Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd

[2007] NSWCA 176

Reported Decision:	(2007) NSW Conv R 56-189(2007) Aust Contract Reports 90-265
Appeal Outcome:	Special leave refused with costs by the High Court - 14 December 2007

New South Wales

Court of Appeal

CITATION:	Penrith Whitewater Stadium Ltd & Anor v Lesvos Pty Ltd & Anor [2007] NSWCA 176 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	05/07/07
JUDGMENT DATE:	19 July 2007
JUDGMENT OF:	Ipp JA at 1; McColl JA at 80; Campbell JA at 81
DECISION:	(1) The appeal is upheld. (2) The orders made by Grove J are set aside. (3) Judgment for the appellants and the respondents' claims should be dismissed. (4) The appellants should have seven days after the publication of these reasons to raise, by affidavit and written argument, their contentions concerning the making of a Calderbank offer, and the respondents should have seven days thereafter in which to reply.
CATCHWORDS:	CONTRACTS – construction – whether the contract was an agreement for lease – whether the appellants were required to have an interest in, or a contractual right to acquire an interest in, the land for the contract to be one “for…the disposition of land or any interest in land”, as that phrase is understood in s 54A(1) of the Conveyancing Act 1919 (NSW) – part performance – whether O’Rourke v Hoeven [1974] 1 NSWLR 622 and Powercell Pty Ltd v Cuzeno Pty Ltd (2004) 11 BPR 21,429 were wrongly decided – whether the ‘fusion’ doctrine allows for the remedy of common law damages to be granted based on part performance of a contract otherwise struck down by s 54A(1) of the Conveyancing Act – unconscionability – whether it was unconscionable for the appellants to rely upon s 54A(1) by reason of their repudiation of the contract. - TRADE PRACTICES – misleading or deceptive conduct – whether, by reason of their agreement to the terms (found by the trial judge as being the ‘elements’) of the contract, the appellants had made representations to the respondents that they intended to comply with the contract and that the contract was, in fact, valid – whether, if such representations were made, the appellants had that intention at the time the contract was made. - COSTS – prolixity of grounds of appeal – 58 grounds of appeal – no decision made on vast majority – Re Minister for Immigration and Ethnic Affairs - Ex parte Lai Qin (1997) 186 CLR 622 applied – no order made on costs of appeal in regard to those grounds that were unnecessary to decide. D
LEGISLATION CITED:	Britain v Rossiter (1879) 11 QBD 123 Brown v Robertson (1890) 16 VLR 786 Chan v Cresdon Pty Ltd (1989) 168 CLR 242 Dalgety & Company Ltd v Gray (1919) 26 CLR 249 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 Horsey v Graham (1869) LR 5 CP 9 J C Williamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 Jones v Baker (2002) 10 BPR 19,115 Lesvos Pty Limited & Anor v Penrith Whitewater Stadium Limited & Anor [2007] NSWSC 335 McBride v Sandland (1918) 25 CLR 69 Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, Re (1997) 186 CLR 622 O’Rourke v Hoeven [1974] 1 NSWLR 622 Ohlstein v Lloyd (2006) Aust Torts Reports 81-866 Penrith Whitewater Stadium Ltd & Anor v Lesvos Pty Ltd & Anor [2007] NSWCA 103 Powercell Pty Ltd v Cuzeno Pty Ltd (2003) 11 BPR 21,385 Powercell Pty Ltd v Cuzeno Pty Ltd (2004) 11 BPR 21,429 Radaich v Smith (1959) 101 CLR 209 Riches v Hogben [1986] 1 Qd R 315 Tame v State of New South Wales; Annetts v Australian Stations Pty Ltd (2002) 211 CLR 317 Williams v Frayne (1937) 58 CLR 710
CASES CITED:	Conveyancing Act 1919 (NSW), ss 23C, 54A(1) Statute of Frauds 1677 (Imp), s 4 Suitors’ Fund Act 1951 (NSW) Supreme Court Act 1970 (NSW), s 68 Supreme Court Rules 1970 (NSW), Pt 51 r 11 Trade Practices Act 1974 (Cth), ss 51A, 52
PARTIES:	Penrith Whitewater Stadium Ltd (First Appellant) Penrith City Council (Second Appellant) Lesvos Enterprises Pty Ltd (First Respondent) Koffee Pty Ltd (Second Respondent)
FILE NUMBER(S):	CA 40199/07
COUNSEL:	M S Jacobs QC/P J Bambagiotti (Appellants) A W Street SC/D C Price (Respondents)
SOLICITORS:	Gadens Lawyers (Appellants) Andresakis & Associates (Respondents)
LOWER COURT JURISDICTION:	Supreme Court - Common Law Division
LOWER COURT FILE NUMBER(S):	SC 20147/02
LOWER COURT JUDICIAL OFFICER:	Bell J; Grove J
LOWER COURT DATE OF DECISION:	23 June 2006 (Bell J) 12 April 2007 (Grove J)
LOWER COURT MEDIUM NEUTRAL CITATION:	[2007] NSWSC 335 (Grove J)

CA 40199/07
SC 20147/02

IPP JA
McCOLL JA
CAMPBELL JA

Thursday 19 July 2007

PENRITH WHITEWATER STADIUM LTD & ANOR v LESVOS PTY LTD & ANOR

Judgment

1 IPP JA:

The determinative questions

2 This appeal concerns a claim by the respondents against the appellants for common law damages, alternatively for damages under the Trade Practices Act 1974 (Cth).

