O'Callaghan & Ors. v Cavanagh-Lang & Anor No. DCCIV-98-475

O’CALLAGHAN & ORS. V CAVANAGH-LANG & ANOR.
[2000] SADC 141

Judge D. Bright
Civil

The plaintiff carries on business as a surveyor, with expertise in the preparation and processing of plans for subdivision of land. The first defendant was the wife of Mr. Cavanagh-Lang, now deceased, whose estate is the second defendant. As far back as 1965, Mr. Cavanagh-Lang owned land at Chandler’s Hill. It is a reasonable inference that, at all times, he had an intention to subdivide at least parts of the land into residential allotments, to be sold for profit. At that time he was married to his first wife, Diana. His financial obligations to Diana are not known to the parties to this case. However, a time came when he and Diana divorced. He transferred part of his land to her. The plaintiff was engaged by Mr. Cavanagh-Lang to effect this subdivision and did so.
Mr. Cavanagh-Lang remained the owner of land which he wished to further subdivide. The land posed certain problems because of its steepness. A major problem was that significant parts of the land were in the Hills Face Zone, in which zone subdivision into residential allotments of urban size was not permitted.
Work on a residential subdivision had commenced at least by April/June 1965. An account was rendered by the plaintiff in June 1965. There was further work and a further account was rendered in December 1965. More work was done in November/December 1967 and an account was rendered in January 1968. More was done in June/August 1974, leading to a further account in August 1974. More work was done in July/August 1977, leading to an account in September 1977.

An account of 29th November 1979 is in the following terms:-

Mr. R. Cavanagh-Lang,
C/- Peter Marker & Associates,
Solicitors,
106 Greenhill Road, 29th November, 1979
UNLEY S.A. 5061

J. 656  Re: Pt. Sec. 270 - Hd. Noarlunga - Happy Valley
  Hills Face Zone Enquiry
  Submission No. 67

To: Preliminary discussions and research,
  preparation of planning concepts and
  map and inquiry exhibits.
  Consultations with planning consultants
  and preparation of case.
  Presentation of case to Planning Inquiry
  Preliminary site inspection and Inquiry
  Inspection.
  Consultants’ fees..........say           $1,050.00
  Less previously paid  $1,000.00
  Balance  $     50.00
Inquiry determinations to be handed down
  at a future date.
With Compliments
  B.T. O’CALLAGHAN & ASSOCIATES

All of this work was paid for by Mr. Cavanagh-Lang.

In about February/March 1979, Mr. O’Callaghan met Mrs. Cavanagh-Lang for the one and only time that either can recall meeting the other. Someone, probably Mr. Cavanagh-Lang, invited Mr. O’Callaghan, Mrs. Cavanagh-Lang and Mr. P. Marker, solicitor, to lunch at, probably, the Sportsmen’s Club on Greenhill Road. Mrs. Cavanagh-Lang’s recall is that it was a hotel, but she does not claim to be sure. She remembers virtually nothing of what went on - and, as it was over 20 years ago, I am not surprised.
Mr. O’Callaghan recalls that there was discussion about the potential to develop the land and the need to deal with an official inquiry into the Hills Face Zone. There was some talk about Mr. Cavanagh-Lang’s land being transferred to Mrs. Cavanagh-Lang. Equally unsurprisingly he has no recall of details. In particular, he has no recall of specific instructions that he was to do anything, though I imply that there was an expectation that work would follow. He does not claim to have been told (or, if he was, to remember) why the land was to be put into Mrs. Cavanagh-Lang’s name.
Mr. Marker recalls no more than that such a lunch occurred.
Within a few weeks Mr. Marker wrote the following letter:

B.T. O’Callaghan & Associates
Wakefield Chambers
47 Wakefield Street
ADELAIDE SA 5000

Attention Mr. B. T. O’Callaghan

Dear Sir,

RE OUR CLIENT L. R. CAVANAGH-LANG

PROPERTY AT HAPPY VALLEY - PART SECTION 270 C.T.3545 FOLIO 88

We refer to our recent telephone conversation in this matter and confirm that we are in the course of transferring the subject land from Mr. R. Cavanagh-Lang to his wife Mrs. L. R. Cavanagh-Lang.

