.1 hectares). The purposes clause of that lease required the land to be solely used “for the purpose of constructing works and building in accordance with the requirements of the deed”. The deed was attachment “A”. Mr Walker SC submitted that the deed merely required the construction of the golf course. It said nothing about maintaining the golf course indefinitely.
In relation to the link between the events in 1993 and the Crown Lease held by GGI, Mr Walker SC referred to the events pleaded in paras 7-10 in the SoC. He noted that the Crown Lease issued to GGI in 2006 was a new title. He questioned how the title issued in 2006 can be part of a scheme of development which, if it existed, related to different titles issued years beforehand.
Mr Walker SC asserted that para 11 of the SoC was defective because, while it alleged that GGI had, or ought to have had, certain knowledge at the time it accepted the 2006 Crown Lease, it was not pleaded that GGI knew (or ought to have known) that it was restricted from using the land in a way that could be construed as being inconsistent with the purposes clause extracted at the end of [3] above.
Mr Walker SC also identified an issue with para 13 of the SoC, which refers to the promotional material utilised in relation to the development. Paragraph 13 pleads that this promotional material emphasised the golf course as a central feature of the whole estate. He submitted that the pleading failed to allege any representation that the golf course would be maintained as a permanent feature of the estate.
Paragraph 14 of the SoC was criticised for failing to allege a commonality of knowledge between the plaintiff and GGI.
In relation to paras 15 and 16 of the SoC, Mr Walker SC criticised the failure to adequately plead the ambit of the restrictive development and building covenants said to attach to all of the residential parcels in the development.
In the context of these submissions, Mr Walker SC pointed to a lack of clarity in the assertions pleaded in para 24 of the SoC, which he claimed were embarrassing.
The Plaintiff’s submissions
Mr Arthur commenced by handing up a document containing proposed paras 24-27 to replace paras 24-26 as pleaded. A copy of that document is attachment “B” to these reasons for decision.
Mr Arthur then took me at some length through the documents exhibited to Mr Badgery’s affidavit (see Exhibit “P1”, RRB-1, tabs A-D) to demonstrate the background to the pleaded scheme of development. Mr Arthur argued that the pleading of the SoC reflected the contents of those documents. Consequently, Mr Arthur submitted that the SoC adequately provided the basis for the assertion that the scheme of development had come into being well before 2006, and therefore, the land bought by GGI (or the relevant part of it) was already burdened with the obligation that it continue to be used as a golf course for the benefit of the residential owners within the scheme.
The SoC, at para 11, pleaded the matters which, according to Mr Arthur, constituted sufficient notice for GGI to be bound by the obligation. The proposed amendments, however, were intended to meet the possibility that GGI had not been sufficiently put on notice. Thus, at para 24e, the plaintiff proposed to plead that the Territory had an obligation to grant leases in a way to ensure that the grantee was aware of its obligations under the scheme of development. Paragraph 25 then pleads that if GGI was not sufficiently on notice of the scheme, such lack of notice was caused by the Territory’s breach of the obligation pleaded in para 24e.
In relation to the identification of the land the subject of the golf course obligation and the residential land subject to the development and building obligations, Mr Arthur argued that although they were referred to at a reasonably high level of abstraction, the references in the SoC were logical and consistent. They were sufficient to allow GGI to identify the land in question so as to be able to plead its defence.
GGI’s submissions in reply
Mr Walker SC criticised the proposed amendments. He suggested that they pleaded conclusions rather than the material facts said to establish the scheme of development.
Mr Walker SC also took the Court to the attachments containing the holding lease (Exhibit “P1”, RRB-1, tab C) to highlight that all of them, apart from A2, were subject to the possibility of amendment. He pointed out that the deed was, effectively, a subdivision plan. Importantly, it did not require the golf course to be maintained “forever”. He made the same point in relation to the draft golf course Crown Lease that formed part of the documents attached to the holding lease.
Consideration of GGI’s Application in Proceeding
The starting point must be the elucidation of the essential elements of a scheme of development. In that regard I was referred to the decision of Miles CJ in Cousin v Grant (1991) 103 FLR 236 (Cousin), where, on the application of the owners of other units in a unit title development, his Honour enforced the purpose clauses in the plan with respect to two particular units. He did this on the basis that the units plan constituted a scheme of development.
His Honour said at pp 244-5:
The essential character of a scheme of development was described by Cross J in Baxter v Four Oaks Properties Ltd [1965] Ch 816 at 825 in the following words:
“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 the various parts of it, as and when he sells them off, for the common benefit of himself (in so far as he retains the 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.”
In a passage frequently quoted in this connection, Parker J in Elliston v Reacher [1908] 2 Ch 374 at 384 said that to bring the principle into operation the following must be proved:
1.“That both the plaintiffs and the defendants derive title under a common vendor;
2.That previously to selling the lands to which the plaintiffs and the defendants are respectively entitled, the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development;
3.That these restrictions were intended by the common vender to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor; and
4.That both the plaintiffs and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to ensure for the benefit of the other lots included in the general scheme whether or not they were also to ensure for the benefit of other lands retained by the vendors.”
More recently Peek J (with whom Hughes J agreed) had occasion to closely examine the history and background of schemes of development, and particularly for the purposes of that case, building schemes: see Deguisa & Anor v Lynn & Ors [2019] SASCFC 107 (Deguisa).
At [174], his Honour quotes at length from Easements and Restrictive Covenants (Adrian Bradbrook and Susan MacCallum, Easements and Restrictive Covenants (LexisNexis Butterworths, 3rd ed, 2010) 343-345). The extract is instructive (I have kept his Honour’s emphasis):
Bradbrook and Neave introduces the building scheme doctrine thus:
13.77 When an owner of land decides to subdivide it and sell off a part, restrictive covenants may be imposed for the benefit of the land, retained by the owner. Land developers who buy land for the purposes of sub-division and resale at a profit may also include restrictive covenants in transfers. Sometimes the purpose of such covenants is simply to preserve the value of the land retained by the subdivider during the time that he or she retains and interest in it. Alternatively, the purpose of the covenants may be to impose a kind of ‘local law’ over the whole area so that the covenants will be enforceable among all the purchasers of the lots, and their assigns, even after the vendor has disposed of the whole of the subdivided area. The fact that the land is sold subject to restrictive covenants designed to preserve aesthetic standards may make it more attractive to purchasers. To achieve this result it will be necessary to make the covenants to be reciprocally enforceable between all the purchasers and their successors in title.
…
13.79 Thus the concept of the scheme of development was historically relied upon in two situations. First, it enabled earlier purchasers of blocks covered by the scheme to enforce covenants entered into by later purchasers. Secondly, it enabled the benefit of a covenant to pass where it had been neither annexed or expressly assigned. For this reason, it was often used to overcome defects in the document creating the covenant. In other words, a scheme of development enabled each purchaser of land within the scheme, and each purchaser’s assigns, to sue or be sued by every other purchaser and their assigns for breach of the restrictive covenants, regardless of the order in which the purchasers acquired their interest from the common vendor, and even in a case where the benefit of the covenants had not been expressly annexed or expressly assigned.
13.80 It is implicit in the concept of the schemes of development that if the vendor had an intention to create such a scheme, and the other requirements of the doctrine are satisfied, the community of interest between the vendor and the purchasers creates reciprocally enforceable obligations between the purchasers, despite the absence of express covenants between them. In such cases this may overcome quite basic flaws in the documentation, for example, accidental failure to insert covenants in some of the conveyances.
