Permanent Trustee Nominees (Canberra) Limited v Coral Sea Resort Motel Pty Ltd

[1988] HCATrans 46

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No Bll of 1988

Between-

PERMANENT TRUSTEE	NOMINEES
(CANBERRA) LIMITED

Applicant

and

CORAL SEA RESORT MOTEL

PTY LTD

Respondent

Application for special

leave to appeal

MASON CJ

WILSON J

Permanent

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 18 MARCH 1988, AT 2.55 PM

Copyright in the High Court of Australia

MlT 9/ 1 /ND 1 18/3/88

MR R.R. DOUGLAS, QC:  I appear with my learned friend,

MR M. BLAND, if the Court pleases, for the

applicant. (instructed by Bain Gasteen & Co)

MR G. FRYBERG, QC:  May it please the Court, I appear with

my learned friend, MISS M.A. WILSON, for the respondent. (instructed by Cowling & Virgo)

MASON CJ:	Yes, Mr Douglas.
MR DOUGLAS:	Your Honours, might we hand up, first of all,

copies of the authorities on our list. There are

four bundles there separated out.

MASON CJ:  Yes. You might begin by telling us why you

say the Full Court was wrong.

MR DOUGLAS:  The Full Court was wrong, Your Honour, and

it is as narrow as this, wrong in the manner in which it sought to apply the decision in HALL V

BUSST to the facts of this case. HALL V BUSST

only decided that an absolute contractual

restraint upon alienation is void as against public

policy. It did not decide the question as to whether

a limited contractual restraint upon alienation

is likewise void as against public policy.

TheirHonours, by referring to three separate parts of that judgment, came to the conclusion

that that was part of the decision in HALL V BUSST.

Your Honours, an analysis of HALL V BUSST is useful,

we can do it briefly. In that case, the contractual

provisions before the Court consisted o~ firstly,

a prohibition upon transfer, et cetera, of the

land without the written consent of the vendor;

secondly, an obligation upon the purchaser to give

one calendar month's notice of her intention so

to deal with the land; and, thirdly, an option
in the vendor to purchase the land during the period

of the notice.

Mr Justice Dixon and Mr Justice Menzies.

construed the provisions so that the prohibition

would continue to operate even after the vendor

had elected not to exercise the option. Those

Judges accordingly held the provisions void as

imposing a total restraint upon alienation.	They
were the only ones to do so.	The remaining members

not exercise the option the purchaser would be

of the Court, Justices Fullagar, Kitto and

free to deal with the land as she saw fit.

Justice Kitto with whom Justice Windeyer agreed

on this point said that upon such a construction

the question of invalidity on the ground of

restraint upon alienation did not arise.

MlT9/2/ND	2	18/3/88
Permanent

However, Justice Fullagar held that even

upon that construction the provisions were void

on that ground as they required the purchaser to

offer the land to the vendor at what might be an

undervalue prior to any dealings in the land.

But Their Honours in the Full Court, in this case,

each arrived at the conclusion that clause 6 of

the management agreement was not invalidated by

the principle in HALL V BUSST.	But the principle
which Senior Puisne Judge Kelly	found in HALL

V BUSST differs radically from that identified

by Justice Connolly and Mr Justice Moynihan seemed

to have a foot in both camps. He expressly agreed

with Mr Justice Kelly.

The first turning point, Your Honours, 1s

to the judgment of Mr Justice Kelly at page 22
of the record where he decides this matter.

Perhaps, Your Honours, I should point out that

there were two restrictions upon the applicant's

right to alienate his land; the first was in respect

of a right of pre-emption given by the other

co-owner. His Honour, in the primary hearing,

Mr Justice McPherson, found against the present

respondent on the facts.	He found that that right
of pre-emption had been made out.	The Full Court

did not disturb that. The Full Court then found

that clause 6 of the management agreement, which

is at page 68 of the record, was not void as against

public policy and went on then to say that the
primary judge had not properly exercisedhis discretion

under section 38 in that he did not take into account

the existence of clause 6 which imposed an obligation

to give 12 month's notice of an intention to seek

the appointment of trustees for sale.

Going back to page 22, the matter is expressed

this way by the senior puisne judge, at point 3

of the page:

The next matter for consideration is

whether the clause is void as amounting to

a restraint on alienation and so contrary

to public policy. To my mind a convenant
which does no more than to require the giving
of a period of notice, even as long as twelve
months, before steps may be taken to obtain

an order to have land held on the statutory

trust for sale cannot properly be regarded

as amounting to a restraint on alienation.

The view of the majority in HALL V BUSST was

that the principle applicable to a condition

against alienation of land is applicable also

to a contractual restrain on such alienation.

M1T9/3/ND	3	18/3/88
Permanent

Your Honours, we do not cavil with that suggestion. In fact, it is what we put up. What

we cavil with is the manner in which His Honour

then went on to find that such a limited contractual

restraint is not void as against public policy.

