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

VAN SCHAIK ORGANIC SOILS & BARK SUPPLIES PTY LTD v WOAKWINE INDUSTRIES PTY LTD
[2001] SASC 297
Miscellaneous Appeal
WICKS J
Introduction

This is an appeal against a decision of a Master of this Court dismissing the plaintiff’s action and ordering the plaintiff to pay the defendant’s costs of the action. An appeal to the Full Court against those orders was instituted by Notice of Appeal filed on 19 February 2001. There was some argument as to whether the appeal lay to the Full Court or to a single Judge. An order was made extending the time within which to appeal against the Master’s order to 20 February 2001. Also an order was made by consent that the appeal be heard by a single Judge.
At all material times the defendant was the registered proprietor of certain land situated at Millicent being the land comprised in Certificate of Title Register Book Volume 5846 Folio 56 (formerly Certificate of Title Register Book Volume 5630 Folio 901) together with and subject to certain easements (“the Land”). The Land was also subject to a mortgage in favour of the Commonwealth Bank of Australia.
The caveat
On 8 March 2000 the plaintiff produced a caveat for registration in respect of the land under which the plaintiff as caveator claimed an estate and interest:
(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 evidenced 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.
In a withdrawal of caveat dated 26 April 2000 the plaintiff withdrew its caveat over a portion of the land being lots B, C1, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, X and X1. The withdrawal of caveat was duly registered at the Lands Title Registration Office on 22 May 2000 and given the serial number 8882340.
On 26 October 2000, application was made to the Registrar General to remove caveat number 8849734 lodged by the plaintiff over the land in respect of certain portions marked A, C and D. This may have been the balance of the land comprised in the Certificate of Title in question.
On 30 November 2000, the plaintiff issued an inter partes summons against the defendant in which it claimed “the relief set out in the affidavit annexed hereto”. In fact no affidavit was annexed although an affidavit was filed on the same day as the summons was issued, paragraph 2 of which is as follows:
"This affidavit is in support of the Company’s application for an order that the Registrar General extend the Caveat No 8849784 over Certificate of Title Register Book Volume 5630 Folio 901, [the predecessor title to Certificate of Title Register Book Volume 5846 Folio 56] hereinafter described."
On 5 December 2000, a Master made an order that the time for removal of caveat number 8849784 lodged in the Lands Titles Office in respect of a portion of the land comprised in Certificate of Title Register Book Volume 5630 Folio 901 [now Certificate of Title Register Book Volume 5846 Folio 56] be extended until 4 pm on 18 January 2001. Further extensions of time were granted until 5 February 2001. On that day, the time for removal of the caveat was not further extended and the caveat was allowed to lapse. On the same day, the Master ordered that the plaintiff’s action be dismissed. Detailed reasons were given by the Master for his decision.
In order to preserve the status quo, by order made on 27 June 2001, I gave leave to the plaintiff to lodge a further caveat in respect of those pieces of land marked “A”, “C” and “C1” in the Plan (“the Plan”) exhibited to the affidavit sworn by Mr Johannes van Schaik on 28 November 2000 and marked “JVS2”.
On 19 February 2001, a Notice of Appeal was filed by the plaintiff. On 23 March 2001, a Judge of this Court made an order that to the extent necessary, the time within which to lodge the Notice of Appeal be extended to 20 February 2001.
Grounds of appeal
The grounds of appeal were as follows:
1      The learned Master erred in failing to find that there were lease terms agreed between the plaintiff and the defendant constituted by a proposed Memorandum of Lease, proposed amendments thereto and acceptance by the defendant of the lease terms thereby amended.
2      The learned Master erred in failing to find that the lease (thereby constituted) was part performed by the parties thereto.
3      The learned Master erred in finding that there was insufficient certainty in the terms of the lease or the provisions of the caveat regarding the description of the land and the method of ascertaining the sale price.
4      The learned Master erred in failing to afford natural justice to the plaintiff by disregarding the uncontroverted evidence of the acceptance of the amendments to the terms of the lease when:
4.1    there was no objection by the defendant to the receipt of that evidence;
4.2    there was no ruling by the learned Master excluding that evidence;
4.3    there was no indication from the learned Master that he would not take that evidence into account.
5 The learned Master erred in failing to consider or adequately consider the provisions of s 26(2) of the Law of Property Act.
6 The learned Master erred in failing to properly construe the effect of s 29(1)(a) of the Law of Property Act and in particular by reference of the provisions of s 31(d) of the Law of Property Act.
7      The learned Master misconstrued and misapplied the provisions of the Real Property Act regarding allotments and part-allotments as they affected the appellant’s lease.
8      The learned Master erred in dismissing the appellant’s application for final order confirming caveat number 8849784.