After referring to the very early cases in which the equitable doctrine was developed his Honour quotes from Lord Macnaghten in Spicer v Martin (1888) 14 App Cas 12. At [178] he says:
The site was laid out in accordance with the building scheme. The houses were to be built as private houses, and to be used for no other purpose: a covenant to that effect was imposed on the builder who bought the ground, and intended to parcel it out and sell it, or let it again … Every lessee must have known that every other lessee was bound to use his house as a private residence only. This restriction was obviously for the benefit of all the lessees on the estate; they all had a common interest in maintaining the restriction. This community of interest necessarily, I think, requires and imports reciprocity of obligation.
His Honour then refers to the four requirements stated in Elliston v Reacher [1908] 2 Ch 374 and, after referring to the comment of Simonds J in Lawrence v South County Freeholds Ltd [1939] Ch 656 to the effect that the equity which the plaintiffs in that case relied on was an equity “…created by circumstances and independent of contractual obligation”, he said at [181]-[182]:
More recently in 1971, in a very helpful judgment in Brunner v Greenslade [1971] CH 993, Megarry J observed:
…The substance of the views of Simonds J. [in Lawrence v South Country Freeholds Ltd [1939] Ch 656] was that where there is a head scheme, any sub-purchasers are bound inter se by the covenants of that head scheme even though they have entered into no covenants with the sub-vendor or with each other. What binds the sub-purchasers inter se is not any covenant of their own making (for there is none) but an equity independent of any contractual obligation entered into by them, and arising from the circumstances of the existence of the head scheme, the process of division into sub-lots and the disposal of those lots. If on the disposal the common intention was that the local law created by the head scheme should apply within the sub-area, then apply it would. It would be remarkable if the restrictions of the head scheme were to be reciprocally enforceable between the owners of a sub-lot and of a plot elsewhere on the estate, however distant, and yet be unenforceable as between neighbouring owners of sub-lots. I have ventured a somewhat free summary of the conclusions reached by Simonds J., but I think that it contains the kernel of his reasoning.
…Perhaps I may go back to first principles and try to summarise the matter in my own way. The most straightforward case is where A owns the entire estate and, having laid it out, himself sells individual lots to individual purchasers who enter into the covenants of the scheme. As soon as he sells a lot to the first purchaser, B, the scheme crystallises. Not only is B bound in respect of his lot to A, for the benefit of the remainder of the estate, but also A is bound, in respect of the remainder of the estate, to B, for the benefit of B’s plot. It may be noted that while B is bound by the express covenants that he entered into, A may well have entered into no express covenants with B; and yet the concept of a scheme of development requires that A shall be treated as having impliedly bound himself by the provisions of the scheme. If A then sells another plot to C, C is taking part of the land that has already been subjected to the scheme in favour of B, and the covenants that he enters into are treated as being made for the benefit not only of A’s remaining land but also of B’s plot. If A continues to sell off one lot to each purchaser, and all the purchasers are different, in this way the whole concept of the enforceability of the covenants under a scheme of development, as between all within the area of the scheme, is readily explicable in terms of covenant, express or implied. [Emphasis added]
Megarry J’s observation as to ‘the scheme crystallising’ emphasises that any land later sold, or retained, by the common vendor, A, will be impliedly subject to the same covenants into which purchaser B (and in turn other purchasers) entered for the benefit of the scheme of development as a whole.
There is a further extract from Easements and Restrictive Covenants at [183]. This contains the following:
… Similarly in Kelly v Barrett [1924] 2 Ch 379 Pollock MR 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.
His Honour then refers at some length to the decision of the High Court in Forestview Nominees Pty Ltd v Perpetual Trustees WA Limited (1998) 193 CLR 154 (Forestview). He saw the decision in that case as continuing “... (t)he trend away from ancient technicality and toward a balanced and fair system …” (at [184]).
Forestview concerned a restrictive covenant contained in a contract for the sale of land. The covenant prevented the use of the remaining portion of the land owned by the seller for certain commercial purposes. It was stated to enure for the benefit of Perpetual and its successors in title only, but not for any tenants of any part of Perpetual’s land. The seller subsequently sold the burdened land to Forestview which on sold it to Silkchime Pty Ltd. The latter wished to develop a retail shopping centre on the burdened land. Perpetual objected, relying on the covenant. Forestview and Silkchime commenced proceedings in the Federal Court seeking a declaration that the covenant was not effective according to its terms. They argued that the covenant did not specifically bind the seller’s successors in title, and that because it did not extend for the benefit of tenants of Perpetual (or its successors) it did not touch or concern the land and was thus not enforceable in equity. Those arguments were unsuccessful at first instance and on appeal.
They were also unsuccessful in the High Court. In the course of discussing the jurisprudential basis for the equitable protection of restrictive covenants, the Court (Gaudron, McHugh, Gummow, Kirby and Hayne JJ) concluded at para [23]:
A more satisfactory explanation as to the passing of the burden of restrictive covenants may be that favoured by Ames. In his view, the burden is imposed upon successors to the covenantor “upon the same principle that the grantee of a guilty trustee… is bound to convey the res to the cestui qui trust”. There would be “the like injustice, if the purchaser with notice, or the volunteer, were allowed to profit at the expense of the cestui qui trust or [the covenantee] by ignoring the trust… or the restrictive agreement”. Accordingly, equity imposes upon the successor to the covenantor “a constructive duty” which is “coextensive” with the express duty of the covenantor to the covenantee. The position of successors to the covenantor with respect to the burden of the covenant thus rests not upon any legal principle of privity of estate but upon “the equitable principle of privity of conscience”.
[Footnotes omitted]
In discussing the particular circumstances of the case before it, the Court went on to say at [28]-[31]:
Again, in equity where a restrictive covenant is taken by a freeholder in favour of that person and the assigns of any person deriving title under that party, the covenant later may be enforced by a lessee despite the absence of privity of estate between the lessee and the predecessor in title. Here also effect is given to the intention of the parties to the covenant by denying the analogy of the common law rules which would have fixed upon the absence of privity of estate. Rather, the parties to the covenant must have manifested therein an intention that the benefit of the covenant does run with the land concerned.
It is apparent from the above authorities that the requirement in equity that the benefit of the restrictive covenant was intended to run with the land concerned expresses, in particular, the conclusion that equity did not, by analogy, import the common law requirement of privity of estate. The requirement is an expression, rather than a denial, of the preference of equity for intention over form and to the giving effect to the intention evinced in the terms of the restrictive covenant in question. It has rightly been said that the question of the intention of the parties "is at the heart of the matter".
It follows that the basis upon which equity deals with the attachment to the benefited land and the transmission of the benefit of restrictive covenants is that which was identified by Ames nearly a century ago. He said that the right of third persons to the benefit of restrictive covenants is the result of the just and simple principle:
"that equity will compel the promisor to perform his agreement according to its tenor. If the restrictive agreement, fairly interpreted, was intended for the sole benefit of the promisee, only he can enforce it. If on the other hand it was intended for the benefit of the occupant or occupants of adjoining lands, then such occupant or occupants may compel its specific performance."
