Jeremy Burnett and Wilhelmina Jacoba Burnett v Alan Stewart Cane

[2000] QSC 17

IN THE SUPREME COURT
OF QUEENSLAND
CAIRNS  Writ No. 114 of  1989
Before the Hon. Justice Jones
[Jeremy Burnett and Wilhelmina Jacoba Burnett v Alan Stewart Cane]

BETWEEN:     JEREMY BURNETT and

WILHELMINA JACOBA BURNETT

Plaintiff
AND:             ALAN STEWART CANE
  Defendant

JONES J

Judgment delivered 16^th February 2000

On the preliminary question, it is found that there was no agreement between the parties which imposed an obligation on the defendant as alleged in the Statement of Claim and accordingly there can be no breach of contract.

Catchwords:  CONTRACT - BREACH - Whether contract existed - Documentary evidence only - Defendant was a lessee from the Crown - Defendant executed agreement to sub-lease to the plaintiff an area of the holding - Ministerial consent was required - Clause in agreement requiring the defendant to join with the plaintiff in the application was deleted - no agreement - no breach

Counsel:Mr K.T. McCreanor for the Plaintiff

Mr M. Sumner-Potts for the Defendant

Solicitors:Thomas Stevens & Co. for the Plaintiff

B.W. Johnston & Associates for the Defendant

Hearing date:  10^th February, 2000

IN THE SUPREME COURT

OF QUEENSLAND

CAIRNS  Writ No. 114 of  1989

BETWEEN:     JEREMY BURNETT and

WILHELMINA JACOBA BURNETT

AND:               ALAN STEWART CANE

REASONS FOR JUDGMENT

BEFORE THE HONOURABLE JUSTICE JONES

DELIVERED THE 16^th DAY OF FEBRUARY, 2000

1. In this matter I am asked to determine only the question of whether there has been, on the part of the defendant a breach of the contract referred to in the amended statement of claim.  The defendant denies that such a contract existed. The parties have agreed that the only evidence to be adduced would be in the form of documents which touch upon the question to be tried.  There is no challenge to the accuracy of the documents and I am asked to accept their contents as factually correct. Presumably I am allowed to draw inferences from the circumstances in which the documents came into being and from the contents of the correspondence as described.  I therefore directed that evidence would be received in that form.[1]

   [1] See Rule 367.

History

1. From 1 January 1957 the defendant was a lessee from the Crown of Pastoral Holding 43/4190 covering an area of 1396.166 square kilometres (hereinafter “the holding”).  On 27 April, 1987 the Minister for Lands (“the minister”) granted an extension of the original lease so that its term is to expire on 31 December, 2009.  The defendant sold his interest in the lease to Antilia Pty Ltd sometime in 1988.

2. On 26 October, 1984 the defendant executed an agreement in writing to sub-lease to the plaintiff an area of 129.25 square kilometres of the holding, subject to the consent of the minister as was required by s.274 of The Lands Act 1962-1984 (“the Act”).  The effect of the section is to make unlawful the subletting of any Crown lands without ministerial consent.  

3. Such consent required compliance with subsection (2) which is in the following terms:-

   “(2)(a)Save as prescribed by subsection (1) of this section, a lessee of a holding may, subject to paragraphs (b) and (c) of this subsection, with the prior approval in writing of the Minister, sublet the whole or any part of his holding.

   (b)The sublessee shall be a person who is qualified, according to the class or mode of a class of tenure of the holding concerned, to become the lessee of the holding or of the part thereof comprised in the sublease.

   (c)Application for the Minister’s approval to sublease shall be made by or on behalf of the lessee not later than three months after the date of the agreement to enter into a sublease and shall be accompanied by a draft of the proposed sublease.

   (d)The Minister in his discretion may approve the proposed sublease unconditionally or subject to such conditions and modifications as he deems fit or he may refuse to approve thereof.

   (e)As soon as practicable after the receipt of the Minister’s approval a sublease agreement in accordance with such approval shall be lodged in triplicate in the Department for registration.”

4. The sub-lease document as executed by the parties contained a provision in the following terms:-

   “2(c)To join with the Lessee in an application to the Department of Lands for the alienation of the demised premises from the said pastural Lease of which the demised premises form part in order to obtain a lease of the demised premises in the name of the Lessee and to sign all documents, do all things and give all consents as are required by the Lessee or the Department of Lands forthwith upon being requested by the lessee or the Department of Lands so to do sign or consent in order to facilitate the said alienation of the demised premises.”

