Lesvos Enterprises Pty Limited & Anor v Penrith Whitewater Stadium Limited & Anor

[2007] HCATrans 798

[2007] HCATrans 798

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S383 of 2007

B e t w e e n -

LESVOS ENTERPRISES PTY LIMITED

First Applicant

KOFFEE PTY LIMITED

Second Applicant

and

PENRITH WHITEWATER STADIUM LIMITED

First Respondent

PENRITH CITY COUNCIL

Second Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 DECEMBER 2007, AT 10.32 AM

Copyright in the High Court of Australia

MR A.W. STREET, SC:   May it please the Court, I appear for the applicants with my learned friend, MR D.C. PRICE.  (instructed by Andresakis & Associates)

MR M.S. JACOBS, QC:   May it please, your Honours, I appear together with my learned friend, MR P.J. BAMBAGIOTTI, for the respondents.  (instructed by Gadens Lawyers)

GLEESON CJ:   Yes, Mr Street.

MR STREET:   If your Honours please. Your Honours, we say in this case there are three important questions that arise:  first, under section 54A of the Conveyancing Act, second, in relation to part performance and, third, in relation to section 52 of the Trade Practices Act.  The question that arises in relation to section 54A, a provision that was intended, we say, consistent with what Justice Windeyer said in the pages we have referred to in our written submissions, to protect the owners of land or their interests is whether section 54A applies where neither respondent had an interest in land and where the nature of the proceedings were not to enforce the sale of land or the disposition of an interest in land.  The contract was not even capable of doing so when neither respondent held such an interest.

Your Honours, the question of importance arises in part from what appears at page 70 in the application book where the application book cites Horton v Jones.  The reasoning that the Court of Appeal picks up in saying that section 54A applies in the present circumstances picks up the same language as is picked up in Horton v Jones on page 70.  It picked up language, your Honours, which is quite significant, referring to:

agreements concerning covering or extending to lands –

Can I just hand up to your Honours if it is convenient – and I have some copies for my learned friends – the provisions ‑ ‑ ‑

GUMMOW J:   Just remind us what the facts were in Horton v Jones, Mr Street.

MR STREET:   Your Honours, in Horton v Jones the relevant fact that we seek to draw attention to is this.  It was the Statute of Frauds that was being relied upon, but the material matter that I want to draw to your Honours’ attention is this in answer to your Honour Justice Gummow, that in section IV the words “or concerning them” appear immediately after the operative words in relation to the work done by section IV.  Those words:

upon any Contract or Sale of Lands Tenements or Hereditaments or any Interest in or concerning them –

is language that is not in section 54A.  It is in those circumstances that we say that the observation in Horton v Jones simply has no application to 54A, which your Honours will see is on page AB 100.  If your Honours look at page 100, we have set out section 54A of the Conveyancing Act.  It does not include the words “or concerning them” and materially, we say, the action brought by the plaintiffs in this case was not one for contract:

for the sale or other disposition of land or any interest in land -

Neither respondent held such an interest.

GUMMOW J:   What was it?

MR STREET:   It was an agreement, your Honour, in essence intending to give the applicants a licence.  It was an agreement in that regard in respect of which neither respondent held any interest that could provide such a licence, and the cause of action brought was for breach of that agreement and damages for the wrongful repudiation of that agreement.  It was not seeking to enforce any interest in land.  Your Honours, in essence, we say that the reasoning then that the Court of Appeal adopted at page 72 in paragraphs 37 and 38 is, in essence, following and adopting that error in respect of a provision that used language involving “concerning them” and no such language is in 54A.  No such language is in any of the other provisions that we have set out on AB 100 to 101 other than, your Honours, in Western Australia, which picks up section IV. 

Your Honours, the second question, if I can turn to it, that we seek to address is the issue that arises in respect of the equity that arises from acts of part performance.  That there were acts of part performance in the present case is crystal clear and I think your Honours will have seen from the application book there is an observation by the trial judge that we have picked up which appears at page 115 at line 30 where the trial judge made an observation about, “The agreement was certainly part performed”.

GUMMOW J:   Now, what was the remedy being sought in this action?

MR STREET:   Your Honour, in this action the remedy being sought was damages for the common law action for wrongful repudiation, but what we say is this.  The equity that arises from the acts of part performance does not disappear simply because specific performance is not available.  We say properly understood what his Honour Justice Dixon said in JC Williamson v Lukey and Mulholland supports the notion that injunctive relief might be available.  In this case, the acts of part performance, we say, do support injunctive relief to preclude the respondents from being able to rely on section 54A.

There are two important aspects that we say support that.  First, the underlying policy in respect of the equity arising from acts of part performance is to prevent the use of the statute as a fraud.  We say that equity does not disappear simply because specific performance is not available.  Secondly, your Honours, we say that when one looks at section 54A – and this is a matter of considerable importance – it bars the remedy, not the cause of action, so that the work done by section 54A is not to extinguish the cause of action.  It is simply to preclude a remedy.

That equity can enjoin the respondents from reliance upon section 54 involves no violation of any fusion principle, nor any inappropriate use of equitable relief.  It simply means that equity given the joint administration enjoins the respondent from reliance upon 54A and the appellant’s right to damages on their common law cause of action is recoverable. 