[Footnotes omitted]
In light of the above, the elements of a claim to enforce a restrictive covenant forming part of a scheme of development are:
(1)The plaintiff must plead that the plaintiff’s land and that of the defendant derived from the title of a common vendor;
(2)The plaintiff must also plead that before the sale of the land to the parties the vendor “laid out”, or planned for the subdivision of the land to be developed, for sale in lots which would be subject to restrictions intended to be imposed on all of the lots, and which although perhaps varying in details, are consistent only with some general scheme of development;
(3)It is also essential that the restrictions be for the benefit of all the lots intended to be sold, whether or not they were to benefit other land retained by the vendor;
(4)It is necessary to assert that both the plaintiff and the defendant bought their land on the footing that the restrictions were to enure for the benefit of the other lots in the general scheme. It did not matter whether or not they were also to enure for the benefit of other land retained by the vendor; and,
(5)The plaintiff must plead that the defendant has evinced an intention to breach the restriction applying to its land under the scheme.
I will deal with each of these requirements in turn in the light of criticisms of the SoC made by GGI.
Common Vendor
At para 1 of the SoC, the plaintiff pleads that Block 9 of Section 1 of Nicholls was Territory Land under s 28 of the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth) (the PLM Act). The plaintiff also pleads that the Australian Capital Territory Executive was responsible for the management of Territory land (under s 29 of the PLM Act) and that the Territory was liable for acts done in the management of such land. The Territory was also entitled to money which would otherwise have been payable to the Commonwealth in respect of Territory land (s 31 of the PLM Act). Finally, the plaintiff pleads in this para that the Planning and Land Authority was a body corporate established by s 10 of the Land Planning and Development Act 1991 (ACT), which exercised its functions for the Territory.
Paragraphs 2 and 3 of the SoC plead the joint venture agreement made between the Territory and Cygnet Corporation Pty Ltd for the development of land referred to as the “Harcourt Hill Estate”. It has not been pleaded, however, I infer from the reference to the Holding Lease in the joint venture agreement in Exhibit “P1”, RRB-1, tab A, that the land was Block 9 of Section 1 of Nicholls.
It is alleged that the development of the land was to be carried out by a nominee company (Harcourt Hill Pty Ltd) jointly owned and controlled by the Territory and Cygnet. The joint venturers were to share profits equally.
The holding lease (which I infer was attached to the joint venture agreement) was granted on 14 October 1993. A copy of that document is at Exhibit “P1”, RRB-1, tab C. It was granted to Harcourt Hill Pty Ltd by the “Australian Capital Territory Executive on behalf of the Commonwealth of Australia”. Having regard to the provisions of the PLM Act pleaded in para 1, it appears to me to be reasonably arguable that the Territory was legally responsible for the granting of the lease.
The holding lease appears to be a key document in relation to the issue of whether a scheme of development came into existence here. It was granted for a period of only 10 years and Harcourt Hill Pty Ltd covenanted to use the land “only for the purposes of constructing the works and building in accordance with the requirements of the deed”. The deed was defined in cl 1(b) as follows:
”deed” means the deed of agreement between the Lessee and the Territory a copy of which comprises Attachment A to this lease and which contains provisions as to planning, completion of Works and associated activities.
Before turning to the deed, it is important to note some other features of the holding lease. By cl 3(b), the Commonwealth (which in practical terms, meant the Territory) covenanted in the following terms:
That when the Lessee has obtained a Certificate of Practical Completion (as defined in the deed) in relation to the completion of construction of a stage of works as specified in the deed as a separable part of the works to the satisfaction of the Territory the Lessee shall in accordance with the requirements of clause 5.2 of the deed surrender to the Australian Capital Territory Executive this lease insofar as it relates to that stage and the Australian Capital Territory Executive will grant the Lessee or its nominee under the provisions of the Land (Planning and Environment) Act 1991 the relevant and specified separate leases in the form set forth in Schedule 2 Schedule 3 Schedule 4 Schedule 5 and Schedule 6 attached hereto.
The leases attached as Schedules 2-6 of the holding lease included a standard residential lease, a residential multi-unit lease, a commercial lease, the “Core Resort Holding Lease” and, at Schedule 6, the “Core Resort Holding Lease – Golf Course and Country Club”. The purposes covenant in that document was “…To use the premises only for the purpose of a Golf Course Country Club and associated facilities”.
The SoC does not plead the details of the holding lease (see para 6).
It does plead the general terms of the deed (attachment A to the holding lease) at para 4.
Given the complexities associated with the references to the Commonwealth and the Executive, it seems to me that the recitals of the deed are important. They are in the following terms:
A.The Commonwealth is the owner of the land, being land which is classified as Territory land within the meaning of the Australian Capital Territory (Planning and Land Management) Act 1988.
B.Under statutory powers and duties prescribed by the Commonwealth, the Territory, on behalf of the Commonwealth:
i.Has responsibility for the management of Territory land, and
ii.May grant, dispose of, acquire, hold and administer leasehold estates in Territory land.
C.The Territory and the Developer have agreed that an estate will be developed on the land in the manner contemplated by this Deed and the Holding Lease.
Part 3 of the deed deals with “Estate Planning”. As Mr Walker SC pointed out, cl 3.1 provides that annexures A1 (“Project Implementation Plan”), A3 (“Consequent Leases Plan and List”) and A4 (“Stages Plan with Program”) were indicative only and were subject to amendment by Harcourt Hill Pty Ltd. However, any such amended annexures were required to conform to A2 (“Special Project Conditions”).
Clause 3.6 provided:
3.6 Development Conditions Applicable to Consequent Leases and Core Resort Holding Leases
The Developer shall in respect of all Blocks within each Stage, prepare and submit for approval by the Estate Manager documentation required under cl A2.4 of Annexure A2.
Documentation shall include a document detailing lease and development conditions applicable to each Block within the Stage.
The Developer shall issue a copy of the approved document to each prospective Lessee. The Estate Manager shall forward copies of the approved Document to the Relevant Authorities including the Building Controller and the ACT Planning Authority for placement on files relevant to development on the respective Blocks. Thereafter, the lease and development conditions will be binding on each Lessee, irrespective of whether it is a third party, the Developer or its nominee.
Annexure A1 to the deed consisted of 5 sheets. Sheet 4 set out the list of works to be completed by Harcourt Hill Pty Ltd. It included (h) which was in the following terms:
(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…
Unfortunately, the copy of sheet 2 of A1 contained in the Exhibit is almost illegible. This diagram is the earliest in time, in the material tendered on these applications, which seeks to identify with any degree of precision the portions of Block 9 of Section 1 of Nicholls which were intended to be developed as an 18-hole golf course.
Annexure A2 contains reasonably detailed planning conditions in relation to the whole subdivision. I note that under the general provision at clause A2.1.1 the document states that “The design of the Estate shall be of a high quality consistent with a Resort of international standing.” It is also important to note clause A2.1.7 which stated:
A2.1.7 Integrated Subdivision and Building Design
Planning and development of the Estate must be directed to providing aq high level of urban amenity. Estate planning and implementation measures which integrate subdivision and building design elements are therefore required, both within the detailed project Implementation Plan for the Estate and supporting documentation (including documentation required under A2.4.3). The general make up and content of these measures needs to be discussed with the Estate Manager and ACT Planning Authority prior to the initial application to vary the implementation plan. This integrated treatment must appropriately and reasonably consider and address, (within other essential objectives for the Estate – if prominent), key urban design issues including:
· The development and protection of attractive and interesting streetscapes and precincts
· The development and protection of an appropriate scale of development, and balance between natural and built features, within both public and private areas, while maximising the most efficient use of land;
· The maximisation of both the opportunities for solar orientation and other energy saving efficiencies, and their effective utilisation; and
· The retention and protection of existing trees and other significant vegetation.