Referring to that passage, in the judgment of

Mr Justice Dixon, the Chief Justice, at 218 where

it was said:

"The ground for denying the validity of a

contractual restriction upon alienation is

that it is a principle of the law that

private property should be full alienable."

Authorities -

"in effect expresses a view that a contractual

restriction upon the alienation of an absolute
estate if unqualified should be considered

void and this seems to accord with modern

views of policy."

In my view a convenant such as that which
is being considered here does not come within

the notion of a restraint on alienation as

it is generally understood in the cases in

that the property is still fully alienable

and the convenant goes only to the procedure

whereby this may be brought about under

s 38 -

Mr Justice Connelly arrives at the same view by

quite a different route at page 30 of the record.

It is the passage at the very top, opposite page 31,

where he refers to:

the English decisions on the basis that HALL

V BUSST has established the principle for Australia that a contractual restraint on alienation is contrary to public policy.

HALL V BUSST however was concerned with a

total contractual restraint upon alienation

as appears from the judgment of Dixon CJ

at page 217. That is not this case.

We go to page 217 of the Chief Justice's judgment

in HALL V BUSST, the passage beginning about

point 6 of the page:

The invalidity may be put on the ground of

repugnancy to the grant or upon public policy

or for that matter it may conceivably be

attributed to an indirect effect of Quia

Emptores. That is immaterial, for it is a

known rule that the condition is void. But

with contractual restraints there is no fetter

MlT9/4/ND	4	18/3/88
Permanent

upon alienation which does more than sound

in damages, that is, unless a doctrine of

equity intervenes to make it bind the land.

Coke at one time seemed to think that a bond

with a condition against alienation of an

estate was good. And in FREEMAN V FREEMAN

a bond against barring an entail was held

valid.

MASON CJ:  But it may be that the reference is mistaken.

It may be that His Honour had in mind the passage

in the Chief Justice's judgment at 215 where

His Honour said in the first sentence in the

paragraph beginning on that page, a little more

than half-way down:

The conclusion to be drawn from the

foregoing considerations as to the meaning

of ell 3, 4 and 6 is that an indefinite

prohibition is intended of alienation without

consent of the fee simple of the land or any

part of it -

MR DOUGLAS: Yes, that is so. His Honour, in that view,

was of a similar mind of Mr Justice Menzies, that

is, that clauses in HALL V BUSST's contract did

have that effect.

MASON CJ:  But at the moment I do not see why you are saying

that Mr Justice Connolly's reason was different

from Mr Justice Kelly's reason. I thought both

of them were suggesting that these were not void

restraints because there was not a total prohibition,

there was merely a limitation for a period of time

and, for that reason, the limitation was not void.

MR DOUGLAS:  Yes, Your Honour, but they both came to that

view based upon the reasoning in HALL V BUSST and

HALL V BUSST did not decide that. HALL V BUSST

decided only that a total restraint - - -

MASON CJ: Yes, HALL V BUSST did not decide that a limited

restraint only was valid but certainly the

possibility that a limited restraint only was valid

was quite consistent with the judgment of the

Chief Justice and the other Judges.

MR DOUGLAS:  Your Honours, it is difficult to say that because

the matter which is the subject of this debate today appears only to be raised in argument in

HALL V BUSST, that is, raised by the bench. It

appears in the slightest degree, in argument itself,

and the Chief Justice in his judgment makes that

remark at page - it is not clear, Your Honours,

whether the matter was fully argued at that time

if one looks at page 214 of HALL V BUSST.

MlT9/5/ND	5	18/3/88
Permanent

WILSON J:  But does this not merely go to saying that the

question the Full Court had to decide was one which

was not covered by the authority of HALL V BUSST?

MR DOUGLAS:  That is so. Their Honours sought to rely upon

the passage in HALL V BUSST to support their view.

WILSON J:  Did you say they did?

MR DOUGLAS:  Yes, Your Honour, we say that. We say that

Mr Justice Moynihan did likewise at page - - -

WILSON J:  I had rather thought that they were concerned

to distinguish HALL V BUSST on the ground mentioned

by the Chief Justice a moment ago.

MASON CJ:  Look at the very sentence in Mr Justice Connolly's

judgment at page - the unnumbered page between 30

and 31:

HALL V BUSST however was con~erned with a

total contractual restraint upon alienation

as appears from the judgment of Dixon CJ.

That is not this case.

MR DOUGLAS:  Yes, Your Honour. Then look at page 32 where

Mr Justice Moynihan expressed it, where he said

at point 5 or 6 of the page, the paragraph beginning:

The contractual provisions in issue here

are not "unqualified" so as to be void as

a restraint on alienation -

MASON CJ: Yes. Well, His Honour says, "see HALL V BUSST",

which is generally an indication that the author

of the judgment is not necessarily regarding the

case cited as authority for the proposition though

he believes that the discussion to which he refers

provides some basis for supporting his conclusion

or some basis upon which that conclusion may be

reached.