3 Both causes of action are based on a contract (“the Café contract”) that the trial judge (Grove J) found the appellants had entered into with the respondents (see Lesvos Pty Limited & Anor v Penrith Whitewater Stadium Limited & Anor [2007] NSWSC 335). By the Café contract the appellants agreed to give the respondents occupation of premises at Penrith Whitewater Stadium for a stipulated term (with an option to renew), at an agreed rent, and the respondents agreed to carry on the business of a café there.

4 At trial, the respondents claimed that the appellants had repudiated the Café contract and thereby caused the respondents to suffer damages. Grove J upheld this claim, granted judgment in favour of the respondents and awarded them damages. The respondents also claimed that, in entering into the Café contract, the appellants had been guilty of misleading or deceptive conduct under s 52 of the Trade Practices Act and the respondents were entitled to damages in consequence. Grove J rejected this claim.

5 The appellants appeal against his Honour’s judgment awarding the respondents common law damages for breach of contract. This part of the appeal turns on the application of s 54A(1) of the Conveyancing Act 1919 (NSW) to the Café contract. The questions of law so raised are determinative of the common law damages claim.

6 The respondents filed a notice of contention (which they later amended) according to which they claim that they should have judgment against the appellants on grounds based on s 52 of the Trade Practices Act. The misleading and deceptive conduct on which they rely in the appeal differs from that for which they contended at trial. The Trade PracticesAct issues raised by the notice of contention as amended fall to be resolved by reference to facts found by the trial judge.

The entering into of the Café contract, its performance and its repudiation

7 By at least 1998 the second appellant, Penrith City Council (“PCC”) became interested in hosting “white water” events (such as rafting, canoeing and kayaking) during the September 2000 Sydney Olympic Games. In mid-1998, construction began of the Penrith Whitewater Stadium. This was a facility within which white water (resulting in ripples, waves and splashes), suitable for the Olympic Games, could artificially be created.

8 The evidence as to the ownership, at the relevant period, of the land on which the stadium was constructed is obscure. Grove J said in this regard (at [3]):

“The title to the land involved multiple holders and the intention was to transfer all title to a Minister of the Crown, apparently the Minister Administering the National Parks and Wildlife Service (NPWS) legislation. It was also the intention of PCC to pass the administration of the facility to a company limited by guarantee to be named Penrith Whitewater Stadium Limited … Neither of these intentions were fulfilled when PCC (and others) set about establishing the stadium and having it constructed.”

9 The respondents submit that, throughout the relevant period, Penrith Lakes Development Corporation Limited (“PLDCL”) owned the land and there was no evidence of any contractual relationship between that company and the appellants or either of them. For the purposes of these reasons, I shall assume that these propositions are correct.

10 At some time in 1998, PCC published an advertisement calling for expressions of interest “For Lease of Kiosk/Coffee Lounge for Penrith Whitewater Stadium – Closing 3pm 27 October 1998”. It is sufficient to say that, in response, Maria Mihas, in co-operation with Arthur Alexiou, submitted a proposal. Ms Mihas and Mr Alexiou were later married. The respondent companies are their “instruments”, as Grove J observed (at [6]).

11 Negotiations for a contract ensued between the appellants and the respondents. These negotiations led to the formation of the Café contract that, Grove J found, was partly oral and partly in writing.

12 Grove J found (at [61]) that the Café contract, as agreed by the appellants and respondents, contained the following “elements”.

“(a) That the [respondents] would operate the café at Penrith Whitewater Stadium.
(b) That in an appropriate fashion the [respondents] would be secured in conducting the operation for a period of five years with an option to extend for a further five years.
(c) That the [respondents] would not be able to operate the café during the Olympic Games.
(d) That the area in which they could operate the café was as delineated in the plans which had been supplied to them and described as the shop and terrace areas.
(e) That they would pay ‘rent’ for the occupation of the area.
(f) That the food and services provided by the café would be along the lines set out in the proposal documents.”

13 The appellants challenge, on many bases, the finding that the Café contract had been agreed, but for the purposes of these reasons I shall assume, as the respondents contend, that Grove J’s findings in this regard are correct.

14 The respondents contend that the Café contract was partly performed. They contend that the appellants gave them, and they took, possession of the delineated area in the Penrith Whitewater Stadium; moreover, the respondents paid rent to the first appellant for the premises. I accept these submissions for the purposes of these reasons.