Proposals which do not demonstrate compliance with this requirement will not be approved.
Clauses 2.4.1 and 2.4.3 provide for Harcourt Hill Pty Ltd to prepare detailed lease and development conditions, applying to all stages of the development. It was presumably pursuant to those clauses that the document specifying the conditions applicable to stage 10D, which included the land bought by the plaintiff, was approved; see Exhibit “P1”, RRB-1, tab D.
The holding lease was cancelled on 14 December 1994 when, I infer, crown leases were issued for a mix of residential lots and the land on which the golf course was either built or in the course of being built (see the memorials registered on the holding lease at Exhibit “P1”, RRB-1, tab C p.155). The precise sequence of events after this is not pleaded. The plaintiff at para 6bii pleads that the Executive granted Harcourt Hill Pty Ltd a specific crown lease for the purpose of “a golf course and country club”. The date of this lease and the details of the land to which it applied are not pleaded.
At para 5 the plaintiff pleads that in 1997 the Territory, Cygnet and Harcourt Hill Pty Ltd agreed to amend the joint venture agreement. One of the terms of that agreement involved the transfer back to the Territory of the golf course lease. Paragraph 8 pleads that when the golf course was completed, Harcourt Hill Pty Ltd transferred the crown lease to a wholly owned and controlled subsidiary, Gold Creek Country Club Pty Ltd. The date and other details of the transfer are not pleaded. Paragraph 9 then pleads the transfer to the Territory of the sole control of Gold Creek Country Club Pty Ltd. The details of the lease then held by that company are not pleaded. Nor are the details of the surrender of that lease which must have occurred to allow the crown lease granted to GGI in 2006 (as pleaded in para 10).
At para 15 the plaintiff pleads that she purchased Block 34 of Section 123 of Nicholls from Harcourt Hill Pty Ltd in July 2001 and in August 2001 accepted a transfer of the crown lease subject to certain restrictive development and building covenants.
The evidence before me discloses a little more detail than is pleaded in that regard. On 12 June 2001, the Executive on behalf of the Commonwealth granted a 99 year residential crown lease for 34/123 Nicholls to Harcourt Hill Pty Ltd; see Exhibit “D1” tab A. The covenant which the plaintiff entered into under the contract of sale and transfer is set out in Exhibit “D1” tabs B and C.
That covenant sets out a list of the land benefitting from the terms of the covenant. I infer that it includes all other residential leases contained in what was Block 9 of Section 1 of Nicholls. Having regard to the land identified in Exhibit “D3” it appears that those parcels are not included in that list.
Nevertheless, having regard to what is pleaded in the SoC and the inferences which can be drawn from the evidence before me, I conclude that there is an arguable claim that at the time when a scheme of development (assuming there was one) crystallised, the owner of the land which included both the land which was the subject of the intended golf course purposes clause and the land which included what became Block 34 of Section 123 of Nicholls was, Harcourt Hill Pty Ltd. The arguable date of crystallisation was the date when the first subdivided block was sold; see [181]-[182] in Deguisa extracted at [32] above. Although the evidence as to the date of crystallisation is not as clear as it might be, it seems likely that it was during the year or so following the registration of separate crown leases upon the cancellation of the holding lease in December 1994.
If there was a scheme of development, it followed that upon the sale of the first parcel of land affected by the intended covenants that parcel, and all of the land retained by the vendor which was intended to be part of the scheme, became subject to the covenants intended to apply to the particular parcels or groups of parcels in question.
Thereafter, subject to any defence which might be raised by a particular owner, the successors in title to the vendor and the purchaser were bound by the covenants intended to attach to each parcel of land upon its subdivision and sale.
I conclude therefore that there is an arguable case for the assertion that Harcourt Hill Pty Ltd was the common vendor for a scheme of development in relation to the land owned by the plaintiff and GGI.
Planned system of restrictions
I have referred to the contents of the holding lease, including the schedules and attached deed above. The SoC pleads some, but not all of this material. In my view the holding lease and incorporated documents does provide an arguable basis for the assertion that the requirement summarised in [38](2) above was met in the circumstances of this case.
Scheme for benefit of all lots
Having regard to the elaborate and integrated nature of the planned subdivision apparent from the holding lease and incorporated documents, it seems to me that it is arguable that the covenants as to the use of the different parcels of land were intended to be part of an overall scheme for the benefit of all lots. Thus, the owners of residential parcels would benefit from the added value associated with the being part of an attractive estate with a golf course amenity. The owner of the golf course parcels would likewise benefit from being situated within an attractive suburban development designed specifically to accommodate the presence of a golf course.
Basis on which the Plaintiff and First Defendant bought their land
The SoC pleads this in a general way. It seems clear that the plaintiff bought her land subject to the covenants expressed to be for the benefit of other residential owners within the overall subdivision. That should be pleaded in greater detail. Also, it seems to me, that the assertion that the covenants were also for the benefit of the parcels containing the golf course should be pleaded. That assertion seems to form part of the reciprocity essential for a scheme of development.
In relation to GGI, it seems to me that the evidence of the history of the subdivision combined with the fact that GGI was a commercial investor prepared to pay $2.75M for the parcels of land containing the golf course, provides a proper basis for the assertion that it knew, or ought to have known, that it would be required to use the parcels for the purposes specified in the relevant crown leases, including for the benefit of all of the residential owners of the land which had been subdivided from Block 9 of Section 1 of Nicholls. That assertion has not been adequately pleaded. Nor have the parcels of land said to be the subject of that burden.
GGI’s Intention to act in breach of scheme
This element is adequately pleaded in the SoC. If there was a scheme of development, and GGI bought its land with notice of that scheme, it will be bound by the covenants as to use in its leases. That would enliven the discretion of the Court to award relief. The nature and extent of any loss of amenity suffered by the plaintiff would be relevant to the exercise of that discretion (as in Cousin).
Relief sought by the plaintiff
I accept the submission of Mr Walker SC that the relief sought by the plaintiff exceeds that which the Court would entertain, assuming that the plaintiff established her claim. As is apparent from the above discussion, I propose to set aside the SoC as currently pleaded and grant the plaintiff leave to replead. Some consideration should be given to narrowing orders 1 and 2 as currently sought.
The Territory Application
The Territory’s Submissions
Ms Thomas made the point that crown leases in the Territory are issued by the Planning and Land Authority (the PLA) under the Planning and Development Act 2007 (ACT) (That Act repealed the Land Planning and Development Act 1991 (ACT). The PLA replaced the entity of that name which had been created under the repealed Act). It followed that the Territory was not an appropriate party for these proceedings given the injunction sought by the plaintiff was against the variation of the crown lease.
Ms Thomas argued that the prayers for relief against the Territory should be struck out on the basis that:
(1)There is no proper basis on which the Court could exercise its discretion to order a quia timet injunction, or make the declaration sought, against the Territory; and,
(2)The facts as pleaded do not disclose any tenable basis for the relief sought against the Territory.
In relation to the injunctive relief sought, Ms Thomas submitted that the Territory had done nothing which could give rise to the plaintiff’s apprehension that it might threaten or infringe her rights. Relying upon Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd (1997) 72 FCR 261 (Magic Menu Systems) at [22], Ms Thomas argued that the pleading here, at its highest, discloses no sufficient basis for injunctive relief. Any involvement by the Territory in varying the purposes clauses of the crown leases relating to the golf course land is years away and in any event would be subject to the complex processes involved in a variation of the Territory Plan and then the variation of the purposes clauses themselves.