9      The learned Master erred in failing to grant an extension of caveat to the expiration of the term of the lease.
The facts
Prior to 1998, Cellulose Australia Limited owned the Land. In or about that month that company advertised the Land for sale. At that time Cellulose Australia Limited was leasing to the plaintiff the areas marked “C”, “D”, “F” and “H” on the Plan.
Mr van Schaik on behalf of the plaintiff expressed an interest in purchasing the Land from Cellulose Australia Limited but eventually withdrew from the sale process on the understanding that Cellulose Australia Limited would ensure that long term leasing arrangements would be guaranteed in the event of the sale of the Land to a new purchaser. Mr van Schaik indicated to Cellulose Australia Limited that the plaintiff would prefer to buy the whole of the area marked “A” on the Plan and move all its operations from the areas marked “C”, “D”, “F” and “H” of the Plan. It was indicated on the part of Cellulose Australia Limited that that company was not prepared to sub-divide the land itself but had made enquiries with the Millicent District Council and ascertained that there would be no impediment to subdivision.
Cellulose Australia Limited sold the Land to the defendant in October 1998.
Prior to the purchase of the Land by the defendant, there appears to have been a lease between Cellulose Australia Limited as lessor and the plaintiff as lessee in relation to the Land or part thereof. An agreement for the sale and purchase of the Land dated 6 October 1998 was entered into between Cellulose Australia Limited as vendor and Mr McCourt on behalf of the defendant as purchaser. Clause 5 of that agreement provides that the Land is sold subject to “the tenancies or other interests referred to in Item 10, if any”. Item 10 refers to certain formal leases including a “Lease to van Schaik Organic Soils and Bark Supplies Pty Ltd”. The lease in question is described in the agreement as a “Formal Agreement”. Clause 15 of the agreement for sale and purchase binds the purchaser to observe the terms and conditions of such lease. The lease between Cellulose Australia Limited and the plaintiff was not put in evidence in these proceedings. I see no reason why that lease would not be enforceable according to its terms. I am inclined to think that there are ways whereby the lease between Cellulose Australia Limited and the defendant can be enforced against the defendant at the instance of the plaintiff.
Prior to settlement of the sale, a meeting was held between Mr van Schaik representing the plaintiff, Mr McCourt representing the defendant and Mr Tony Joyce representing Cellulose Australia Limited. Mr Ian Chappel of Cellulose Australia Limited may also have been present. As a result of this meeting, Mr McCourt gave an undertaking to Cellulose Australia Limited and to the plaintiff that he would continue to provide a lease of the areas currently let to the plaintiff for a period of five years. It was also agreed between Mr McCourt representing the defendant and Mr van Schaik representing the plaintiff that the plaintiff would be given an option to purchase the area marked “A” on the Plan which option was to be exercised towards the expiration of the lease term of five years. The plaintiff alleges that it was further agreed between Mr McCourt on behalf of the defendant and Mr van Schaik on behalf of the plaintiff that upon execution of the lease which provided an option to purchase the area marked “A” on the Plan, the plaintiff would progressively move all of its operations then being conducted on the areas marked “A”, “D” and “F” on the plan to area “C” and upon exercise of the option to purchase area “A” the plaintiff’s operations would be removed from area “C” and be relocated to area “A” on the Plan. Agreement was reached between Mr van Schaik on behalf of the plaintiff and Mr McCourt on behalf of the defendant that the purchase price for the land in the area marked “A” would be $1200 per acre with the area of the piece in question being determined by survey.
Mr McCourt undertook to prepare a formal memorandum of lease. The document prepared by him contained the following material terms. The lease was to commence on 5 November 1998 and was to be for a term of five years. There were no rights of renewal. Annual rental was $13,200 payable monthly on the first day of each and every month. The permitted use was for waste transfer and composting. Rental was to be reviewed annually pursuant to cl 4.10 of the draft lease. By cl 6 of the draft lease, the lessee was to vacate the area described as “the Concrete Area”, being the area marked “F” on the Plan within six months. The lessee was also to vacate the land described as “West of the eastern security fence” or “the hard standing area”, being the area marked “D” on the Plan within 12 months. Cl 6.2 of the memorandum of lease contained an option to purchase that portion of the land known as the “cricket pitch area” and being the area marked “A” on the Plan. The option fee was $1 and the price of the land on exercise of the option was to be calculated as I have stated earlier in these reasons. The land being the subject matter of the option is defined as “the Sale Land”. The option to purchase is exercisable by the lessee between 20 October 2003 and 3 November 2003. Settlement was expressed to take place on a date to be agreed between the parties. The terms and conditions of the contract for sale and purchase of the Sale Land were to be in the form of the Law Society of South Australia contract for the sale and purchase of land. The lessee was to be responsible at its cost for any fencing of the Sale Land required prior to or after settlement.