15 The respondents contend that the term of the period of occupation under the Café contract commenced at the date they were given occupation (from which date they began trading). When this occurred is not precisely clear from the judgment, although it appears to be common ground that occupation commenced at some time in October 1999. I shall assume that this is the case and that the respondents’ contentions in this regard are correct.

16 In terms of the Café contract, the respondents were not entitled to operate the café during the Olympic Games. Grove J said (at [25]) that the appellants had represented that this period would be “up to two weeks”.

17 On 5 June 2000, the appellants, in effect, ejected the respondents from the café premises. They required the respondents to remove their fixtures and fittings, as the judge found (at [88]), “by 7th July 2000 and remain quit of the premises until at least 13th October and possibly 22 January 2001”. His Honour found (at [88]) that this was “a plain breach of a level of seriousness so as to amount to repudiation”. His Honour found that the respondents “packed up and left”, and, in so doing, “had no effective choice”. His Honour held that this conduct amounted to acceptance of the appellants’ repudiation.

The finding that the appellants are liable to the respondents for common law damages

18 The facts so far stated are sufficient to expose the issues relevant to the determination of the respondents’ claim for contractual damages at common law.

19 In my view, the finding that the appellants are liable to the respondents for common law damages on the facts stated cannot be sustained and the respondents’ claim, on that basis, must fail. I come to this conclusion on the following grounds (which I go on to discuss in greater detail):

(a) Section 54A(1) of the Conveyancing Act provides:

“No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.”


(b) The Café contract is an agreement for lease and, therefore, is a contract “for the sale or other disposition of land or any interest in land”. Accordingly, s 54A(1) applies to the Café contract.

(c) The fact that the Café contract was partly performed does not entitle the respondents to common law damages. Part performance of a contract that does not comply with Statute of Frauds [1677 (Imp)] legislation may entitle a party to equitable relief, but does not provide the basis for a claim for common law damages.

Is the Café contract a contract for the disposition of an interest in land?

20 Grove J said (at [63]):

“The [respondents] do not sue upon a lease but upon an agreement as described in the extract from the pleading which I have set out above. I therefore find no relevance in references by counsel to provisions in the Conveyancing Act … ”

The “pleading” in question described the agreement as one “for the operation of a kiosk/café and provision of food services at the Penrith Whitewater Stadium in consideration of the [respondents] paying a licence fee to the first [appellant]”.

21 In his oral submissions on appeal, Mr Street SC, who, together with Mr Price, appeared for the respondents, did not submit that the Café contract was an agreement for a licence. He accepted that the Café contract was an agreement for a lease.

22 In his written submissions filed after oral argument had taken place (and, in regard to this issue, without leave), Mr Street submitted, however:

“The agreement was in characterisation a licence granted by the appellants without an interest in land … .”

23 In essential respects, the Café contract was no different from that considered in Radaich v Smith (1959) 101 CLR 209. In that case, the appellant and the respondents were parties to a deed whereby the respondents, as licensors, granted to the appellant, as licensee, for a term of five years “the sole and exclusive licence and privilege to supply refreshments to the public admitted to premises situated at … Mosman and to carry on the business of a milk bar therein …” (at 215 to 216 per Taylor J). The deed, according to Taylor J (at 216) consistently avoided the use of the expressions “lease”, “lessors”, and “lessee” and carefully used the words “licence”, “licensors”, and “licensee”.

24 The deed did not provide expressly that the appellant would have exclusive possession of the premises. The High Court, however, had no difficulty in finding that it was implicit that the deed, in fact, conferred the right to exclusive possession on the appellant. The crucial factor was that the deed contemplated that the appellant would carry on the business of a milk bar and café upon the premises for a fixed term and this required her to have exclusive possession of the premises.

25 Taylor J said (at 217):

“I have no doubt that the substance and effect of the instrument in question here was to grant to the appellant a right to the exclusive possession of the subject premises upon the specified conditions for the prescribed term. The deed obviously contemplated that the appellant should have the right to occupy the premises for the purposes of her business and the business was to be carried on upon the premises at all times when they might lawfully be kept open. The character of the business was such that it could only be effectively carried on if the appellant had exclusive occupation and it seems clear that, even at times when they could not lawfully be kept open for the purposes of the business, the premises were to remain under her effective control. That being so it is inevitable that we should hold that the instrument created a leasehold interest and that at the material time the relationship of lessor and lessee existed between the parties.”

Menzies J expressed like views. His Honour said (at 221):

“These obligations to occupy a shop, to carry on a business there that needs plant and stock, and to give up possession at the end of the term, taken together, seem to me to require the conclusion that the occupier has, during the term, the right of exclusive possession.”

Windeyer J said (at 224 to 225):

“I imagine all concerned would have been astounded if they had been told that the appellant had no right to exclude persons from her shop; that the respondent might, if he wished, license other people to carry on any activity there other than the sale of refreshments, provided their presence did not prevent her selling refreshments or conducting the milk bar …”

26 As the deed impliedly conferred exclusive possession of the premises for a fixed term on the appellants, it was an agreement for a lease and created a leasehold interest, and not a licence.