The same submission was made with respect to the declaratory relief sought. Ms Thomas submitted that it would not be appropriate for a declaration to be made where, in this instance, it could only be directed to hypothetical questions or to circumstances that have not occurred and may never occur (see Ainsworth v Criminal Justice Commission (Qld) (1992) 175 CLR 564 at pp 581-2; and, Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421 at [38]).
In relation to the alleged scheme of development, it was submitted that even if the Territory was the common vendor (as currently alleged) the plaintiff’s remedy lay against GGI not the Territory.
Footnote 72 to the written submissions, filed for the Territory, correctly in my view states that it was more likely that Harcourt Hill Pty Ltd was the only entity which could be regarded as the common vendor. Ms Thomas goes on to say that the doctrine could have no application because it was the Territory which imposed the covenant as to how the golf course land is to be used. I do not accept that proposition, at least for the purposes of the current application. It seems to me reasonably arguable that while it may have been the Territory standing behind the elaborate integrated subdivision of Block 9 of Section 1 of Nicholls, the owner of that land, and thus the entity which “imposed” the system of covenants in accordance with the terms of the holding lease and incorporated documents at the time of crystallisation, was Harcourt Hill Pty Ltd. If that proposition is established, it follows that whatever transfers of ownership of the golf course land occurred thereafter, were subject to the equitable rights arising under the scheme of development.
Ms Thomas further submitted that the plaintiff did not allege that the golf course covenant was for the benefit of the residential owners because that covenant did not arise until the 2006 crown lease was issued to GGI. Having regard to the analysis summarised in para [76] above, I reject that submission. In my view it is reasonably arguable that if the scheme of development had come into being with the first sale by Harcourt Hill Pty Ltd, any surrender of the golf course land crown lease could not extinguish the equitable rights and obligations running with that land in relation to the residential land forming part of the scheme. This was particularly so given the involvement of the Territory in the creation of the subdivision.
Ms Thomas argued that the SoC does not allege that the plaintiff acquired her property with the benefit of the purposes clause covenant contained in the 2006 crown lease issued to GGI. It is asserted that the reason for that omission is that the latter did not come into being until some years after the plaintiff purchased her property.
It seems to me that this argument misses the point. If a scheme of development came into being in the mid-1990s when Harcourt Hill Pty Ltd first sold a portion of the subdivision, as noted above, the equitable rights running with the remainder of the subdivision came into existence then and continued thereafter. That is, the equitable rights operated independently of the contents of the crown leases issued from time to time. Thus, if the Territory or the PLA had in 2006 accepted the surrender of the golf course land and then purported to issue a new crown lease containing a purposes clause inconsistent with that which was contained in schedule 6 to the holding lease initially issued to Harcourt Hill Pty Ltd (see paras [43]-[46] above), the plaintiff could have commenced proceedings seeking to prevent such a lease from being issued. The plaintiff’s cause of action would have been based on the asserted scheme of development.
Of course, such action was not necessary because the 2006 crown lease included a purposes clause consistent with that which would be enforceable if the scheme of development had come into being.
As to the alleged derogation from the grant, Ms Thomas submitted that the plaintiff’s case as pleaded falls short of that required for relief under this cause of action. Relief is available only if the relevant grant was to enable the land to be used for a specific purpose and the action taken, or proposed to be taken, by the grantor would render the land unfit (or materially less fit) for that purpose.
It was argued that the allegation by the plaintiff in the SoC that she purchased her land with the expectation that the amenity of that property would be enhanced by the nearby golf course is insufficient to plead this cause of action.
In the light of the above, Ms Thomas submitted that the appropriate order here would be to summarily dismiss the plaintiff’s claim against the Territory.
The Plaintiff’s Submissions
In relation to the question of whether the PLA is the appropriate defendant to the claim made by the plaintiff against the Territory, the plaintiff says that it is “inconceivable” that the PLA would do an act which the Territory was restrained from doing by order of the Court. However, if it is necessary to do so, the plaintiff would seek to join both the PLA and the Territory Executive. (The latter on the basis that it has the power to vary leases under the Australian Capital Territory (Planning and Land Management) Act 1988 (Cth).)
As to the argument that it is simply too soon for injunctive or declaratory relief against the Territory (or whichever entity is appropriate), the plaintiff accepts that the Territory has taken no step to indicate what it might do in response to an application to vary the crown lease(s) relating to the golf course land. However, the plaintiff argues that this very uncertainty contributes to the detrimental affect which the announcement by the Konstantinou group (the persons behind GGI) of their intention to seek to redevelop the golf course has had, and will have, on the market value of the plaintiff’s property. That detriment is said to constitute an economic injury to the plaintiff which was sufficiently likely to, arguably, justify the exercise of discretion to grant injunctive and/or declaratory relief.
In relation to the Territory’s argument that it was not the appropriate party to the action to enforce the scheme of development, the plaintiff took issue with this on the basis of her assumption that the Territory was the common vendor, and thus was bound by the equity which came into existence with the creation of the scheme.
In answer to the Territory’s submission that the case as pleaded fell short of what was required to sustain a case for derogation of the grant of the crown lease to the plaintiff, the plaintiff argues that the knowledge and intent of the Territory of the plaintiff’s expectation that her property would enjoy the amenity of proximity to a golf course, was arguably sufficient to include the substance of that expectation as part of the purpose for which her lease was granted.
The Territory’s Submissions in Reply
The Territory points out that the PLA is an entity created under statute with functions which it must exercise under that statute. In the circumstances, it is far from “inconceivable” that the PLA might perform those functions as it was required to notwithstanding that an order had been made against the Territory restraining it from acting in the same way.
Ms Thomas notes that the plaintiff does not dispute that in an appropriate case a claim for discretionary relief might be summarily dismissed, nor does the plaintiff dispute that in order to obtain injunctive and declaratory relief against the Territory, the plaintiff must demonstrate that the Territory has threatened to infringe her rights. It is submitted that given the absence of the averment of a threat by the Territory to infringe the rights of the plaintiff it must follow that there is no basis for injunctive or declaratory relief.
As to the alleged detrimental affect on the value of the plaintiff’s land, the Territory submits that this is too remote to warrant relief against the Territory. If there is such an affect it arises from the actions of those behind GGI. It is submitted that relief cannot be obtained against the Territory in circumstances where there is no cause of action against it and any harm suffered by (or threatened against) the plaintiff relates to the acts of a different party.
In relation to the alleged scheme of development, the Territory elaborates on the argument summarised at [77]-[78] above. In the light of my conclusions in relation to the scheme of development issue, it is not necessary for me to set out the detail of that elaboration.
As to the asserted potential derogation from grant, the Territory notes that the SoC proceeds on the basis that the existence of the scheme of development is sufficient to support the derogation claim. The Territory argues that this is not sufficient and repeats the submission that the assertion of the plaintiff’s expectation of a certain amenity based upon the presence of the golf course does not provide the basis for a claim of derogation.
Consideration of Territory Application
I see some force in the argument that the PLA is the appropriate party against whom relief should be sought, if the plaintiff otherwise had a viable cause of action against the Territory. Thus, if the plaintiff did have an arguable cause of action which would enliven the power of the court to restrain the Territory from varying the purposes clause in the crown lease for the golf course land it would be appropriate for the PLA, as the Territory’s agent in that regard (see s 11, Planning and Development Act 2007 (ACT)), to also be restrained. Having regard to s 21 of the Court Procedures Act 2004 (ACT), I do not see a need to separately join the Territory Executive here.