The draft lease prepared by Mr McCourt clearly shows that it is a draft and nothing more. Also the date of the draft is shown as 30 December 1998. This draft of the lease has been made an exhibit to Mr van Schaik’s affidavit sworn 28 November 2000. In the draft, the land description is incomplete. It reads: “Portion of the land comprised in Certificate of Title Register Book Volume 5486 Folio 67 being Area # premises” (no further description was given.)
There was a further draft of the lease prepared and dated 10 November 1999 which varied materially from the earlier draft discussed. This draft was made an exhibit to the affidavit of Mr McCourt sworn in this action on the part of the defendant. There was a different land description although, like the previous description, it was incomplete in various material respects. The land description reads: That portion of the land comprised in Certificate of Title Register Book Volume 5486 Folio 67 as is marked “C and “C1” in GRO Plan No of

Premises” (no further description was given.) No further or better description of the land to be leased was provided. The term of the lease was for a period of five years with two rights of renewal of five years each. It was asserted that the lease did not contravene s 32 of the Development Act 1993. In fact, such lease would contravene that section unless made subject to the consent of the appropriate authority and such consent was in fact obtained. Clause 6.1, dealing with the vacation of certain areas, and cl 6.2, dealing with the option to purchase relating to portion of the Land, have been omitted altogether. Neither the affidavit of Mr van Schaik nor the affidavit of Mr McCourt explains how the second and materially different draft of the lease came into being.
On 11 March 1999, the plaintiff responded to the draft dated 10 November 1998 of the lease by letter to the defendant in the following terms:
"Re: Proposed Memorandum of Lease – Cellulose Property
Having perused the draft copy of the above Lease agreement, the following points and queries are raised for your attention and consideration:-
.Rather than be time bound to enter into a formal purchase agreement for the adjacent property, we would prefer to have this option available at any time during the lease period. This would allow us that once the statutory planning and licensing approvals (Local council, EPA, etc) were held and if it was then advantageous for ‘Van Schaik’s’ to proceed we would like to be in a position to initiate this clause at any time.
.Purchase agreement is to be based on $1,200.00 per acre and is to include the existing ‘old change rooms’ and bore. An agreed nominal deposit to be paid at the signing of an agreement with settlement on the handing back of the Cellulose property.
.We agree that over the next 12 months to return the hard standing area by 1/4/2000 – clause 6.1(c).
.Fencing costs are to be shared – clause 6.2. We are to jointly agree on the type of fence, etc with the work to be completed once transfer of ownership has been completed.
.As this is for our purposes a continuation of an existing property rental we would prefer that the requirement for Director’s Guarantee be waived in this instance.
.Is there a need for any rental increase to be allowed for in this agreement? Progressively we are relinquishing area over an agreed time frame, however with the annual rental remaining fixed we are effectively paying at a higher rate over this period of time.
.A more accurate description of the work being completed on site is ‘Transfer site, storage and depot’ as per ‘Item 12 – Permitted Use’.
.We understand that the registered address of Van Schaik organic Soils & Bark Suppliers Pty Ltd is 194 Jubilee Highway East, Mount Gambier SA 5290.
If you have any queries regarding these details please do not hesitate in contacting myself."
On 16 August 1999 Mr van Schaik wrote to Mr McCourt in the following terms:
"Re: Purchase Of “The Wicket” Property
It is disappointing to note that you have not conveyed to us the board’s decision on the above issue. We understand the meeting was to be held on 5/8/99.
We reiterate our concerns in regard to you reneging on the “Verbal Agreement” in place for “Van Schaik’s” to purchase this property.
In view of these recent events we find ourselves forced into a renegotiating position in regard to the existing site we operate from. You will recall that we have already acted in good faith by relinquishing the area known as “The Concrete Area” and this action was in terms of the original “Verbal Agreement” that was agreed to by all parties. Reluctantly we advise that no further rental payments will be made until you state your final position on this matter. Once known, we will then be able to negotiate the ongoing terms and conditions.
We look forward to your reply in writing, regrettably verbal discussions will no longer be entertained."
The Concrete Area referred to was the area marked “F” on the Plan.
This letter elicited a response from Mr McCourt on behalf of the defendant by letter dated 18 August 1999. In his reply, Mr McCourt indicated that he was responding to Mr van Schaik’s letter of 16 August 1999. Mr McCourt’s letter, so far as is material, continued:
"The issue of whether or not to sell the “cricket pitch” area was raised and the decision was made to retain the land in Woakwine Industries ownership. It was agreed that to increase the area of potentially contaminated land in the immediate vicinity would be irresponsible from an environmental and company perspective. [The “cricket pitch” area was the area of land marked “A” in the Plan.]
Your reneging on the ‘verbal agreement’ by attempting to shorten the lease period from five years to three years took place well before the decision was made not to sell the “cricket pitch”.