We have instructions from Mrs. Cavanagh-Lang to request that you give consideration to the sub division of the subject land. We would therefore appreciate it if you could complete general enquiries in the matter and in particular we would appreciate your investigations and comments on the use of hills face zone land on the subject property.

We look forward to hearing from you.

Yours faithfully,
PETER MARKER & ASSOCIATES
(Signed)

The land transfer to Mrs. Cavanagh-Lang was signed on the 8th May 1978, but not lodged for registration until the 14th June, 1979. I have no explanation for the delay. The transfer records consideration of $37,000, but Mrs. Cavanagh-Lang denies ever making such a payment.
The plaintiff continued to deal with Mr. Cavanagh-Lang (with occasional contact with Mr. Marker) to prosecute the development. Mr. Cavanagh-Lang died in October 1996. Mr. O’Callaghan sent his first account since the end of 1979 on 7th October 1997, addressed to the estate of Mr. Cavanagh-Lang and to Mrs. Cavanagh-Lang, He sought payment of $35,595.70. It is agreed that he had performed work for which that was a reasonable charge.
The estate of Mr. Cavanagh-Lang appeared by counsel, but did not remain for the trial. It does not oppose the making of an order against it. However, the estate has no means to meet the account. The question is whether Mrs. Cavanagh-Lang is liable.
The plaintiff’s contention can be put very simply. First there was the lunch meeting. Mrs. Cavanagh-Lang was present. She was, or was to become the registered proprietor of the land. At the least, she did not dissent from suggestions that the land be subdivided and that the plaintiff do the necessary work. Then Mr. Marker wrote the letter I have set out, in particular, claiming to have instructions from Mrs. Cavanagh-Lang. Mr. Marker told me that, prior and subsequent to that letter he had been a friend of Mr. Cavanagh-Lang and of Mrs. Cavanagh-Lang. He had done odd bits of work for each of them, both jointly and individually. With regard to this matter, he had no recall of obtaining the instructions from Mrs. Cavanagh-Lang which he claimed in the letter. He no longer had a file or other documentation to assist. I think I am fair to paraphrase him as believing that, if he said he had instructions, he expected that would have been so.
All subsequent instructions came from Mr. Cavanagh-Lang. Over the years the signature of the registered proprietor was required on various documents. Mrs. Cavanagh-Lang signed those documents. Many letters and notes passed between Mr. Cavanagh-Lang and Mr. O’Callaghan over the years. Mr. O’Callaghan recorded various conversations. Clearly he took it for granted that Mrs. Cavanagh-Lang continued to be involved. He did not inquire on what basis. From time to time his notes refer to the land as “his” or “Ron’s”, but he claimed always to have regarded that as a loose shorthand and to have known he had to act in the best interests of Mrs. Cavanagh-Lang, whose land it really was.
On various occasions, he sought to make arrangements with Mr. Cavanagh-Lang for payment of his fees, but was always put off with promises of payment when the development was complete. At no time did he discuss payment with Mrs. Cavanagh-Lang.
It seems probable to me that Mr. Marker did have the instruction he said he had to request the plaintiff to perform the work requested in the letter of 28th March 1979. However, I repeat the request:
“that you give consideration to the sub division of the subject land. We therefore appreciate it if you could complete general enquiries in the matter and in particular we would appreciate your investigation and comments on the use of hills face zone land on the subject property.”
In my view, no one could possibly construe that as an instruction to apply and negotiate for all necessary consents, to prepare and survey full plans for subdivision and for all necessary works to lead to the issue of new titles for residential allotments. The request was obviously for preliminary consideration and advice.