27 The Café contract similarly gave the respondents the right to operate the café that was to be situated in the delineated area in the Penrith Whitewater Stadium. It provided that they would be secured in conducting the operation for a period of five years with an option to extend for a further five years and they would pay “rent” for the occupation of the area. Adopting the approach applied by each member of the High Court in Radaich v Smith, it is implicit that the Café contract conferred on the respondents exclusive possession of the café premises for the agreed term. That being so, the Café contract was an agreement to provide a lease and not a licence.

The application of s 54A(1) of the Conveyancing Act to the Café contract

28 Mr Street submitted that as, at the time of the transaction, neither appellant had an interest in the land or any contractual right to acquire an interest in the land, the Café contract was not a contract for the disposition of any interest in land and s 54A(1) did not apply to it .

29 In Powercell Pty Ltd v Cuzeno Pty Ltd (2004) 11 BPR 21,429 (in a judgment dismissing an appeal from a decision of Campbell J - as his Honour then was - in Powercell Pty Ltd v CuzenoPty Ltd (2003) 11 BPR 21,385), Giles JA (with whom Meagher and Santow JJA agreed) observed (at 21,434, [29]) that s 54A(1) “substantially re-enacted s 4 of the Statute of Frauds 29 Car II cap 3”.

30 In Horton v Jones (1935) 53 CLR 475, Starke J said (at 489):

“The Statute of Frauds is directed to agreements concerning, covering or extending to lands or interests therein, whether the contracting party has title to them or not.”

There are many authorities, at every level, which support this statement.

31 In Horsey v Graham (1869) LR 5 CP 9, the plaintiff wished to obtain an assignment of a lease of a certain public house. He agreed with the defendant (a hotel broker) that the latter would obtain the lease for a nominated price and convey it to the plaintiff for that price. The defendant had no legal right in the public house. The Court of Common Pleas held that such a contract must be evidenced in writing under s 4 of the Statute of Frauds, even though the person who thereby undertook to sell the property had no interest in it.

32 Brown v Robertson (1890) 16 VLR 786 should be noticed. In this case, a number of persons agreed to endeavour to acquire property. None had any interest in the property to be acquired. The Full Court of the Supreme Court of Victoria held that the Statute of Frauds did not apply. The Court did not disagree with Horsey v Graham but distinguished it.

33 The preferable explanation for Brown v Robertson is, as Williams J said at 790, that the agreement concerned was “not an agreement to purchase at all”. Rather, as his Honour observed, “it is an agreement to endeavour to purchase if they can”. This explanation was accepted by Williams J of the Full Court of the Supreme Court of Queensland in Riches v Hogben [1986] 1 Qd R 315 (at 336) and Campbell J in Powercell (2003) 11 BPR 21,385 (at 21,414, [116]).

34 In McBride v Sandland (1918) 25 CLR 69, the agreement concerned was between a father, on the one hand, and his daughter and her husband, on the other. The father agreed that, should he purchase certain property at an auction, his daughter would have the right to “take” the property at his death, subject to her paying five per cent of the purchase price paid by the father. The parties also agreed that, should the father acquire the property, the daughter and her husband could have possession “as soon as the purchase is complete” (at 92 per Higgins J).

Each of the members of the High Court (Isaacs, Higgins, Gavan Duffy, Powers and Rich JJ) assumed that, in the absence of part performance, the agreement was unenforceable by reason of the application of the Statute of Frauds to it. Implicitly, their Honours were of the view that the Statute of Frauds applied to the agreement; they accepted that the daughter could succeed only if part performance were to be established.

35 In Dalgety & Company Ltd v Gray (1919) 26 CLR 249, a landowner and a broker agreed that the broker would find someone who would grant a mortgage to the landowner over specified land, on specified terms, and the landowner agreed that he would execute such a mortgage. At the time of the agreement neither contracting party had an interest in the land. The Privy Council held that the agreement created an interest in land and was “struck at by the Statute of Frauds” (at 255 per Lord Dunedin).

36 In Riches v Hogben [1986] 1 Qd R 315, the Full Court of the Supreme Court of Queensland (Kelly SPJ, Macrossan and Williams JJ) was concerned with an oral agreement by which the respondent promised to migrate to Australia and to live with, and care for, his mother, the appellant, in return for her undertaking to buy a house (which would be put in his name).

Kelly SPJ (at 318) said that Horsey v Graham was “akin to the present case” and observed:

“Support for the view that the Statute is not prevented from applying by the fact that at the time of making the oral bargain neither party had an interest in the land is to be found in McBride vSandland (1918) 25 CLR 69 in which the Court proceeded on the basis that in the absence of part performance the Statute would apply to an oral agreement giving an option for a future interest in land with a present right to possession of it, notwithstanding that it related to an acquisition of land in the future in that at the time of the oral agreement neither party had an interest in the land.”