“The Concrete Area” was mostly vacated after several reminders however one heap still remains on this area to date. Also, you gained substantial area that was previously occupied by Fuentes Scrapmetal equivalent to the area known as “The Concrete Area”.
In the near future you will receive a lease document stipulating ongoing terms and conditions."
The plaintiff has maintained possession of those areas marked “C”, “D”, “F” and “H” delineated on the plan and has conducted the permitted business on those areas.
On 21 October 1999 Messrs W S DeGaris & Co, acting on behalf of the plaintiff wrote to the defendant a letter which, so far as is material, is as follows:
"Our client instructs us that there has been an option contract entered into for the sale of the “cricket pitch” area of the Cellulose premises owned by your company, being portion of the land described in Certificate of Title Register Book Volume 5630 Folio 901. The option is to our client as purchaser. The terms of the option to purchase are as follows:
1.The value of the land was to be ascertained at $1,200.00 per acre and to include the existing change rooms and bore.
2.The area of the land was to be ascertained from a plan drawn by Ian Chapman (then of Cellulose Aust Ltd) which plan was approved by Michael McCourt and Hans Van Schaik together.
3.Option to purchase the property by our client was to be exercised by our client on or before the 4^th November 2003.
4.The contract for the purchase of the property was to be subject to Wattle Range Council approving the sub division of the land which area was to be ascertained from survey as set out in paragraph 2 above.
5.Consideration for the option was to be in the terms of a lease agreement which has been entered into and currently subsists between your company and our client company.
The terms and conditions in relation to the sale and purchase are partly in writing and partly oral. The oral contents of the contract were made between your Director, Michael McCourt, and our Director, Mr Hans Van Schaik in the presence of a number of witnesses. The written evidence which point to an agreement between the parties is contained in a draft lease presented to our client by you, correspondence between the parties and notes of conversations between the parties. In addition we have witnesses who will attest to the fact there was an agreement and that the terms of the agreement were quite definite and well defined.
Could you please forthwith confirm your company will honour its contractual obligations to our client and enter into an agreement for the sale of the “cricket pitch” area at Cellulose. Failure to do so will result in our client placing a Caveat over your property in relation to sale of the land."

On 19 November 1999, Messrs Kelly & Co, solicitors for the defendant, wrote to Mr van Schaik, so far as is material in the following terms:
"I confirm I act for Woakwine Industries Pty Ltd and refer to recent conversations between yourself and Michael McCourt.
I have been instructed by Woakwine Industries Pty Ltd to offer the following conditions of Lease in an effort to resolve the continuing problems experienced between Van Schaik Organic Soils & Bark Supplies Pty Ltd and my client:
1. A commencement date of 1 December 1999.
2.Area to be that marked C & C1 of the attached plan (areas outlined in red - note that the north-west boundary of area C ends 8 metres from the ponds).
3.A term of (5) years with 2 rights of renewal of five years each.
4.Annual rent of $14,400.00 (on account of the grant of lease over the additional area C1).
5.Lessor is responsible for connecting power to area C1.
6.C1 is to be used solely for access, parking of vehicles and machinery and erecting sheds. This area is not to be used for composting.
7.Lessee is responsible for the keeping the railway line crossing the access between areas C & C1 clear at all times.
8.Lessee will no longer have access to the lunch room hut.
9.Annual CPI rent adjustments.
10.Market review to occur every 5 years (on renewal).
11.Lessor to pay council rates and land-tax - Lessee to pay all other outgoings.
12.Lessee to reinstate the land on termination/expiration.
13.Access is available via main entrance road however should Transport SA approve additional access via Snuggery then Lessee’s access will be limited to this new route.
Once confirmation of the above terms is received I will forward a draft lease incorporating the above provisions for your consideration.
In relation to area D my client confirms this will be held by you on a monthly tenancy at a monthly rate of $100.00 per month.
In respect to the above offer, my clients instruct me that it is conditional on Van Schaik Organic Soils & Bark Supplies Pty Ltd meeting all arrears of rent calculated as the day prior to the commencement date, and is conditional on Van Schaik removing all waste presently occupying the area known as the ‘cricket pitch’ area and moving the fuel tank onto area C.
I look forward to your response to this offer.
If you have any questions please do not hesitate to contact me."
In the letter of 19 November 1999, the area “C1” is mentioned for the first time. It would appear to have been included following conversations between Messrs van Schaik and McCourt referred to in the letter.
On 1 December 1999, Messrs W S DeGaris & Co, wrote to Messrs Kelly & Co in the following terms:
"RE: VAN SCHAIK ORGANIC SOILS & BARK SUPPLIES PTY LTD
We act on instructions of the above company.
We refer you to our letter to Woakwine Industries Pty Ltd dated the 21^st October 1999.