That appears to me to be the work covered by the account of 29th November, 1979 to Mr. Cavanagh-Lang, and which was paid by him on 20th December, 1979. Note that the account was to Mr. Cavanagh-Lang and not to Mrs. or to both. It seems from Mr. Cavanagh-Lang’s letter of 20th December 1979 that work was complete, for the moment. It appears that there was a hiatus while the response to representations to the Hills Face Zone Inquiry were awaited.
On 5th August, 1980, Mr. Marker, again purporting to be in receipt of instructions from Mrs. Cavanagh-Lang, wrote to the Minister for Planning requesting an urgent decision. As to whether he had instructions, the same comments apply. In any event, his claim to represent her is not of contractual significance as between the 1st defendant and the plaintiff. He was not the person to whom the letter was directed.
But the delay suggests that little if anything was then being done by the plaintiff and that, for the moment, his work was complete. I am not able to conclude that any part of his next and last account was for work performed before, but not covered by the account of 29th November, 1979.
In my view, new instructions were required before the plaintiff could embark on the work for which it now sues.
I must say a little about Mrs. Cavanagh-Lang’s relationship with Mr. Cavanagh-Lang. She was born in 1946. She was educated to secondary school level. After school she became a ledger machinist. She obtained work for the Unilever company in Adelaide. She became secretary to Mr. Cavanagh-Lang. She was 21 and he was almost over 20 years older. He was then married to Diana. They divorced. Mrs. Cavanagh-Lang and he were married in 1973. They had a daughter in 1974.
In about 1979, it seems that Unilever decided not to maintain a full company office in Adelaide. It decided to market at least some of its products through a local agent. Mr. Cavanagh-Lang would become redundant. He suggested that Mrs. Cavanagh-Lang take on the agency. He would help. That was arranged. A business name “Cambridge Chemicals” was registered in her name.
The marriage was not always a happy one. Mrs. Cavanagh-Lang was and had long been the owner of a house, No. 42 Lynton avenue, Millswood. They lived there for a while. Later Mr. Cavanagh-Lang bought the house next door, No. 44. He used it as an office. Sometimes he lived there.
At least at times Mr. Cavanagh-Lang drank too much. He was abusive and threatening. He was a domineering man. Mrs. Cavanagh-Lang found it easier generally to let him have his head. She worked at the agency. He also worked at it. He was an authorised signatory to the firm’s bank account. Mrs. Cavanagh-Lang did not insist on seeing bank records and the like, and was not well informed on the affairs of the business. She became concerned that the overdraft of the business was mounting and was not under her control. She cancelled Mr. Cavanagh-Lang’s authority to operate the bank account.
A Mr. Braybrook worked for Mr. Cavanagh-Lang. He had authority to sign cheques. It appears probable that Mr. Cavanagh-Lang continued to operate on the account through him. So brazen was his interference in “her” business, that, eventually, he set up a new business in the name of Cambridge International Colloids, not telling her until he had done it.
I am unclear how her signatures to necessary documents were procured, as it appears they were. It was his habit to ring her at No. 42, from No. 44, to ask her to come over and sign documents from time to time. She would do so. She was at least very foolish. Mr. Cavanagh-Lang was a signatory again. Debts continued to mount.
There were separations, some lengthy. At times she was overseas for protracted periods. She had a breakdown. There was a resumption of relations, then further separation. It was during her breakdown that Mr. Cavanagh-Lang set up Cambridge International Colloids. Their divorce became absolute on 2nd January 1993. On 1st February 1984, Mr. Cavanagh-Lang transferred the business name to Mrs. Cavanagh-Lang.
It appears that there must have been discussion about a property settlement between them. I set out a letter from Mr. Cavanagh-Lang of 14th February, 1995.