Williams J (at 338) accepted that the High Court in McBride v Sandland was of the opinion that the Statute of Frauds applied to the agreement considered in that case despite the fact that at the time it was entered into the father had no interest in land. Partly in reliance on McBride, he held that the Statute of Frauds applied to the oral agreement, the subject of the appeal in Riches v Hogben , and the oral agreement was unenforceable.

37 In the course of argument on appeal, Campbell JA observed that the expression in s 54A(1), “contract for the sale or other disposition of land”, was an expression that “looks to what would happen, in a hypothetical situation, if the contract were to be performed”. I agree with that observation, which supports and explains Starke J’s statement in Horton v Jones (at 489).

38 I would not uphold the argument that, because neither appellant had an interest in the land or any contractual rights to acquire such an interest, the Café contract was not a contract for the disposition of any interest in land.

The effect of part performance and the application to re-argue Powercell

39 In Powercell (2004) 11 BPR 21,429, Giles JA said (at [29]):

“Equity has devised the doctrine of part performance as a basis of equitable relief in the absence of a written record, but part performance does not excuse the absence of a written record in an action for damages for breach of contract: J C Williamson Ltd vLukey and Mulholland (1931) 45 CLR 282; O’Rourke v Hoeven [1974] 1 NSWLR 622.”

40 The remarks of Campbell J at first instance in Powercell (at (2003) 11 BPR 21,385) have ineluctable persuasive force. His Honour commenced (at 21,391, [29]):

“Part performance is a doctrine invented by the Chancery Court, and provides a basis upon which a court of Equity will provide equitable relief concerning a contract, when that contract is unenforceable by reason of non-compliance with the Statute of Frauds. The equitable relief most commonly provided when acts of part performance of a contract are established is specific performance of that contract. It may be that part performance can also provide a basis for other equitable remedies, sch as an injunction to enforce a provision of the contract: R P Meagher, J D Heydon and M J Leeming, Meagher, Gummow and Lehane’s, Equity : Doctrines and Remedies , 4th ed, LexisNexis Butterworths, Sydney, 2002, para 20-220), or some other equitable remedy: Jones v Baker (2002) 10 BPR 19,115. However, an action for damages for breach of contract is a common law action, to which part performance is irrelevant.”

His Honour said (at 21,391 to 21,392, [30]) that these principles had been adopted, authoritatively, in New South Wales. He referred to O’Rourke v Hoeven [1974] 1 NSWLR 622 where Glass JA (with whom Reynolds and Hutley JJA agreed) said (at 626):

“The doctrine of part performance was developed in the Equity courts and has never been available in an action at law for damages to excuse absence of the writing which the Statute of Frauds demanded. As Dixon J, as he then was, said in J CWilliamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 at p 297.
‘An action of damages could not but fail, because, when a common law remedy is sought, part performance never did and does not now afford an answer to the Statute of Frauds … if the doctrine is not confined to cases in which a decree might be made for the specific performance of the contract, it is at least true that the doctrine arose in the administration of that relief and has not been resorted to except for that purpose’ (and see per Starke J and Evatt J (1931) 45 CLR 282 at pp 294, 306). The position is in no way altered by the concurrent administration of law and equity directed by Pt IV of the Supreme Court Act. This is not a fusion of two systems of principle but of the courts which administer the two systems: Britain v Rossiter (1879) 11 QBD 123 at p 129. The rules continue to be influenced by the system to which they belong, so as to disentitle a party claiming damages at law from praying in aid an exemption from writing on equitable grounds’.”

His Honour continued (at 21,392, [31]):

“Before 1858 the Court of Chancery might have had a limited jurisdiction to award damages in lieu of, or in addition to, specific performance: Meagher, Gummow and Lehane’s, Equity: Doctrines and Remedies , para 23-025. In 1858 Lord Cairns’ Act conferred on the Court of Chancery jurisdiction to award damages either in addition to, or in substitution for, the grant of an injunction for specific performance; that provision now has its equivalent in New South Wales in s 68 Supreme Court Act 1970 (NSW)”.

41 Mr Street sought leave to argue that O’Rourke v Hoeven and Powercell Pty Ltd v Cuzeno were wrong, principally on the ground that “fusion” permitted the remedy of damages to be granted because, he argued, “part performance in equity treats the appellants in the same way as if the lease had been granted: Williams v Frayne (1937) 58 CLR 710 at 721, 730”. He submitted that Chan v Cresdon Pty Ltd (1989) 168 CLR 242 (at 252) supported his argument.

42 Williams v Frayne does not deal with the fusion of equitable and legal remedies and was not in any way concerned with a claim for common law damages based on part performance of a contract otherwise struck down by the Statute of Frauds. Williams v Frayne is not authority for the proposition advanced.

43 In Chan v Cresdon Pty Ltd, the majority (Mason CJ, Brennan, Deane and McHugh JJ) made remarks (at 252) about the court’s willingness to treat an agreement for lease as a lease in equity in cases where the agreement is specifically enforceable. These remarks do not support the proposition that part performance of a contract rendered unenforceable by the Statute of Frauds enables an action to be brought for common law damages for breach of that contract. Chan v Cresdon Pty Ltd does not represent any departure from J CWilliamson Ltd v Lukey and Mulholland (1931) 45 CLR 282 (at 297).