Your Honours, in that regard we say that what was said by Justice Dixon in JC Williamson v Lukey and Mulholland continued beyond the page ‑ it was identified at 297 on to 298 – and clearly supported the notion of injunctive relief as did, in our respectful submission, the passage that was picked up in part by Justice Evatt.  It was Justice Starke who suggested in a bald sentence that no remedy would be available by way of damages arising from part performance.  In our respectful submission, his Honour was not seeking to analyse there the operation of equity that might arise in circumstances where there are such acts of part performance. 

Your Honours, could I just add in that regard, the pleading asserted facts referable to the agreement, both under the Trade Practices Act as an assertion of agreement and in respect of the agreement itself, that meant there were facts of part performance within the pleading itself.  The time at which this issue arose, as your Honours will have seen, was at the end of the trial.  There was no suggestion before the trial judge that the submission of part performance as being available to provide – a preclusion was not available.

GUMMOW J:   Now, the first point you want to raise, though it seems to have emerged late in the day from what I see at page 67, would turn upon the particular construction of this arrangement, would it not?

MR STREET:   No, your Honour.

GUMMOW J:   Whether or not it is a Radaich v Smith arrangement.

MR STREET:   Your Honour, it may be that the facts of this case clearly throw up the issue, but, your Honour, the issue of construction that we say arises from this as general application ‑ ‑ ‑

GUMMOW J:   No.  It only arises on a factual substrate, and the factual substrate depends on a particular view being taken of what this agreement means, and it was given a particular construction in the Court of Appeal.

MR STREET:   Your Honour, that may be one approach ‑ ‑ ‑

GUMMOW J:   That at the moment does not shriek out as a special leave ground.  Now, the second ground seems to be in the face of a substantial body of authority and general understanding ever since most of us have been around.

MR STREET:   Your Honour, we say properly understood that authority does not, in fact, when you look at what Justice Dixon said, support the proposition that one cannot obtain injunctive relief ‑ ‑ ‑

GUMMOW J:   It started a long time before Justice Dixon.

MR STREET:   But, your Honour, to the extent relevant, before Justice Dixon the notion of an antecedent junction or the like to preclude someone relying upon statutory provision or to bring some particular claim existed.  The notion that the equity simply dissipates because specific performance is no longer available has such a manifest unfairness to indicate that there must be a flaw in the reasoning that jointly administered equity cannot enjoin and preclude reliance upon 54A where there are appropriate acts of part performance, as in this case, over $150,000 spent in fit out, entering into occupation, paying rent or licence fee, however one describes it.  So to your Honour we say it is an appropriate case in which an equity does arise.  It is not dissipated, because the respondents wrongfully repudiate the agreement. 

That precludes in the circumstances where it was accepted the ability to seek specific performance.  It does not preclude the ability to seek injunctive relief in the joint administration of equity in common law.  It does not violate any notion of suggesting that it is part performance that sustains the damages.  It is simply part performance precludes reliance on the remedy which would otherwise have been – or at least the barring of the remedy worked by 54A.

Your Honours, can I turn to the third point, which arises under the Trade Practices Act?  In that regard, what the court in essence did was to hold that there was no representation in the context of what was a clear finding by the trial judge at AB 27, paragraph 78, that there was representation of agreement.  What their Honours in the Court of Appeal appear to have done is treat a conclusion of a combination of fact or law as not being capable of giving rise to misleading and deceptive conduct under

section 52.  That involves an important question.  A conclusion of fact and law is probably involved in a number of areas, not just agreement; status, capacity, title, but in this case there was a representation as to agreement.  That it was relied upon is manifest from the findings of the trial judge. 

The reasoning of the Court of Appeal, as appears in paragraphs 58 and 59 on pages 78 to 79, that the unenforceability of the agreement, because section 54A takes it outside misleading conduct, is, in our respectful submission, fundamentally flawed.  The representation of agreement led my clients into error.  In reliance upon that they incurred substantial expenditure and fit out costs, entering into occupation, developing a business.  They suffered loss because of the misleading conduct of the respondents in the present case. 

Your Honours, we respectfully submit that the three questions I have identified are all questions of general importance and ones which would be appropriate for a grant of special leave on the ground of general importance, but if that is not embraced, we do say that it is an appropriate case for visitorial jurisdiction, because in this case it is clear that these café proprietors expended substantial funds in pursuing the fit out of the café, incurred substantial steps in leading their employment to pursue this café opportunity.  

The consequence in respect of the matter of principle in the case that the applicants seek to advance as well as the costs consequences, are such that the Court should exercise its visitorial jurisdiction on grounds of substantial injustice.  If the Court pleases.

GLEESON CJ:   Thank you, Mr Street.  We do not need to hear you, Mr Jacobs.

The first ground on which the applicant relies turns upon the construction of the terms of the arrangement in question.  The second ground challenges a well and long‑settled line of authority respecting the doctrine of part performance and the third ground raises no question of principle respecting the operation of section 52 of the Trade Practices Act.

In the circumstances we think that the application for special leave to appeal should be dismissed with costs and we make that order.

MR STREET:   If the Court pleases.

MR JACOBS:   If the Court pleases.

GLEESON CJ:   We will adjourn for a short time to reconstitute.

AT 10.46 AM THE MATTER WAS CONCLUDED