14th February, 1995

Lyn,

Thank you for you two page letter to me dated 13 February, 1995.

I agree with your comments re the sale of everything and, after settlement with the Commonwealth Bank of Australia and Ben and Vi Noske whatsoever is left we split 50/50.
  BUT
Not the property (land) at Happy Valley (Aberfoyle Park)
I have owned this land (property) together with my ex wife (DIANA) long before I even met with you.
This property belongs to- Simon, Suzanne and Elka (my 3 children).
If you see fit to take me to court over this matter then, before it even reaches that stage, I will personally kill you.
You see I have not worked myself out for the benefit of you and your lover over the past 35 years.
  NO
Everything else but, not the property (land).
I am approaching 69 years of age so, I DON’T CARE!
You can report my statement to the police for it will make no difference.
I’ll kill you and me:   then the children will have the lot.
I don’t wish to be bad friends however, THAT’S IT - finale!

Ronald

This letter provides strong corroboration for Mrs. Cavanagh-Lang’s evidence about the nature of their relationship.
On his death, Mrs. Cavanagh-Lang learned that the account of the business Cambridge International Colloids was in debt to the Commonwealth Bank for about $505,000. The debt was in her name. Their daughter was executor and Mrs. Cavanagh-Lang helped her with the estate. It was hopelessly insolvent. It appeared that he had invested large sums of money in pursuit of that chimera, the Marcos gold. He had been a heavy gambler. I set out two letters she found amongst his possessions.

CAMBRIDGE

Cambridge International Colloids

..................   Group of Companies
..................   42-44 Lynton Avenue, Millswood, Adelaide, South Australia 5034
........................   P.O. Box 161 Goodwood, South Australia 5034
........................   Telephone: (08) 272 1514   272 4111   Telex: AA89357 Suntec

03 August, 1990

Dear Lyn,

CAMBRIDGE CHEMICALS

BANK BILLS AUTHORITY

You / L R NOSKE trading as CAMBRIDGE CHEMICALS, 42 Lynton Ave., Millswood S.A. have been since Dick Armour, Commonwealth Bank, Parkholme cancelled my signatures / authorities are the only one authorised by the Commonwealth Bank to operate on the account -

CAMBRIDGE CHEMICALS

I, Ronald Cavanagh-Lang have for sometime been authorizing bank bills currently to 08 August, 1990 for the amount of $A*275,000 going back in the past up to $A*400,000.

I have had no authority nor have the Commonwealth Bank of Australia had any authority from you / L R NOSKE trading as CAMBRIDGE CHEMICALS for me RONALD CAVANAGH-LANG to sign any bill (bank) for and on behalf of you. Therefore upon my death I would strongly suggest you give this letter to Peter Marker and/or your solicitor and claim the $A270,000 to $400,000 plus compound interest from the Commonwealth Bank of Australia.

Signed
(RONALD CAVANAGH-LANG) Date 3rd August, 1990
.................. 1245 hours

CAMBRIDGE

Cambridge International Colloids
Group of Companies
  42-44 Lynton Avenue, Millswood, Adelaide, South Australia 5034
  P.O. Box 161 Goodwood, South Australia 5034
  Telephone: (08) 272 1514   272 4111   Telex: AA89357 Suntec

4th August, 1989

Mr Peter Marker
Peter Marker & Associates
Barristers & Solicitors
Adelaide, SA 5000

Dear Mr Marker,

In the event of my death I would now like to make a statement and being of sound mind sat the following:-

CAMBRIDGE CHEMICALS - For some considerable time now I have been signing my name (R. C. Lang) rolling over bank bills on a regular basis (monthly) with the Commonwealth Bank of Australia, King William Street and Hindley Streets, Adelaide knowing full well that I have not been given the authority by the proprietor, Lynette Ruth Noske. Being a compulsive gambler I have used the money for my own ends. I can only apologise to Lynette for my actions although I place the blame fairly and squarely on the Staff on The Commonwealth Bank of Australia at the King William & Hindley Streets branch as they know I am not even authorized to sign a cheque on behalf of CAMBRIDGE CHEMICALS.

CHALET WINES INTERNATIONAL PTY LTD:- As for item 1. At no time would Lynette Ruth know anything about the operations of the above.

CAMBRIDGE INTERNATIONAL COLLOIDS:- As for item number 2/1. In all Peter, Lynette Ruth Cavanagh-Lang nee Noske with whom I have not lived for five (5) years past has not had any indication of what I have and how I have conducted the business activities nor did she even suspect anything was wrong with the way in which I made myself responsible for all money transactions and book transfers connected with the above.
FINAL:- I have to accept full responsibility for all past and current financial transactions of the above named. I can only apologise for my short comings.

(Signed)
R. Cavanagh-Lang 4th day of August, 1989 - 2.45 p.m.