MR DOUGLAS:  Th~t may be so, Your Honour, but perhaps we

can point to it this way:  HALL V BUSST certainly

does not decide the point at issue in this case,

that is, whether a limited restraint upon alienation

such as was imposed by clause 6 is void as against

public policy.

WILSON J:  I think we all agree with that.

MR DOUGLAS:  Yes, Your Honour. Your Honours, we say that is

a matter which ought to be decided. It is an

important matter because parties are entitled to
deal with land which they own on the basis of

certainty as to what steps they may take with

respect to their right to alienate it.

MlT9/6/ND	6	18/3/88
Permanent

WILSON J:	The Full Court has decided it.
MR DOUGLAS:	Your Honours, we would submit that they are

wrong in so deciding.

WILSON J: Why?

MR DOUGLAS:  Because, Your Honour, it leads to things such

as, what, Your Honour, is an appropriate time,

would it be 3, 6 or 12 months, or 2 years? It

leaves the area of law in a degree of uncertainty.

People do not know, Your Honour, how they are

entitled to deal with their land, if restraints

of this sort by contract are sought to be imposed.

WILSON J: It is quite clear that in the circumstances of

this case it is not void. And in the next case

it may 18 months and it may be too long.

MR DOUGLAS:  Your Honour, that is a matter which leads to

unsatisfactory results, with respect. The question

should be, really, whether a provision of this

sort is void or not. We submit it is void because

it amounts to a restraint upon the alienation of

land.

WILSON J:  So that if it was a restraint for one month you

would still say it was void?

MR DOUGLAS: Yes, Your Honour, we would still say that.

And, Your Honours, the second point sought to be

raised is that in so far as section 38 is concerned,

we submit that the Full Court was wrong in concluding

that Mr Justice McPherson did not exercise his

discretion or permit himself any area of discretion.

He did, we would submit, Your Honour, exercise

discretion in view of his findings on clause 6.

What Their Honours did in the Full Court was to

substitute their own exercise of discretion without

identifying any error in the primary judge's

reasoning at first instance.

Your Honours, we cannot take the matter much

further than that except to say that the decision

is an unsatisfactory one, it leads td uncertainty,

and we submit the application should be successful.

MASON CJ: One thing we ought to say, perhaps, to you,

Mr Douglas, and that is this:  you have been arguing

on the footing that this provision is a restraint
on alienation. Now, it was held to be invalid

by Mr Justice McPherson on the footing that it

was an ouster of jurisdiction. On the face of

it, one would have thought that if there is any

conceivable basis for arguing invalidity, it is

rather on the footing that there may be an ouster

of jurisdiction than a restraint on alienation.

MlT9/6/ND	7	18/3/88
Permanent

In other words, there is a bar to somebody approaching the court.

MR DOUGLAS:  Yes, Your Honour, that is the way it was

decided below.

MASON CJ:  I am not suggesting that I think that there is

an arguable basis for a conclusion of invalidity

when I put that to you but I am just indicating

to you that you were arguing it on the footing
that it is a restraint against alienation whereas

it would seem to be more properly characterized,

if it is a relevant restraint, as one which bars

access to the courts.

MR DOUGLAS: Well, Your Honours, that certainly was our

argument before Mr Justice McPherson which was

adopted by him. We submit he is correct in the

view that he took in the judgment below for the

reasons beginning at page 5 of the record.

Your Honours, that is not expressly, as we see

it, one of our proposed grounds of appeal. I am

sorry, it is ground 2(a). We, .Your Honour, would

not wish to take the argument beyond what

Mr Justice McPherson said.

MASON CJ: No, but you run into the same difficulty: is

a time limitation of this kind imposed on access

to the courts, an outster of the jurisdiction

of the court?

MR DOUGLAS: Well, we say, yes - - -

MASON CJ: All it does is to delay the time as at which

a party can commence proceedings.

MR DOUGLAS:  Your Honour, we say yes, for the same reason

that we espoused in the previous argument, that it

must be.

MASON CJ:  Thank you.

MR DOUGLAS:  They are our submissions.

MASON CJ:  We need not trouble you, Mr Fryberg. The Court

considers that the decision of the Full Court is not

attended with sufficient doubt to justify the grant

of special leave to appeal.	The application is
therefore refused.

MR FRYBERG:	We ask for costs, Your Honour.
MASON CJ:	You cannot resist that, can you, Mr Douglas?
MR DOUGLAS:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 3.15 PM THE MATTER WAS ADJOURNED SINE DIE

MIT9/8/JM	8
Permanent