44 In any event, the majority’s observations in Chan v Cresdon Pty Ltd (at 252), on which the respondents relied, were predicated on the assumption that the notional agreement for lease being discussed was specifically enforceable. By the time the respondents commenced their action, the Café contract was not specifically enforceable. The appellants had repudiated it and the respondents had accepted that repudiation.

45 Mr Street sought to rely on the “doctrine of coherence” and observations by Mason P in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298 (at 335). Mason P was in dissent in that case and nothing said by Spigelman CJ and Heydon JA (as his Honour then was) could, by any stretch of the imagination, be regarded as supporting a fusion argument. The contrary is the case.

46 Mr Street submitted: “The blending of the waters by the equity to prevent the use of the statute as a fraud and provision of common law damages accords with a single coherent common law of Australia”. Whatever the merits of that proposition (on which I make no comment), the present case does not involve the use of s 54A(1) as a fraud.

47 The respondents have no prospect of succeeding in their argument that O’Rourke and Powercell were wrongly decided. The principles that the respondents seek to challenge are entrenched in our law and have been enunciated and accepted by the high authority for many years. It is sufficient to refer to J CWilliamson Ltd v Lukey and Mulholland. The respondents’ argument must fail. I would not grant the leave sought.

The argument based on unconscionability

48 Mr Street submitted that it was unconscionable for the appellants to rely on s 54A(1) by reason of their repudiation of the Café contract. There are at least two material difficulties with this proposition.

49 Firstly, the argument that the appellants should be so precluded from relying on s 54A(1) was not pleaded, was not raised at trial, and was raised for the first time during the oral argument on appeal. The argument raises factual issues that were not investigated at the trial.

50 Secondly, in Powercell (2004) 11 BPR 21,429, this Court considered a not dissimilar argument. The appellant there contended that the respondent had taken the benefit of the agreement and it would, therefore, be unconscionable for the respondent to rely on s 54A(1). Giles JA (at 21,443, [79] to [80]) observed:

“[W]ithout more it was not inequitable or unconscionable for the respondent to rely on the law of the land.
Equity has ameliorated the harshness of reliance on s 54A through the doctrine of part performance. The doctrine would be unnecessary if the plaintiff could always fall back on an estoppel founded on no more than the making of the contract in question. And if the plaintiff could always do that, s 54A would be rendered nugatory.”


The same considerations apply in this case. The respondents’ contention is that the mere repudiation of the contract, which s 54A(1) renders unenforceable, makes it unconscionable for the appellants to rely on the section. The argument cannot be upheld.

The Trade Practices Act argument

51 The respondents relied on the following grounds in their Amended Notice of Contention:

“8. The Court ought to have found that the Appellants engaged in misleading or deceptive conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth) by reason of the false representations made on behalf of the Appellants to Mr and Mrs Alexiou that:
(a) the Respondents would be able to commence trading in March 1999;
(b) the Respondents would be the exclusive caterers at the Stadium;
(c) the Respondents would have a ‘5 by 5’ lease and were successful tenderers whereby the parties were bound by enforceable agreement for a five by five secure tenure; and
(d) the only period in which the Respondents were not permitted to trade was during the Olympic Games.
9. The Court ought to have found that the Appellants did not have reasonable grounds for making the representations referred to in paragraph 8 above by reason of the absence of existence of a binding and enforceable contract whether or not by operation of section 54A and/or section 23C of the Conveyancing Act (which is not admitted) and the absence of existing title to the land or existing interest in land by the Appellants.”

52 There is some confusion in para 9 of the Amended Notice of Contention in regard to the allegations that the appellants “did not have reasonable grounds for making the representations referred to in paragraph 8”. The reference to the absence of reasonable grounds appears to be an attempt to call in aid the provisions of s 51A of the Trade Practices Act (which concerns misleading conduct involving future matters). Paragraph 8 of the Amended Notice of Contention, however, makes it plain that the appellants rely only on s 52, and Mr Street affirmed this in oral argument.

53 The s 52 argument that the respondents advanced at trial was dealt with by Grove J (at [78] to [79]) as follows:

“As I have already recorded, the defendants, through Mr Hackett, agreed that the plaintiffs could have a 5 x 5 ‘lease’. As can be gleaned from matters earlier discussed the concept of lease in the discussions and agreement was not attended by any precision. What was understood on both sides was that occupation and operation of the café would be secured on some basis for the period specified.
That the promise was not fulfilled is not a demonstration that it was not, at the time that it was made, intended that it be fulfilled. Nor was it misleading if, in this case Mr Hackett, has been shown to have had an adequate foundation for making it. The collapse of the agreement was brought about by factors other than any attempt by the defendants to renege upon the offer of a 5 x 5 term. It was within the scope of Mr Hackett’s authority to agree as he did and, when he did, he believed on reasonable grounds that it could and would be fulfilled. There is no basis for concluding that, if other events had not intervened, the 5 x 5 period would not have been met.”

