Van Schaik Organic Soils and Bark Supplies P/L v Woakwine Industries P/L No. Scciv-00-1204

[2001] SASC 421

VAN SCHAIK ORGANIC SOILS AND BARK SUPPLIES PTY LTD v WOAKWINE INDUSTRIES PTY LTD
[2001] SASC 421

Full Court:  Debelle, Martin & Besanko JJ

1. DEBELLE J.         In this appeal, the appellant seeks to preserve a caveat it has lodged preventing any dealing in the respondent’s land in a manner contrary to the interest the appellant alleges that it has in the land. The appellant is the plaintiff in this action, and the respondent is the defendant. I will refer to the parties as “plaintiff” and “defendant”.

2. The plaintiff contends that it has an interest as lessee in part of the defendant’s land. The defendant disputes that claim. The plaintiff lodged a caveat to preserve its alleged interest. The defendant warned the caveat. The plaintiff applied, pursuant to s 191VIII of the Real Property Act 1886, for an order extending the caveat. The application for extension was heard by a Master of this Court, who dismissed the plaintiff’s application. The plaintiff appealed to a Judge of this Court, who dismissed the appeal. The plaintiff now appeals to the Full Court.

3. At the commencement of the hearing of the appeal there was some discussion as to the principles which had been applied respectively by the Master and the Judge. It was acknowledged by the defendant that we should deal with the appeal on the footing that the plaintiff had to establish sufficient grounds to warrant the ordering of an interim injunction, that is to say, that there was a serious question to be tried and that on the balance of convenience the caveat should be extended. The relevant principles are discussed in the reasons of Cox J in Whallin v Bailbart Investments Pty Ltd (1987) 47 SASR 198.

4. The only evidence before the court was an affidavit of Mr Van Schaik, a director of the plaintiff. The defendant owns land in Millicent. It purchased the land in October 1998 from Cellulose Australia Ltd. The sale and purchase agreement is dated 6 October 1998. It appears that before it sold the land, Cellulose was leasing part of the land to the plaintiff. There was no evidence as to the form of the lease or its terms. Clause 5 of the sale and purchase agreement dated 6 October 1998 between Cellulose and the defendant provided that the land was to be sold subject to “the tenancies or other interests referred to in item 10, if any”. Item 10 refers to certain leases, including the lease to the plaintiff. Clause 15 of the sale and purchase agreement binds the defendant as purchaser to observe the terms and conditions of the lease. The plaintiff conducts a business on the land the subject of the lease.

5. Before settlement of the contract between Cellulose and the defendant, a meeting was held between Mr Van Schaik representing the plaintiff, Mr McCourt representing the defendant, and Mr Joyce representing Cellulose. As a result of this meeting, Mr McCourt gave an undertaking to Cellulose and the plaintiff that the defendant would continue to provide a lease of the areas then being let to the plaintiff for a period of five years. It was also agreed between the plaintiff and the defendant that the lease would grant the plaintiff an option to purchase an area marked “A” on a plan, the option to be exercised towards the end of the term of five years. The price for the land was to be $1200 per acre. The area of the land was to be determined by survey. The plaintiff alleges a further agreement to relocate its operations, but it is unnecessary to stay with that issue.

6. Mr McCourt undertook to prepare a formal memorandum of lease. He sent a draft to the plaintiff on 29 October 1998. On 11 March 1999, the plaintiff responded to the draft lease and requested certain amendments. Wicks J held that the parties were then in the process of negotiation. The plaintiff disputes that finding. Mr Van Schaik deposes, in para 18 of his affidavit, that he was informed by an employee of the plaintiff company that on or about 24 June 1999 he had a conversation with Mr McCourt, during which Mr McCourt indicated there were no major objections by the defendant to the responses contained in the plaintiff’s letter of 11 March 1999.

7. Thereafter, as Wicks J found, the parties continued to negotiate. The negotiations ran into difficulty. In October 1999, the plaintiff had instructed Messrs WS DeGaris & Co to act for it. That firm wrote to the defendant concerning the terms of the option to purchase and other matters. The defendant instructed Messrs Kelly & Co to act for it. On 19 November 1999, Kelly & Co wrote to WS DeGaris & Co setting out the terms of the proposed lease. The letter said nothing about the option to purchase. On 1 December 1999 WS DeGaris & Co wrote to Kelly & Co asserting the existence of a lease. There were further negotiations. No lease or agreement to lease has been executed by the parties.