Our client maintains firmly that there is an agreement between Woakwine Industries Pty Ltd and Van Schaik Organic Soils & Barks[sic] Supplies Pty Ltd for a lease of premises at the Cellulose area. We refer you to a draft Memorandum of Lease which was accepted by our client. (If there is any ambiguity about this, your client has never withdrawn the offer to Lease on the terms and conditions contained in a draft Lease, and our client accepts those terms and conditions. The modifications required to the Lease have been agreed and we refer to our letter of the 21^st October which sets out those various agreements).
Contained in the Lease was an option granted to our client to purchase certain land. We have outlined our position in respect of the option in our letter of the 21^st October 1999 (a copy of which is contained with this letter).
Since the delivery of the draft Lease to our client, our client has indicated to your client that he would prefer an ability to exercise the option earlier than at the expiration of 5 years as set out in that draft Lease. Your client rejected this proposal.
Could you now please prepare a Lease, the terms and conditions of which are embodied in the draft Lease delivered to our client previously, but which Lease includes the agreements in relation to the area of land upon which our client has been given an option to purchase.
We look forward to receiving this Lease shortly."
The letter of 21 October 1999 referred to on two occasions in this letter is set out earlier in these reasons.
The caveat referred earlier in these reasons was produced at the Lands Titles Office on 8 March 2000 and registered on that day. The solicitors for the defendant complained in a letter dated 31 March 2000 to the solicitors for the plaintiff that the caveat was too wide in its effect in that it claimed an estate or interest as lessee in the whole if the land in the Certificate of Title instead of those pieces of land the subject matter of the lease. Also, it claimed an estate or interest as grantee of the option embodied in the lease in respect of the whole rather than a portion only of the land contained in the Certificate of Title. The caveat should have been limited in its operation to those pieces of land marked “A” and “C” and possibly “D”. The caveat was partially withdrawn by instrument number 8882340 dated 26 April 2000.
On 6 April 2000 Messrs Kelly & Co on behalf of the defendant wrote to Messrs W S DeGaris & Co, acting for the plaintiff. The text of the letter, so far as is material, is as follows:
"... In relation to your client’s belief that a current agreement exists between itself and my client based on a draft Memorandum of Lease provided by my client, and which you now propose as binding between our clients, I draw your attention to the following facts.
1.Your client’s letter to Woakwine Industries of 11 March 1999 expressly refers to the Memorandum of Lease as a “Proposal” and seeks to alter significantly the terms therein.
2.It is admitted in your letter of 1 December 1999 that your client sought to alter the term within which the original option to purchase was to be exercised from 5 years (as per the draft lease) to 3 years, and it is further admitted in that letter that our client rejected that counter offer.
It is clear from the above two pieces of correspondence that no agreement as to the terms of any lease (and thus any option to purchase) exists. You may wish to discuss this matter further with your client. In your letter of 21 October 1999 you assert that certain ‘oral’ agreements outside this correspondence had been reached and that you have “witnesses who will attest to the fact there was an agreement and that the terms of the agreement were quite definite and well defined.” My client has instructed me to inform you that it itself has a number of witnesses who will attest to the content and context of those discussions and have detailed notes of those outcomes. My client has expressed its willingness to test the strength of our respective evidence should a settlement not be reached.
In an effort to avoid further difficulties between the parties, my client has offered a lease to your client based upon direct discussions between your client’s Director Hans Van Schaik and the Managing Director of Woakwine Industries Mr Michael McCourt, the terms of which were contained in my letter to Mr Van Schaik of 19 November 1999. Our client now wishes to reiterate that offer as follows: [Then is set out the 13 items which were previously set out in the letter of 19 November 1999 earlier referred to.]"
The letter continued in the following terms:
"In relation to area D my client has instructed me that your client’s tenancy expired on 1/4/00 and hereby requests your client reinstate and vacate the area immediately.
In respect of the above offer my client has instructed me that it is conditional on Van Schaik removing all waste presently occupying the area known as the ‘cricket pitch area’ and moving the fuel tank to area C.
I look forward to your client’s response to this offer within seven (7) days.
As there is no formal lease of the land your client currently holds a monthly tenancy. Our client reserves all its rights in this regard.
If you have any questions please do not hesitate to contact me."
A letter dated 6 April 2000 was sent by the plaintiff’s solicitors to the defendant’s solicitors. It is not known whether that letter crossed with the earlier letter of the same date sent by the defendant’s solicitors to the plaintiff’s solicitors. The further letter of 6 April is in the following terms, so far as is material:
"RE: VAN SCHAIK ORGANIC SOILS AND BARK SUPPLIES PTY LTD AND WOAKWINE INDUSTRIES PTY LTD
We acknowledge receipt of your recent correspondence in the abovementioned matter.