5. The proposed sub-lease was presented to the Land Administration Commission (“LAC”), a statutory body which had the task of administering Crown lands on the minister’s behalf. Though duly stamped on 3 January 1985 the document was received by LAC as a draft agreement [2]. As a condition of approval of the sub-lease the LAC directed amendments to be made to the terms of the documents in a number of respects.

   [2]  Letter from LAC to plaintiff’s solicitors 25 June 85- ex.1 doc.3

6. Relevantly to this case, the LAC required clause 2(c) to be deleted as well as the words in the preamble which sought to extend the sub-lease “for the whole of the term of any renewed lease”. The sub-lease therefore was for a finite term to end on 30 December 1989. The reasons for these deletions were communicated to the plaintiff’s solicitors by a letter of 25 June 1985 [3].

   [3]  Ex. 1 doc.3

7. The deletion of clause 2(c) was obviously accepted by the parties and the sub-lease was duly registered on 12 March 1986 [4].

   [4]  See ex.2

8. The plaintiffs commenced to make improvements on the land of the sub-lease and to use the land for its intended purpose.

9. On 15 July 1985 in apparent concern to gain some greater security of tenure the plaintiff, through his solicitors, wrote to the defendants a letter which contained the following:-

   “You will appreciate that it was the intention of both parties that the sub-lease continue for the term of any renewed lease between your client and the Land Administration Commission upon the expiration of the existing lease on 31 December 1989.  Obviously as the Land Administration Commission would not allow a clause to be included in the sub-lease giving our client a sub-lease for an unspecified term the best way to protect our client’s interest would be to draw up a further agreement between our client and your client to make provision that in the event that your client’s lease is renewed by the Land Administration Commission after 1989 he  will grant our client a further sub-lease in similar terms to that existing.” [5]

That letter enclosed a draft agreement to give effect to the plaintiff’s intention.

[5]  See ex. 1 doc.4

1. That agreement was duly executed by the parties on 7 October, 1985, it provided –

   “...the proposed lessor will immediately upon being required to do so by the proposed lessee enter into a further sub-lease with the proposed lessee in the same terms and subject to the same conditions as the existing sub-lease”.

2. The next event of interest occurred on 13 May 1986.  At this time the plaintiffs were aware that the defendant was attempting to sell his interest in the lease.  The plaintiffs thereupon made a request to the LAC for the “alienation of the area comprising the sub-lease from the area comprising the pastoral lease”.  This terminology was somewhat inappropriate for what was intended by the request viz - the surrender of that part of the holding by the defendant and the granting to the plaintiffs directly from the Crown a lease over the area.  The term “alienation” where it appears in correspondence is understood in that sense.

3. On the same date the plaintiffs sought from the defendant a variation to the October agreement to the effect that the defendant would obtain from any transferee of the holding an agreement to renew the sub-lease with the plaintiffs at the expiration of the present term.

4. The defendant, in September 1986, indicated his agreement to the excision of the sub-lease area from his lease and its transfer to the plaintiffs.

5. Before any action was taken on that project, the term of the Crown lease was extended so as to expire on 31 December 2009.  Notice to this effect was given on 27 April 1987.[6]

   [6]  Ex. 1 doc 13

6. On 7 July 1987 the LAC indicated to the defendant that, provided he was prepared to surrender his interest in the sub-lease area, the department would seek executive authority to grant a special lease over that area to the plaintiffs. [7]

   [7]  See ex.1 doc. 14

7. On 21 August 1987 the defendant, through his solicitor, advised LAC that he was agreeable to that proposal. However between that date and 14 September 1987 the defendant sought further clarification of the proposal to which he had signified his consent. As a consequence the LAC decided to take no further action on the surrendered proposal until further advice was received from the defendant [8].

   [8]  Letter of 14 September 1987 – Ex. 1 doc.17

8. The defendant did not confirm his request to proceed with the surrender proposal but instead wrote to the plaintiffs’ solicitors on 16 November 1987 advising that he was no longer interested in the surrender proposals. [9]

   [9]  Letter to Pescott Reaston & Associates ex.1 doc.20

9. On 5 April 1998, after being made aware that approval had been sought for the transfer of the lease to a company Antilia Pty Ltd., the plaintiffs sought the LAC’s acknowledgment of their client having an interest in the head lease by reason of the defendant’s signing a surrender document or alternatively, that the plaintiffs had a right to have a renewal of the sub-lease upon its expiration pursuant to the agreement of 7 October 1985. [10]  The LAC rejected both claims. 