It seems likely that the contents of those letters are true, though one must be wary of the word of a man in his position.
Through these turbulent years the plaintiff continued, albeit intermittently, to carry out his work. His last account suggests work resumed in April 1980 and continued until August 1995.
Mrs. Cavanagh-Lang told me that she never regarded the land as her own. She was the registered proprietor, but it was “Ron’s land”. She did not know why he put it in her name. She denied paying for it. When he asked for her signature to a document in relation to it, she gave it. She was aware that he wanted to subdivide it and was aware that he had engaged the plaintiff to help.
A “first stage” was reached when a number of blocks could be sold in about 1988. She did not know what happened to the proceeds of sale. She did not know whether there were any proceeds, or whether the blocks were encumbered. Looking at the title, it appears that a mortgage over the land was discharged before the new, subdivided titles issued. She supposed any proceeds would have been paid into Cambridge International Colloids - but I see that as pure speculation. I don’t know what other accounts Mr. Cavanagh-Lang operated. His letter refers to other businesses, the moneys of which he claims to have misapplied.
Mrs. Cavanagh-Lang said that she visited the land with Mr. Cavanagh-Lang on a few occasions. She went mushrooming there. She was aware that various accounts relating to the land, such as rates and weed control demands, were paid on Cambridge International Colloids cheques.
Insofar as proceeds of the first stage were paid into the account of Cambridge International Colloids (if they were) they would have assisted to provide the funds from which Mr. Cavanagh-Lang used to pay her four or five hundred dollars a week, usually in cash. Given what appears to have been his habit of using the account for his own purposes, and on a grand scale, I doubt that any of the money could have been traced into Mrs. Cavanagh-Lang’s hands. I am certainly not satisfied it has been traced.
At one stage, Mr. Cavanagh-Lang bought adjoining land, likely to assist the development. It was registered in the name of Mr. Braybrook. Mr. Braybrook executed a declaration of trust in favour of Mrs. Cavanagh-Lang who told me she did not know why this was done.
After Mr. Cavanagh-Lang’s death, the land was sold. It appears that all the proceeds went to meet debts of his estate, principally to the Commonwealth Bank. Mrs. Cavanagh-Lang saw no money, as such. There is an argument that she benefitted.