However, I have concluded that the SoC against the Territory should be struck out as disclosing no reasonable cause of action or basis for the relief claimed.
I have reached this conclusion for the reasons expressed in the following paragraphs.
The scheme of development claim against the Territory depends upon the assertion that the Territory was the “common vendor” at the time of the scheme came into being. For the reasons given at [40]-[64] above I have concluded that if there is an arguable scheme of development here, the common vendor was Harcourt Hill Pty Ltd, not the Territory. It follows that the restrictive use covenants in the GGI leases are not enforceable as against the Territory as the common vendor.
I accept the submissions of the Territory in relation to the derogation of grant claim. I do not see the expectation of the plaintiff as an arguable basis for the ascertainment of the purpose for which her crown lease was granted. It is true, as Mr Arthur submitted, that the scope and extent of the obligation not to derogate from grant is to be determined from the surrounding circumstances and the provisions of the leases themselves; see Specialist Diagnostic Services Pty Ltd (Formerly Symbion Pathology Pty Ltd) v Healthscope Ltd [2012] VSCA 175; 41 VR 1 (Specialist Diagnostic Services) at [109]. However, the Court went on to say in that paragraph [the obligation not to derogate] “… will vary with the purposes for which it is imposed.”
The authorities which the Court then referred to make clear the need to determine with some precision the purpose for which the lease of the grantee was granted, and to determine whether the impugned action of the grantor would in some substantial way disturb or disrupt the reasonable enjoyment of the grantee’s land; see Specialist Diagnostic Services at [110].
The plaintiff’s crown lease provided that her land must only be used for the purposes of a single dwelling. At the most basic level, nothing proposed in relation to the redevelopment of the golf course land would derogate from that purpose. In order to sustain that cause of action, the plaintiff would have to plead each fact which indicated that the purpose of the crown lease was somehow expanded to include the use of the land with the relevant contiguous land being used only for a golf course. Such a purpose would be uncertain and difficult to define. I am conscious of the comment of the Court in Carpet Fashion Pty Ltd v Forma Holdings Pty Ltd [2004] NSWCA 150 (Stein JA (Handley and Santow JJA agreeing) in the following terms:
[15]...As observed by Handley JA in Wilcox v Richardson Ltd (1997) 43 NSWLR 4 claims of derogation from grant based on the conduct of the lessees claiming under the same lessor, have rarely succeeded and then only in extreme circumstances (see Nordern v Blueport Enterprises [1996] 3 NZLR 450).
I have some difficulty in seeing how such a case could be pleaded and made out. Certainly, I do not see the current pleading as adequate, for the reasons advanced by the Territory. However, it is not necessary for me to decide whether there may or may not be an arguable basis for this cause of action because of my conclusion that in any event the claim made by the plaintiff is premature.
In that context, I am persuaded by the Territory’s argument that there is simply no basis at this stage for injunctive or declaratory relief against it. Ms Thomas referred me to the decision of the Full Court of the Federal Court in Magic Menu Systems at 270 where the Court quoted with approval the following paragraph from I C F Spry, The Principles of Equitable Remedies (Law Book, 4th ed, 1990):
… So if no breach has taken place it may be more difficult to establish, as a matter of evidence, that there is a sufficient risk of a future injury to justify the immediate grant of an injunction; and in exercising its discretion the court is found here to be “balancing the magnitude of the evil against the chances of its occurrence”. If in all the circumstances the likelihood that an injury will take place is not sufficiently high, quia timet relief will be refused, and the applicant will be left either to avail himself of such other remedies as may be open to him or else to renew his application should subsequently the likelihood of an injury increase sufficiently to render equitable intervention appropriate.
The plaintiff argues that she is already suffering from harm, being the affect on the value of her land arising from the announced intention of the Konstantinou group to seek to amend the purposes clause in relation to GGI’s golf course land and the uncertainty of what the Territory might do should a variation application be made. However, that uncertainty is a very poor basis in my view on which to allege an apprehended breach on the part of the Territory, assuming that it owed the plaintiff a duty not to derogate from her lease as she submits. In addition to the numerous administrative hurdles facing GGI in order to obtain the variation of the lease of the golf course land, it faces the legal hurdle of the plaintiff’s asserted scheme of development. If the plaintiff succeeds in that action the claim against the Territory will have been totally futile. Indeed, in my view the “threat” of a potential breach of any relevant duty or obligation which might be owed by the Territory here is so remote that I can see no proper basis on which the Court could exercise its discretion in favour of the applicant to grant the relief which she seeks against the Territory (or the PLA should it be joined); see per French J in Orison Pty Ltd v Strategic Minerals Corporation NL (1988) 81 ALR 183 at 189, and also per Brereton J in Honest Remark Pty Ltd v Allstate Exploration NL [2006] NSWSC 735; 234 ALR 765 at [5]-[6].
I am conscious of the degree of caution required in exercising the power of the Court to summarily dismiss a claim; see McColley v Commonwealth of Australia [2014] ACTCA 21 at [31]-[32] and [34]. However, I am satisfied that on the facts as alleged in the SoC and the evidence which has been admitted on the application in proceeding, the plaintiff’s claim for injunctive and declaratory relief against the Territory (and the PLA) is “clearly untenable”.
Conclusion
In relation to the claim against GGI I have found that the plaintiff does have a proper basis for asserting a scheme of development, which, if established, could lead to orders for injunctive and declaratory relief. However, I have concluded that the current SoC does not adequately plead that case. Rather than permitting piecemeal repairs to the current pleading I propose to strike out the whole of the SoC as against GGI and grant leave for the plaintiff to replead her cause of action against the second defendant.
In relation to the claim against the Territory, I have concluded that there is no proper basis for asserting a scheme of development against it, and that there is no proper basis for seeking injunctive or declaratory relief at this stage in relation to any asserted derogation from grant. I therefore propose to strike out the SoC as against the Territory, and to dismiss the proceeding against it.
In relation to costs, subject to any applications which might be made by any of the parties, I see the appropriate orders to be that the plaintiff should bear GGI in costs of the application in proceeding, but that recovery of those costs should await the completion of the litigation. The plaintiff should pay the Territory’s costs of the application in proceeding and of the proceeding.
Orders
The orders of the court are:
(1) The statement of claim dated 20 June 2019 is struck out.
(2) The proceeding against the first defendant is dismissed.
(3) The plaintiff has leave to replead her statement of claim against the second defendant, such pleading to be filed and served within 28 days from the date of this order.
(4) The plaintiff pay the first defendant’s costs of the application in proceeding dated 26 August 2019, and of the proceeding.
(5) The plaintiff pay the second defendant’s costs of the application in proceeding dated 23 August 2019.
(6) The assessment and recovery of the costs referred to in order (5) be stayed until the completion of the litigation.
(7) Orders (4), (5) and (6) be stayed for 14 days.
(8) The parties have liberty to relist the matter in relation to orders (4), (5) and (6) on 2 days notice.
| I certify that the preceding one hundred and seven [107] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Crowe. Associate: Date: |
Attachment A – Statement of Claim
The plaintiff claims:
A declaration that the second defendant using, or purporting to be able to use, Block 14 Section 86 Nicholls for any purpose other than
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 of fairways and putting greens
would be contrary to the scheme of development constituted by the Harcourt Hill Estate.