Our client is prepared to withdraw his Caveat in relation to all of the land contained in Certificate of Title Volume 5630 Folio 901 [now Volume 5846 Folio 56] in which he does not claim an interest pursuant to the Memorandum of Lease offered to our client. We are instructed that that areas “C” and “D” are leased, and area “A” was the land over which our client had an option to purchase.
We have been provided with a plan drawn by your client’s surveyors, Messrs Sawley & Lock which details a number of areas for lease purposes. This plan has not yet been deposited.
Unfortunately, this plan does not properly define areas “A”, “C” or “D” in relation to either their dimensions or by proper memorials.
We assume that it would be a simple exercise for Messrs Sawley & Lock to properly define areas “A”, “C” and “D” for us and provide us with a copy of that plan. If they could do this forthwith we would undertake to lodge a Withdrawal of Caveat for all but areas “A”, “C” and “D” marked on the plan provided to us. This proposition is made on the basis that providing us with this information is not an admission in any way by your client as to the facts or matters in dispute between our clients on the Lease and Option issues.
..."
From the imprint at the top of this letter, it would appear that it was sent by facsimile.
Then followed correspondence between the solicitors for the parties dealing generally with proposals and counterproposals for lease of some of the various pieces of land, an accurate plan delineating the various pieces, the vacating by the plaintiff of some of the pieces of land and the partial withdrawal of the caveat. None of this correspondence really advances the matter which I have to decide and that is whether the parties at any stage of their negotiations had reached a concluded agreement.
By letter dated 17 May 2000, Messrs Kelly & Co responded in which they said “I have been instructed to reject your client’s offer in total”. The defendant’s solicitors then indicated that the defendant wished to restate an offer which it had made on 6 April 2000. Moreover, the solicitors indicated that the defendant had instructed them that the offer put was to be a final offer.
A document described as a “Notice of Termination Lease - Notice of Re-entry” was served on the plaintiff on or bout 15 August 2000. The plaintiff was notified that the defendant as lessor intended to take possession of the premises on 15 October 2000. The defendant further gave notice determining the tenancy without prejudice to any of the defendant’s rights in respect of any breaches or non-performance by the plaintiff of any of the terms of the tenancy prior to 15 August 2000.
Whether the parties were ad idem
I refer to the letter dated 11 March 1999 written by Mr van Schaik on behalf of the plaintiff to the defendant, a copy of which is set out earlier in these reasons. As appears from the letter, the plaintiff received a draft lease for comment and responded, not by saying that the lease was satisfactory , but rather by raising a number of suggested amendments and matters requiring clarification. The defendant was tardy with its response and when it did reply eventually after a reminder in August 1999, the letter did not suggest that any agreement had been reached but rather that Mr van Schaik would in the near future receive a lease document stipulating ongoing terms and conditions.. The defendant’s letter was followed up with an exchange of correspondence, the net effect of which being that the plaintiff considered that it had an agreement based on the terms of the 30 December 1998 draft lease referred to earlier in these reasons whereas the defendant claimed that no such agreement existed. The plaintiff’s solicitors asserted that the written evidence which they had pointing to an agreement between the parties was contained in the draft lease (the 30 December 1998 version) “presented by our client to you, correspondence between the parties and notes of conversations between the parties”.
In my opinion, the parties were never ad idem. The draft lease was intended as a draft for discussion and nothing more. It was not prepared in a form which enabled it to be executed and, presumably, registered. It was intended to be a formal document and, clearly, it needed additional work to be done on it before it could be regarded as being in a fit condition to be executed. Moreover, the document was clearly marked “Draft”. There can be no doubt that this meant that the document was not intended as an offer capable of acceptance but rather nothing more than a document forming the basis of negotiations. As there was no offer, the letter of 11 March 1999 could not be regarded as an acceptance of an offer. In any event the letter does not purport to be an acceptance of an offer. All it did was to raise further matters for discussion. From August 1999 onwards, a lengthy exchange of correspondence ensued. There was, however, nothing in that which could be regarded as an offer to enter into a lease on terms which have been accepted by both parties. Also, it should be pointed out that the draft lease was not signed or otherwise executed by either party.
I conclude this part of my reasons by holding that the parties were never ad idem. Negotiations were incomplete. There was no lease or agreement for lease whether in writing or otherwise. The learned Master did not err in failing to find that there were lease terms agreed between the plaintiff and the defendant constituted by a proposed Memorandum of Lease, proposed amendments thereto and acceptance by the defendant of the lease terms thereby amended.
Part performance
As I have found that the parties were never ad idem, that must be the end of the matter. However, in case this matter should go further, I should say something on the application of the Statute of Frauds 1677 (Imp). The modern equivalent of s 4 of that Act is contained in s 26 of the Law of Property Act (1936). Subsection (1) of that section provides as follows:
"No action shall be brought upon any contract for the sale or other disposition of land or of any interest in land, unless an agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some person thereunto by him lawfully authorised."