The debt to the bank was in her name. It was satisfied by the payment of the proceeds of the land. If she was the beneficial owner of the land, and if the debt was one for which she was liable, she got a benefit. A contrary argument is that she was not liable in all the circumstances - the debt was his estate’s debt; it was paid for by the sale of his land. It is not possible to predict the outcome of this argument with certainty, but it appears to me that she had a reasonable chance of being found not liable to the bank.
Her application of the proceeds to meeting his debts suggests that she did not regard herself as entitled to keep them because the land was truly hers. I acknowledge that the bank held the titles to the land as security for the Cambridge International Colloids debts and was thereby entitled to payment in priority to her. Establishing her entitlement to keep the proceeds may not have been very easy. Taking the broad view of her position which I would expect equity to take, I do not think it is proved that she was “enriched” either by the first stage or the ultimate sale.
There was a good deal of debate about whether the value of the land had been enhanced by Mr. O’Callaghan’s work. Mr. Dee, valuer, believed that broadacres worth $200,000 were converted by the obtaining of approval for subdivision to a value of about $400,000. The land was sold for that amount. Remaining areas were also sold. Almost $560,000 was realised (before expenses) on sale of the land. The first stage raised about $182,750. There is no evidence of the costs associated with that sale.
I have little doubt that the value of the land was enhanced by Mr. O’Callaghan’s work. There was an early approval, which eventually lapsed and was then, with variations, again granted. At the beginning it had been highly speculative. It was not unlikely that approval for a profitable subdivision would be refused. In the end, and after a good deal of work, it was granted. By the time of the eventual sale, whether or not Mr. O’Callaghan’s precise plans were adopted, it was plain that approval for a development could be obtained. Mr. O’Callaghan’s work was worth some $35,600. It covered a long period and several stages. I guess complete new plans might not cost more than $25,000. We do know that the purchaser of the land was not prepared to pay the plaintiff its fees. Presumably it believed it could get to the same stage for less.
I expect that a new developer might feel pretty confident that an approval could be obtained. Land in that state must be worth more than land about which there is substantial doubt. Mr. O’Callaghan’s work removed that doubt.
I look first at whether there was a contract between the Plaintiff and Mrs. Cavanagh-Lang on which she is liable as a primary contracting party. There was no direct request or authorisation by her later than the 1979 bill. That bill was sent to Mr. Cavanagh-Lang. All relevant dealings were by, or through, Mr. Cavanagh-Lang. I accept that he was not, in fact, acting on her express authority. I accept that, in her mind, he was acting in relation to his own land for his own purposes. She no more authorised him to instruct Mr. O’Callaghan than she authorised him to spend Cambridge International Colloids money in pursuit of the Marcos gold.
If she is liable it is because, by her conduct, she is estopped from denying to Mr. O’Callaghan that she authorised him to act. She thought Mr. Cavanagh-Lang was acting on his own behalf. She knew that her signature was needed at various times, and gave it. I do not construe that as recognition by her that Mr. O’Callaghan expected that, albeit as a last resort, he would be entitled to be paid by her. I don’t believe that thought ever crossed her mind. She was not conscious of holding him out in any way as her agent.
Did she, nevertheless, so act that, objectively, it can be seen that Mr. O’Callaghan altered his position in reliance on her acts, and in circumstances for which she should be held liable - and that is to take estoppel to the extreme? I think not. He acted, on a day to day basis, on the instruction of Mr. Cavanagh-Lang. In only the most abstruse way could he have contemplated being paid by Mrs. Cavanagh-Lang - and I don’t think he did contemplate that. That was something he pursued on hearing of Mr. Cavanagh-Lang’s death - and then not for about a year. He did not do the work in reliance on a belief that Mrs. Cavanagh-Lang would pay. I find against estoppel.
Was she unjustly enriched by Mr. O’Callaghan’s work? I have described the two sets of land sales. It is not proved to me that she was enriched - let alone unjustly enriched. Any improvement in her position was, at best, technical. She saw no extra cash or other asset clear in her hands. I do not find her liable on this basis.
In the circumstances, it is not necessary to consider the Statute of Frauds defence. For what it is worth, I do not believe there was any memorandum in relation to post 1979 work, sufficient to satisfy the statute. I would probably have held that the whole of the work covered in the 1997 bill could not have been performed within a year, when regard is had not only to the work to be done by the plaintiff (which might have been done within a year) but also to the delays inevitable in obtaining approval and permission from various departments for an area which was partly on Hills Face Zone land.
It does not appear to me that Mrs. Cavanagh-Lang did anything unconscionable in doing nothing while being aware that Mr. O’Callaghan was performing work. As she thought it was a matter between Mr. O’Callaghan and Mr. Cavanagh-Lang, she was not consciously allowing Mr. O’Callaghan to act to his detriment. She knew very little about what work and how much of it was being done. She had no belief that the land was really hers - so any benefit was dependent entirely on what Mr. Cavanagh-Lang chose to do. Once the work was done, it could not be returned. She was in no position to choose whether to accept or reject the benefit of the work. Insofar as the benefit consisted only of an increase in value attributable to knowledge that approval could be obtained, the genie could not be put back in the bottle. She made no use of Mr. O’Callaghan’s drawings or calculations.
In my view, it is not correct to argue that, because the contract for services was unenforceable, but remained in existence, there could not simultaneously exist a right to pursue an unjust enrichment. It is precisely in those circumstances that the remedy may be available.
At the highest, any enrichment fell to be accounted for on sale. I have given my reasons for holding that no relevant enrichment occurred.
Insofar as there may have been a series of contracts for successive stages of the work, the statute would not apply to those for which instructions were given after the repeal of the statute.
The plaintiff will have judgment against the second defendant for the amount claimed, plus interest to be calculated.
The claim against the first defendant will be dismissed. She is to have her costs to be taxed, if not agreed within 21 days, to be paid by the plaintiff.
The plaintiff is to have its costs, to be taxed if not paid within 21 days, to be paid by the second defendant, together with any costs it is required to pay to the first defendant.

[2000] SADC 141

6 December 2000