54 On appeal, the respondents did not put their s 52 argument in the same way as they did at trial. The conduct on which the respondents relied on appeal was merely the appellants’ act of agreeing to the terms found by Grove J (at [61]) as being the “elements” of the Café contract.

55 In my opinion, by expressing their agreement to those “elements”, the appellants made no representations. They merely expressed their assent to them and indicated their intention to enter into a binding contract incorporating them.

56 Even if the appellants’ conduct in expressing their assent to those elements is to be regarded as representations by the respondents that they intended to comply with the Café contract, the respondents did not establish that, at the time that contract was made, the appellants did not have that intention. Grove J found that the respondents had not proved that the appellants did not have that intention and the respondents do not challenge that finding.

57 Mr Street submitted that the appellants falsely represented that they were assenting to an enforceable agreement when they “have put in issue and denied the existence of an agreement”.

58 The respondents’ case based on the Café contract fails, however, not because the appellants deny the existence of the agreement but because the Café contract is unenforceable by reason of s 54A(1) of the Conveyancing Act.

59 In essence, as I understand Mr Street, his argument is that the appellants, by their conduct in agreeing to the elements of the Café contract, represented that the Café contract was enforceable. I am quite unable to accept this proposition. There is nothing to suggest that the question of the enforceability or otherwise of the Café contract, at the time it was entered into, was in the mind of any of the contracting parties. The mere expression of an assent to the provisions of the Café contract says nothing as to whether the Café contract was enforceable at law. That assent did not constitute a representation that the Café contract was enforceable.

Conclusion

60 I would reject the arguments presented on the respondents’ behalf in regard to s 54A(1) of the Conveyancing Act and s 52 of the Trade Practices Act. Accordingly, the appeal must succeed.

Costs

61 I should preface my remarks as to costs by saying that the orders I propose in regard to costs are provisional as the appellants indicated that, after publication of the Court’s reasons for judgment, they may wish to raise the making of a Calderbank offer that might affect costs. What follows are my views as to costs subject to any argument that might subsequently be raised concerning a Calderbank offer.

62 When the respondents first commenced proceedings against the appellants, they relied on breaches of the Trade Practices Act and negligence. The respondents’ claim based on the repudiation of the Café contract was raised for the first time on 9 September 2004. There were various challenges to the statement of claim and other interlocutory proceedings and it was only on 25 January 2007 that the appellants served their defence on the respondents. The filing of that defence was the first opportunity the appellants had of pleading s 54A(1). The defence, however, made no reference to the section. Eventually, some five weeks later, on 4 March 2007, the appellants served a version of their amended defence on the respondents that included the s 54A(1) point. On 19 March 2007, the amended defence was filed in Court. I do not think that the delay in pleading s 54A(1) is material. As later events show, the delay made no difference to the way in which the respondents conducted the case.

63 The respondents did not plead part performance in any of its pleadings. Mr Street, when opening the case for the respondents at trial, did not refer to part performance. He first sought to rely on part performance in his closing address at trial on 20 March 2007. In the circumstances, I do not think that the appellants can be criticised for failing, at trial, to take the point that part performance of a contract to which s 54A(1) of the Conveyancing Act applies does not give to rise to a claim for common law damages for breach of contract. The respondents’ failure to plead part performance, and the way they raised part performance so late in the proceedings, explains the appellants’ omission to plead and raise the argument.

64 Accordingly, there is no reason why the ordinary rule should not apply. The appellants should be entitled to the costs of the trial.

65 The appellants’ grounds of appeal and written submissions on appeal squarely raised s 54A(1) of the Conveyancing Act. The respondents’ submissions in reply raised part performance. The appellants’ submissions did not refer to Powercell and did not refer to the rule that part performance is not a basis for a claim for common law damages.

66 The Powercell cases and the principle that part performance does not give rise to a claim for common law damages were raised by the Court immediately after the case was called on the morning of the appeal. The Court then adjourned to enable the parties to consider their position. The respondents persisted in their support of the trial judge’s decision in regard to common law damages and argued the notice of contention ground in respect of the Trade Practices Act. The respondents’ arguments on these matters continued until after the luncheon adjournment. At the conclusion of oral argument, the Court granted leave to the parties to file written submissions concerning certain matters. The respondents then sought leave to put in supplementary submissions in regard to their argument concerning Powercell and O’Rourke vHoeven, and did so. Further submissions were then exchanged on this issue.

67 The appellants submit that the conduct of the respondents after the Court drew attention to Powercell and the problems with the respondents’ claim for common law damages demonstrates that their omission to rely on these matters at an earlier stage did not add to the length of the appeal. They submitted that, as the respondents subsequent conduct has shown, even had the appellants relied on Powercell and taken the damages point earlier, the respondents would have continued to oppose the appeal. In my view, these submissions must be accepted.

68 There is one other aspect that affects the costs of the appeal and that is the inordinate number of grounds of appeal and the additional costs these have caused.