An order restraining the second defendant, by itself or its servants or agents, from using, asserting an entitlement to use, announcing intention to use or seeking permission to use Block 14 Section 86 Nicholls for any purpose other than
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 of fairways and putting greens
Further, or in the alternative to Order 1, a declaration that execution by the Executive of a variation of the Crown lease entered in Register Book Vol 2157 Fol 38 in order to permit the use of Block 14 Section 86 Division of Nicholls and Block 11 Section 88 Division of Nicholls for a purpose other than
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 of fairways and putting greens
would derogate from the grant by the Executive to the plaintiff of the Crown lease entered in Register Book Vol 1601 Fol 43 over Block 34 Section 123 Nicholls.
An order restraining the first defendant from executing a variation of the Crown lease entered in Register Book Vol 2157 Fol 38 so as to permit the use of Block 14 Section 86 Division of Nicholls and Block 11 Section 88 Division of Nicholls for a purpose other than
an outdoor recreation facility that must consist of a golf course with grassed greens and a minimum of eighteen (I8) holes that may include practice of fairways and putting greens
Such other declarations or orders as the court considers appropriate.
Costs.
Details of the claim are as follows:
At all material times:
a.the land being Block 9 of Section 1 Division of Nicholls in the Australian Capital Territory and each further block created by subdivision of Block 9 was designated as Territory Land under section 28 of the Australian Capital Territory (Planning and Management) Act 1988 (Cth) ("PLM Act");
b.The Australian Capital Territory ("the Territory") is a body politic established under section 7 of the Australian Capital Territory (Self-Government) Act 1998 (Cth);
c.The Australian Capital Territory Executive established by section 36 of the Australian Capital Territory (Self-Government) Act 1998 (Cth) ("Executive") had responsibility under section 29 of the PLM Act to manage Territory Land and to grant, dispose of, acquire, hold and administer leasehold estates in Territory Land on behalf of the Commonwealth;
d.The Planning and Land Authority was a body corporate established by section 10 of the Land Planning and Development Act 1991 and exercised its functions for the Territory;
e.The Territory was liable for acts done in the performance of its functions pursuant to section 29 of the PLM Act;
f.Money payable to the Commonwealth in respect of Territory Land was payable to the Territory pursuant to section 31 of the PLM Act;
g.Harcourt Hill Pty Ltd was wholly owned and controlled by the participants from time to time under the Joint Venture Agreement;
h.Gungahlin Golf Investments Pty Ltd was wholly owned and controlled by the Konstantinou family and was part of the Konstantinou Group of companies.
Joint Venture Agreement
In 1993 the Territory entered into a joint venture agreement between itself and Cygnet Corporation Pty Ltd as participants, and Harcourt Hill Pty Ltd as their nominee for the purpose of the development of the Harcourt Hill Estate (“the joint venture”) by:
a.acquiring a holding lease over land to be granted by the Territory on behalf of the Commonwealth;
b.carrying out works including developing the land as residential land, a golf course, a country club and a hotel in accordance with a Deed of Agreement between the Executive and Harcourt Hill Pty Ltd (“Deed of Agreement”); and
c.selling the residential land, the golf course and country club, and the hotel site, and granting leases over the land sold.
Particulars
A. Joint venture agreement between The Australian Capital Territory, Cygnet Pty Ltd and Harcourt Hill Pty Ltd dated 3 September 1993 [clause 2].
The Joint Venture Agreement contained terms whereby
a.the development of the Estate was to be undertaken by Harcourt Hill Pty Ltd, a corporation jointly owned and controlled by the participants [clause 7]; and
b.the participants would each be entitled to fifty percent (50%) of the profits of the joint-venture [clause 11.4].
By the Deed of Agreement the Executive, and Harcourt Hill Pty Ltd as developer, agreed
a.that the developer would submit to the Territory for approval plans for the implementation of the Estate;
b.that the development was to be carried out to meet standards and requirements as set out in the Deed of Agreement;
c.that the development was to be carried out within the times specified in the Deed of Agreement;
d.that the development works to be carried out [clause 4.1] were to include
i.the design, construction and commissioning of all infrastructure necessary for residential housing, an international championship standard golf course, driving range, practice holes and country club as specified
ii.provision for facilities ancillary to the golf course including a hotel and recreational facilities and
iii.all associated landscaping;
e.that the development of the Estate was to centre on the golf course and country club as its major attraction [A 2.5.2];
f.that the landscaping of the golf course was the major open space within the Estate and so must be of a high quality and consistent with an approved landscape master plan for the total site, and designed to, inter alia, satisfy encircling Estate needs for views, safety and solar access;
g.that the golf course and country club was to be completed within 24 months;
h.that the residential development was to be conducted in stages, with individual lease development to be undertaken to a high standard as prescribed;
i.that the Executive would grant a holding lease over the land for the Estate and subsequent leases as land was subdivided;
j.that Harcourt Hill Pty Ltd was to pay to the Executive a premium for the land being a minimum of $22,721,500 payable on a per dwelling unit basis with the amount payable per unit being 18% of the proposed retail sale price of the land for each unit for not less than 1567 units and extending to all units developed in excess of 1567 [part 7] with an adjustment for additional premium to cover any shortfall in units.
Particulars
A. Deed of Agreement between Harcourt Hill Pty Ltd and the Executive which is Attachment A to the holding lease.
In 1997 the Joint Venture Agreement was amended to provide, inter alia, for the golf course lease to be handed back to the Territory.
Particulars
A. Joint Venture Amendment Agreement dated 1997.
Development
The Executive granted to Harcourt Hill Pty Ltd
a.a holding lease over Block 9, and in due course after subdivision of Block 9,
b.further leases
i.in respect of residential land, for residential purposes ("residential leases"), and
ii.in respect of the golf course land, for the purpose of a golf course and country club (“golf course lease").
Pursuant to the Deed of Agreement Harcourt Hill Pty Ltd commenced and completed the golf course works and commenced work on the residential land and prepared stages for sale.
The Golf Course
On completion of the golf course works, Harcourt Hill Pty Ltd transferred the golf course lease to Gold Creek Country Club Pty Ltd, a corporation wholly owned and controlled by Harcourt Hill Pty Ltd.
In about 1997, Harcourt Hill Pty Ltd transferred sole control of Gold Creek Country Club Pty Ltd to the Territory which then assumed full responsibility for the golf course and country club.
10.In 2006 the Territory granted a lease for 99 years over the golf course land to Gungahlin Golf Investments Pty Ltd in consideration of the payment of the sum of $2,750,000.
11.At the time it accepted the lease granted by the Territory, Gungahlin Golf Investments Pty Ltd:
a.knew that the golf course land had been developed as part of the integrated Harcourt Hill Estate;
b.knew, or ought to have known, that the continued use of the golf course land in its entirety as a golf course was integral to the residential amenity which characterised the Harcourt Hill Estate;
c.knew, or ought to have known, that in furtherance of that amenity the purchasers from the Territory of residential land in the Harcourt Hill Estate had each covenanted with the Territory to build and develop the land to a standard specified by the Territory; and
d.covenanted with the Territory to use the golf course land
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 of fairways and putting greens.
12.In 2014, Gungahlin Golf Investments Pty Ltd surrendered the golf course lease to the Territory and was granted a further lease, in substitution, for the same purpose and for the same land with the exception of Block 11 Section 86 Nicholls, and thereafter continued to use the land trading as “Gold Creek Country Club”.