This statute does not render a disposition in breach void but merely unenforceable by action. In that sense, it is procedural. In this matter the lease is not in writing; nor is there a note or memorandum in writing. It is therefore necessary to have regard to s 26(2) of the Law of Property Act which preserves the doctrine of part performance as a defence to s 26(1).
The reason for equitable intervention, in the face of the statute, is that the acts of part performance make it unconscientious for the defendant to plead the statute as a bar to the plaintiff’s claim: Meagher, Gummow and Lehane, Equity, Doctrines and Remedies, 3^rd Ed, 1992 par 2045. In Maddison v Alderson [1883] LR 8 App Cas 467, Lord Selbourne LC said at p 479:
"All the authorities shew that the acts relied upon as part performance must be unequivocally, and in their own nature, referable to some such agreement as that alleged … ‘The acknowledged possession’ … ‘of a stranger in the land of another is not explicable except on the supposition of an agreement, and has therefore constantly been received as evidence of an antecedent contract, and as sufficient to authorize an inquiry into the terms, the Court regarding what has been done as a consequence of contract or tenure’."
This statement is concerned with two elements. There is the requirement that the acts be ‘unequivocal’ and there is a further requirement that that they be referable to ‘some such contract’.
Regent v Millett [1976] 133 CLR 679 affords an example of an unequivocal act. Taking of possession, effecting repairs, the making of mortgage payments and renovations and additions to the improvements are all capable of being relied upon as constituting acts of part performance. Whether or not they can be so relied upon may depend on other factors as well when taken with the acts abovementioned.
On the other hand, the part payment of the purchase money or even full payment of the money is an equivocal act. Also, acts preparatory to the completion of a contract and the mere holding over by a tenant (unless qualified by the payment of a different rent) are equivocal and are not to be regarded of themselves as acts of part performance: Maddison v Alderson (cited above) at p 479-480, per Lord Selbourne LC.
The second element relating to part performance is that the act relied upon is referable to ‘some such contract’. In McBride v Sandland [1918] 25 CLR 79 at p 78, Isaacs and Rich JJ said:
" (1) The act relied on must be unequivocally and in its own nature referable to ‘some such agreement as that alleged.’ That is it must be such as could be done with no other view than to perform such an agreement ...
(2) By ‘some such agreement as that alleged’ is meant some contract of the general nature of that alleged …
(3) The proved circumstances in which the ‘act’ was done must be considered in order to judge whether it refers unequivocally to such an agreement as is alleged … bare possession does not necessarily connote trespass or, alternatively, a contract at all; indeed, some contracts would not justify the act done. Possession may be the result of mere permission. But if the circumstances under which the possession was given are proved, then the Court may judge whether the act indicates permission or contract, and, if contract, its general character. For instance … the expression ‘some agreement’ is used, we think, in contradistinction to the specific terms of the agreement, and not in the most general sense of any agreement whatever.
(4) It must have been in fact done by the party relying on it on the faith of the agreement, and further the other party must have permitted it to be done on that footing. Otherwise there would not be ‘fraud’ in refusing to carry out the agreement, and fraud, that is moral turpitude, is the ground of jurisdiction …
(5) It must be done by a party to the agreement …
These requirements must be satisfied before the actual terms of the alleged agreement are allowed to be deposed to.
Further, when those terms are established, it still remains to be shown:-
(6) That there was a completed agreement …
(7) That the act was done under the terms of that agreement by force of that agreement ..."
In the present case, no agreement in writing exists which sets out the terms and conditions of the lease granted by the defendant to the plaintiff in respect of the various pieces of land marked “C”, “D”, “F” and “H” or any of them. If, for the sake of argument, and contrary to my finding made earlier in these reasons, it is assumed that a lease exists between the plaintiff and the defendant whereby the pieces of land are leased from the plaintiff to the defendant, such oral lease would be unenforceable by virtue of s 26 of the Law of Property Act and could not be made enforceable by the operation of s 26(2) of that Act.

In this matter, the entry into possession would not be sufficient part performance. That event is equivocal. It must be borne in mind that the pieces of land marked “C”, “D”, “F” and “H” were originally leased to the plaintiff by Cellulose Australia Limited and that the defendant purchased certain land, including the above four pieces from Cellulose Australia Limited. At the present time the above four pieces of land are being leased to the plaintiff pursuant to a lease granted by Cellulose Australia Limited to the plaintiff. On the making of the lease between the plaintiff and the defendant, the plaintiff will simply remain in possession. Entry into possession as such would be unnecessary.
The movement of chattels, fixtures and structures from one of the above pieces of land to another would not be sufficient part performance. Such movement would be consistent with the grant of a lease by Cellulose Australia Limited to the plaintiff or by the defendant to the plaintiff. It would also be consistent with the movement of chattels, fixtures and structures from one of the above pieces of land to another for reasons unconnected with the grant of a lease by the defendant to the plaintiff..