69 The grounds of appeal contained in the notice of appeal are divided into seven groups. Several grounds are listed under each group heading. If one regards the sub-issues raised (as is appropriate, as each raises a separate argument) there are some 58 grounds of appeal in all.

70 On 23 April 2007 in an interlocutory judgment (Penrith Whitewater StadiumLtd & Anor v Lesvos Pty Ltd & Anor [2007] NSWCA 103) relating to an application by the appellants for a stay of the orders made by Grove J, McColl JA said (at [8]):

“The claimants have filed an Amended Notice of Appeal with Appointment which identifies 14 grounds of appeal, almost all of which are the subject of sub-issues. That document does not appear to comply with the requirement that a notice of appeal state the grounds briefly, but specifically, and should not descend to a detailed statement of the reasons supporting the appeal: SCR Pt 51 r 11. Drafters of such notices should be alert to what McHugh J said in Tame v State of New South Wales ; Annetts v AustralianStations Pty Ltd [2002] HCA 35; (2002) 211 CLR 317 (at [70]) (citing Aldisert J, Opinion Writing , (1990) at (89) that where there is:
‘an appellant’s brief containing seven to ten points or more, a presumption arises that there is no merit to any of them’.”

71 These observations were, in effect, a warning to the appellants that the grounds in the notice of appeal were excessive in number. Her Honour made an order requiring the appellants to file a further amended notice of appeal that complied with her observations. The amended notice of appeal is the one that, in effect, contains 58 grounds of appeal.

72 In Ohlstein v Lloyd (2006) Aust Torts Reports 81-866; [2006] NSWCA 226, I said (at [61]):

“An extravagantly excessive number of causes of action, or grounds of appeal, or particulars of negligence, are often a sign of serious problems with the health of the case being advanced. At the very least, they demonstrate a lack of appropriate consideration in formulating the issues and are obstacles in the path of justice. Apart from causing unnecessary delay and costs, the scattergun approach obscures the true issues, camouflages the pleader’s best points, and unnecessarily complicates the task of the judge.”

73 About three of the 58 grounds concern s 54A of the Conveyancing Act. Others involve bald assertion of errors of fact. Yet others concern errors said to have been made by Bell J “in not rejecting the Respondents Application for an amendment of their Statement of Claim”. At first glance (and acknowledging that these grounds have not been argued orally) there are difficulties with several of the grounds so formulated.

74 A substantial amount of costs have been incurred by the raising of grounds that have not been necessary to argue. This situation bears analogy to that contemplated by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte LaiQin (1997) 186 CLR 622. His Honour in that case (at 624) pointed out that a successful party is prima facie entitled to a favourable costs order, but when there has been no hearing on the merits, a Court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. McHugh J observed (at 624):

“The Court cannot try a hypothetical action between the parties.”

And went on to say (at 625):

“If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.”

75 In my view, as regards the costs of the appeal, justice would be done by ordering the respondents to pay those costs, save for the costs that were incurred:

(a) in preparing the orange book and the arguments incorporated in it, and


(b) in preparing for the oral argument on appeal;

in regard to arguments unconnected with s 54A(1) of the Conveyancing Act or s 52 of the Trade Practices Act or the notice (or amended notice) of contention.

76 There should be no order in respect of the costs so excluded.

Orders proposed

77 I would propose the following orders:

(a) The appeal is upheld;

(b) The orders made by Grove J are set aside; and

(c) There should be judgment for the appellants and the respondents’ claims should be dismissed.

78 As regards costs, subject to any argument that might be raised concerning the making of a Calderbank offer, I would propose the following orders:

(a) The respondents pay the costs of the trial;

(b) The respondents pay the costs of the appeal, save for the costs that were incurred:
(i) in preparing the orange book and the arguments incorporated in it, and
(ii) in preparing for the oral argument on appeal;
in regard to arguments unconnected with s 54A(1) of the Conveyancing Act or s 52 of the Trade Practices Act or the notice (or amended notice) of contention;
(c) There should be no order in respect of the costs so excluded; and
(d) The respondents to have a certificate under the Suitors’ Fund Act 1951 (NSW) if otherwise entitled.

79 The appellants should have seven days after the publication of these reasons to raise, by affidavit and written argument, their contentions concerning the making of a Calderbank offer, and the respondents should have seven days thereafter in which to reply.

80 McCOLL JA: I agree with Ipp JA.

81 CAMPBELL JA: I agree with the reasons and proposed orders of Ipp JA.

82 One extra factor supporting the conclusion that the Café contract was in substance an agreement for lease arises from the Statement of Claim. It pleaded one of the terms of the contract as being:

“The defendants would give to the plaintiff the exclusive right to use and occupy premises …”

Thus, the case that the respondents propounded was, from the outset, that they had rights that were, as a matter of legal analysis, an agreement to lease.

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20/07/2007 - Title (page 1) amended to read: Penrith Whitewater Stadium Ltd & Anor v Lesvos Pty Ltd & Anor. - Paragraph(s) N/A