8. On 8 March 2000 the plaintiff lodged a caveat claiming an estate and interest in the defendant’s land on two grounds. This is the caveat which the plaintiff now seeks to extend. The grounds on which the plaintiff claimed an interest in the land were in these terms:

   “(a)firstly as lessee pursuant to an agreement partly in writing and partly oral between the caveator as lessee and the caveatee as lessor being evidence by an undated document headed ‘Memorandum of Lease’ for a term of five years commencing on 5 November 1998 and ending on 4 November 2003 pursuant to which the caveator had been in occupation and paid rental, which had been accepted by the caveatee, from 5 November 1998;

   (b)secondly, as grantee of an option to purchase pursuant to cl 6.2 of the Memorandum of Lease detailed above, granting the caveator an option to purchase portion of the within land which option is to be exercised by the caveator between 20 October 2003 and 3 November 2003.  The caveat was duly registered and given the serial number 8849734.”

   The caveat was registered. It will be noted that the plaintiff did not claim an interest pursuant to its lease with Cellulose.

9. After reviewing negotiations between the parties and the correspondence exchanged between them or their solicitors, the judge held the parties had not reached a concluded agreement. In his view, the negotiations were incomplete. He also held that there had been no part performance of the contract within the meaning of s26(2) of the Law of Property Act. He further held that even if, contrary to his view, there was a concluded lease or agreement to lease, that lease or agreement to lease was invalid by reason of s32 of the Development Act 1993. It appears that the judge had concluded that there was no serious question to be tried.

10. The plaintiff appeals against the judge’s conclusion. I agree with the substance of the reasons of the learned judge. I agree with his conclusion that the parties had not reached a concluded agreement. In my view, it is unnecessary to deal with the other matters.

11. It is also unnecessary to recapitulate the reasoning of the learned judge. It is sufficient to state that the judge’s review of the original facts is complete and it has not been shown that it was wrong. That review demonstrates that the parties did not agree the terms and conditions of the lease. A number of outstanding issues as important as the area of the land the subject of the lease, the terms upon which there should be rent reviews, and whether the directors should guarantee all payments due under the lease remained to be agreed. I adopt the reasons of the learned trial judge.

12. I add that the correspondence between the parties is couched in the language of negotiation as opposed to language of offer and counter offer for which the plaintiff contends. I agree with the learned judge that at no stage were the parties ad idem and that they had not reached a concluded agreement. It, therefore, follows that the parties did not agree either the terms and conditions of a lease or an agreement to lease. It might be possible also to point to other issues, such as the extent to which an option to purchase was to form part of the concluded agreement. It is unnecessary for the reasons already given to deal with that issue.

13. In the course of his argument, Mr Ross-Smith, who appeared for the plaintiff, relied on para 18 of the affidavit of Mr Van Schaik to which I have already referred. He contended that the evidence demonstrated there was a concluded agreement between the parties. However, it is apparent that Mr Van Schaik was aware that the decision whether the defendant company would agree to the terms and conditions he had proposed in his letter of 11 March 1999 turned on a decision of the board of directors of the defendant company. A letter dated 16 August 1999 written by Mr Van Schaik demonstrates that fact. There is no evidence that the board did agree the terms of the lease. Later negotiations indicate that it did not.

14. In my view, the judge was therefore correct in concluding that there was no concluded lease or agreement for lease between the parties. That is sufficient to dispose of this appeal. It is, therefore, unnecessary to deal with the other issues.

15. For these reasons, I would dismiss the appeal.

16. MARTIN J.           I agree that the appeal should be dismissed for the reasons given by Debelle J. I would add only that, although the judge did not refer to para 18 of the affidavit of Mr Van Schaik, in my view when the evidence is considered as a whole, and giving as much weight to the paragraph as is reasonable, the conclusions to which the learned trial judge came were plainly correct.

17. BESANKO J.        I agree with the order proposed by His Honour Debelle J and I agree with the reasons of Debelle J and Martin J.

18. DEBELLE J.         The order of the court will therefore be appeal dismissed.