   [10]  Letter to LAC 5 April 1998 – ex. 1 doc. 21

10. The LAC advised that what was relevant to both the plaintiffs’ quest to achieve a surrender of part of the head lease and the granting of a Special Lease over the sub-lease area was a formal instrument of surrender.  This was required to be executed by the defendant and endorsed with the consent of the mortgagee.  But whilst approval in principle had been given to seek executive authority for the grant of the new lease, such a grant was subject to there being no objection from the Forestry Department, National Parks and Wildlife Service, Mines Department or Cook Shire Council. [11]  This letter also contained the information that the defendant’s solicitors had requested that the LAC make no determination on the matter of surrender.

    [11]  LAC letter 21 April 1998 – ex.1 doc.22

11. In the upshot, the defendant’s interest in the lease was sold without the defendant taking any further step in respect of surrender from his lease of the sub-lease area.

The Issue

1. The case for the plaintiffs is that the defendant was contractually bound to join with the plaintiffs for “the alienation” of the sub-lease area in order that the plaintiffs might obtain a lease thereof in their names.  This alleged obligation required the defendant to sign all documents to do all things and give all consents as are required to achieve this result.

2. The essential question to be determined is whether, after clause 2(c) was deleted, there remained any agreement between the parties that they would be bound to act in accordance with the terms of that clause.

3. I emphasise that point because it is conceded by the plaintiffs’ counsel that there was no subsequent document or conversation which could be relied upon as expressing an agreement to act in accordance with the deleted terms. The amended statement of claim alleges in paragraph 3B that there continued to exist independently of the sub-lease an agreement in terms of the deleted clause 2(c).

4. In my view in identifying the new agreement there can be no reliance upon the terms of the deleted clause in the sub-lease agreement.  The contract by law could have effectiveness only upon ministerial approval.  Until that event it was unlawful by reason of its offending s.274(1) of the Act.

5. The contract which became enforceable was the one in the terms of the sub-lease as finally registered.  This prima facie set out the complete terms of the agreement.  It did not include the terms of clause 2(c).

6. It may not make much sense to speak of offer and acceptance in the context of the relationship between the parties, but the plaintiffs must show clearly circumstances whereby the plaintiffs became contractually bound.  The course of conduct disclosed in the narrative above does not create that impression.

7. After the clause 2(c) was deleted the first step in the history of dealings between the parties was to reach a new agreement.  This was to provide for something different – the granting of a further sub-lease after renewal  of the head lease.  That agreement of 7 October 1985 was probably enforceable had a request for the sub-lease been denied but that contract is not the subject of these proceedings.

8. The re-awakening of an interest in having the defendant surrender the sub-lease area did not occur until May 1986 amidst rumours that the lease was to be sold.  The letter to the defendant’s solicitors is most informative.[12]  Through it, the plaintiffs assert that the October 1985 agreement was effective and sought to extend the scope of that agreement by requiring the defendant to secure from any purchasers the lease agreement to its terms.

   [12]  Ex. 1 doc. 8

9. Further, the letter informs of the plaintiffs’ approach to the LAC inquiring of the formalities to bring about a surrender of the sub-lease area.  The letter makes no demand of the defendant to join in that approach.

10. The next document of interest is the plaintiffs’ solicitor’s diary note of 18 August 1987 [13] - “Cane is prepared to consent”.  Both in the terms of this note and in the defendant’s ensuing letter of 21 August 1987 [14], the sense I gain is that the defendant’s consent is given gratuitously rather than as a matter of obligation.  This is confirmed by the fact that when the defendant wrote prior to 14 September 1987 seeking clarification of the LAC requirements and subsequently when he withdrew his consent to the surrender there was no immediate response from the plaintiffs to enforce any obligation on the defendant to pursue the course of surrendering that part of his lease.  The plaintiffs’ letter to LAC of 5 April 1988 [15] made no such claim and this action was not commenced until 14 June 1989, some 3 years after the concern was first raised.

    [13]  Ex. 1 doc.15

    [14]  Ex.1 doc.16

    [15]  Ex. 1 doc.21

11. From this review of the facts it is difficult to accept the plaintiffs’ present assertion that there existed an enforceable obligation of the defendant to take the steps to surrender the lease when the plaintiffs took no action consistent with such a claim.

12. It does not require any review of judicial authority to conclude that in the absence of any evidence of offer and acceptance or any evidence of conduct from which one could infer the existence of an agreement, there was indeed no contract.

13. Although I have only been asked to determine this issue it would seem to follow that if the plaintiffs fail on this question it disposes of the plaintiffs’ action.  If I am called upon to do so I will hear submissions on this aspect.

14. For the present, however, on the preliminary question I find that there was no agreement between the parties which imposed an obligation on the defendant as alleged in the Statement of Claim and accordingly there can be no breach of contract.