The payment of rent and other moneys is equivocal. It is consistent with several possibilities, one of which is the grant of the lease by the defendant to the plaintiff.
In the circumstances, if a parole lease exists between the defendant as lessor and the plaintiff as lessee, such lease is unenforceable by virtue of s 26 of the Law of Property Act 1936 and it is not rendered enforceable by the application of the equitable doctrine of part performance.
In its Notice of Appeal, the plaintiff alleged that the learned Master erred in failing to properly construe the effect of s 29(1)(a) of the Law of Property Act 1936 and in particular by reference to s 31(d). In my view the situation here is covered by s 26 of the above Act and there is no need to refer to s 29. However, in relation to that section, the same considerations apply. The disposition concerned is of no effect. The terms of s 29 are made subject to the operation of the equitable doctrine of part performance. As I have explained earlier, that doctrine has no application in the present case as there was no concluded lease or agreement for lease in the first place.
Transactions in contravention of the Real Property Act and the Development Act
Paragraph 7 of the Grounds of Appeal states that the learned Master misconstrued and misapplied the provisions of the Real Property Act 1886 regarding allotments and part-allotments as they affected the plaintiff’s lease. Part 19AB of the Real Property Act deals with the question of division and amalgamation of allotments of land. The lawful division of land is dealt with in s 223LB which is to be found in Part 19AB of the Act. The basic prohibition is contained in subs (4) which provides that a transaction entered into in contravention of the section is void and no instrument purporting to give effect to such a transaction may be lodged for registration.
Section 223LB(7) provides that s 223LB does not affect the validity of a transaction of a class excluded by regulation from the provisions of that section. The relevant regulations are the Real Property (Land Division) Regulations 1995. Regulation 27 provides that certain classes of transaction are to be excluded from the provisions of s 223LB of the Real Property Act and these include the granting of and all dealings with a lease of part of an allotment and the granting of and all dealings with a licence in respect of part of an allotment.
The Development Act is however applicable. Section 32 of that Act provides that no development may be undertaken unless the development is an approved development. In s 4, “development” is defined to mean the division of an allotment and “division” includes:
"(c)the conferral or exercise of a present right to occupy part only of an allotment under a lease or licence, or an agreement for a lease or licence, the term of which exceeds six years or such longer term as may be prescribed, or in respect of which a right or option of renewal or extension exists so that the lease, licence or agreement may operate by virtue of renewal or extension for a total period exceeding six years or such longer period as may be prescribed;"
As the first draft of the lease set out a term which was five years and provided for no rights of renewal, s 32 of the Development Act would have no application in relation to a lease in that form. However, it would appear that the further draft of the lease contemplated a term of five years with two rights of renewal of five years each. The total period of fifteen years involved is prohibited under s 32. However, a lease or lease with renewals can be for a term longer than six years if the lease is made conditional on the approval of the relevant authority being obtained under the Development Act and that approval is subsequently obtained.
Some criticism was made concerning the withdrawal of the caveat in relation to only portion of the land comprised in the relevant Certificate of Title. The withdrawal has been endorsed on the official form used for a withdrawal of caveat. The second panel in that form makes it clear that a withdrawal can be undertaken in respect of either the whole of the land comprised in the relevant Certificate of Title or only part thereof.
In my opinion there was never any lease or agreement for lease entered into by the plaintiff and defendant. The arrangements between the parties proceeded no further than negotiations. If, contrary to the view I have just expressed, there was a concluded lease or agreement for lease between the parties that lease or agreement for lease is unenforceable by virtue of the operation of s 26(1) of the Law of Property Act 1936. The doctrine of part performance has no application. If contrary to the view I have just expressed there is a lease or agreement for lease between the parties which is not adversely affected by s 26 of the Law of Property Act, such lease or agreement for lease, if for a term of five years only, would be valid but if for an initial term of five years with two rights of renewal of five years each, would be invalid because it was not made subject to the approval of the appropriate authority under the Development Act 1993 and such approval has not been obtained.
The effect of dismissing this appeal is that the Master’s order dismissing the action stands. It will be necessary for the caveat, the lodgement of which was authorised by my order made on 27 June 2001, to be withdrawn or removed. If necessary, application can be made to this Court under s 191 IV of the Real Property Act for the caveat’s removal. A request for the withdrawal of the caveat should be made in the first instance. Alternatively, the normal process of warning the caveat could be undertaken.
Orders made
For the reasons, I make the following orders:
(1) That the appeal be dismissed.
(2)That the defendant be at liberty to apply for an order removing the caveat lodged at the Land Titles Office pursuant to leave granted by my order in this matter made on 27 June 2001.
I will hear counsel as to costs.

[2001] SASC 297

23 August 2001