Marketing and Sale of Residential Blocks
13.From about 1994 Harcourt Hill Pty Ltd commenced, and continued in following years, to disseminate material to promote 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, using expressions including
a.“an integrated and premier resort development”
b.“residential and resort development present[ing] 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.“outstanding views - some with 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 nongolfers, 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 ACT … 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”
(“the promotional material”)
Plaintiff's Purchase
14.The plaintiff was aware:
a.of the promotional material;
b.that the Harcourt Hill Estate was a joint venture in which the Territory was a participant;
c.That each residential purchaser in the Estate was required to accept obligations of development requirements and restrictions; and
d.that the Territory had granted a lease for the purpose of a golf course, and that the golf course had been completed and was operational and was under the full control of the Territory.
15.In July 2001 the plaintiff entered into a contract with Harcourt Hill Pty Ltd for the purchase of the Crown lease over Block 34 Section 123 Nicholls, having an area of 1195 m2 with immediate frontage to the golf course, for the sum of $193,000 and in August 2001 accepted a transfer of the Crown lease subject to restrictive development and building covenants affecting all other parcels of land, being residential blocks in the Estate.
16.Each other purchaser of residential land in the Estate was required to accept a transfer of their lease subject to restrictive development and building covenants reciprocal to those accepted by the plaintiff, and did so accept.
17.The plaintiff entered into the purchase contract and accepted the Crown lease in the expectation that she, and her family, would enjoy the leased land with an amenity enhanced by the proximity of the golf course and the high standard of residential development required by the Deed of Agreement.
18.The plaintiff complied with the lease building and development covenants and constructed a four bedroom dwelling of approximately 470 m2, to plans approved by Harcourt Hill Pty Ltd, at a cost of over $800,000.
Proposed Golf Course Redevelopment
19.In April 2018 the Konstantinou Group, as owners of the Gold Creek Country Club announced:
... 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... while the redesign and construction of the new course will not occur for at least three years, when constructed it will leave 49 ha of the existing course (currently holes 10-18) available for alternate uses... [Including] retail areas... housing.
(“the announcement”)
20.The Konstantinou Group thereafter pursued a public campaign calculated to facilitate
a.variation of the Territory Plan to permit the golf course land to be used for purposes other than as a golf course; and
b.variation of the golf course lease to permit the golf course land to be used for purposes other than as a golf course.
21.If the intentions expressed in the announcement come into effect the residential amenity of land in the proximity of the golf course and in particular land with frontage onto the golf course will be materially diminished.
22.The land leased to the plaintiff by the Territory fronts on to that part of the golf course identified in the announcement as intended for alternative uses.
23.The announcement and subsequent campaign have had a detrimental effect on the market value of Crown leases in the Harcourt Hill Estate.
Particulars
A. Since April 2018, the Crown leases of Blocks 1, 13 and 15 of Section 123 and Block 9 of Section 154, each being land fronting onto the golf course land, have been placed on the market for sale. Each of the leases has remained unsold because of the lack of buyer interest, other than at prices substantially below the previously prevailing market value.
24.By reason that
a.the Territory through the joint venture established the Harcourt Hill Estate consisting of the residential land and the golf course land with each of the blocks of land comprising the Estate subject to individual covenants which were calculated to ensure a residential Estate whose amenity was enhanced by proximity to the golf course and a high standard of development;
b.the Territory intended the covenants to be for the benefit of all blocks in the Estate for which it granted leases;
c.the plaintiff (and each other purchaser to whom the Territory granted a residential lease) and Harcourt Hill Pty Ltd to whom the Territory granted the golf course lease understood that the covenants were to enure for the benefit of the other blocks in the Estate; and
d.Gungahlin Golf Investments Pty Ltd, as purchaser from the Territory, knew that its covenant to use the golf course land as a golf course was for the benefit of holders of residential leases
the Harcourt Hill Estate is, in equity, a scheme of development (or common building scheme) such that the second defendant (Gungahlin Golf Investments Pty Ltd) has an obligation to the plaintiff and to each other lessee of residential land in the Estate, imposed by the scheme of development, to use the golf course land as it has covenanted to do.
25.Further, by reason of the matters set out in paragraph 24, the variation by the Territory of the lease granted to Gungahlin Golf Investments Pty Ltd to permit the golf course land to be used for a purpose other than that presently stipulated would
a.be contrary to the scheme of development, and
b.derogate from the grant by the Territory of the lease to the plaintiff.
26.Further, and in the alternative to paragraph 24, by reason of the matters set out in paragraphs 24 and 25, use of the golf course land by Gungahlin Golf Investments Pty Ltd for any purpose other than that presently stipulated would derogate from the grant by the Territory of the lease over Block 34 Section 123 Nicholls to the plaintiff.
Attachment B – Proposed Paragraphs 24-27 of the Statement of Claim
By reason that
a. the Territory through the joint venture established the Harcourt Hill Estate consisting of the residential land and the golf course land with each of the blocks of land comprising the Estate subject to individual covenants which were calculated to ensure a residential component of the Estate whose amenity was enhanced by proximity to the golf course and a high standard of development;
b.the Territory intended the covenants to be for the benefit of all blocks in the Estate for which it granted leases; and
c.the plaintiff (and each other purchaser to whom the Territory granted a residential lease) and Harcourt Hill Pty Ltd to whom the Territory granted the golf course lease understood that the covenants were to enure for the benefit of the other blocks in the Estate;
d.Gungahlin Golf investments Pty Ltd, as purchaser from the Territory, knew, that its covenant to use the golf course land as a golf course was for the benefit of holders of residential leases
the Harcourt Hill Estate is, in equity, a scheme of development (or common building scheme) such that
the second defendant (Gungahlin Golf Investments Pty Limited) has an obligation to the plaintiff and to each other lessee of residential land in the estate, imposed by the scheme of development, to use the golf course land as it has covenanted to do.e.the first defendant at all material times had, and still has, an obligation to grant leases of land to which the scheme applied on terms and in a manner which ensured that the grantee was aware of and accepted its obligations under the scheme (“the notice obligation”), and a further obligation not to permit variations of the scheme; and
f.if the second defendant (Gungahlin Golf Investments Pty Ltd), as purchaser from the Territory, knew the matters alleged in subparagraphs 11 a, b, and c. and that its covenant to use the golf course land as a golf course was for the benefit of holders of residential leases, it has an obligation to the plaintiff and to each other lessee of residential land in the estate, imposed by the scheme of development, to use the golf course land as it has covenanted to do.
By reason of the matters set out in paragraph 24 if, in the events that happened, the second defendant did not have knowledge as alleged in subparagraph 24 f., that lack of knowledge was a result of the failure of the first defendant to meet the notice obligation, which failure was
a.contrary to the scheme of development, and
b.in derogation from the grant by the Territory of the lease to the plaintiff.
Further, by reason of the matters set out in paragraph 24 and 25, the variation by the Territory of the lease granted to Gungahlin Golf investments Pty Ltd to permit the golf course land to be used for a purpose other than that presently stipulated would
a.be contrary to the scheme of development, and
b.derogate from the grant by the Territory of the lease to the plaintiff.
Further,
and in the alternative to paragraph 24, by reason of the matters set out in paragraph 24 and 25, use of the golf course land by Gungahlin Golf Investments Pty Ltd for any purpose other than that presently stipulated would
a.be contrary to the scheme of development, and
b.derogate from the grant by the Territory of the lease over Block 34 Section 123 Nicholls to the plaintiff.
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