Victoria Park Golf Club Inc v Brisbane City Council
[2001] QSC 225
•29 June 2001
SUPREME COURT OF QUEENSLAND
[2001] QSC 225
File No S8353 of 2000
BETWEEN:
VICTORIA PARK GOLF CLUB INC
Plaintiff
AND:
BRISBANE CITY COUNCIL
Defendant
MOYNIHAN J – REASONS FOR JUDGMENT
DELIVERED ON: | 29 June 2001 |
HEARING DATE: | 21-23 May 2001 |
ORDER: | The plaintiff’s action is dismissed. |
CATCHWORDS: | CONTRACT – OFFER AND ACCEPTANCE – MATTERS NOT GIVING RISE TO BINDING CONTRACT – STATEMENTS OF INTENTION, NEGOTIATIONS AND INVITATIONS TO TREAT – where negotiations occurred regarding a lease of a golf course to a golf club – whether the parties intended to be bound by the terms recorded in a particular letter. CONTRACT – OFFER AND ACCEPTANCE – MATTERS NOT GIVING RISE TO BINDING CONTRACT – VAGUENESS AND UNCERTAINTY – LEASES - where negotiations occurred regarding a lease of a golf course to a golf club – whether terms negotiated were sufficient to constitute a concluded agreement. CONTRACT – PARTICULAR PARTIES – PRINCIPAL AND AGENT – AUTHORITY OF AGENTS – CONSTRUCTION AND EXTENT OF AUTHORITY – AUTHORITY CREATED BY OTHER MEANS – ACTS INCIDENTAL TO EFFECTIVE EXECUTION OF EXPRESS AUTHORITY – AUTHORITY TO NEGOTIATE – where negotiations occurred between a city council and a golf club regarding a lease of a golf course – whether a particular council officer had actual or ostensible authority to bind the council. |
COUNSEL: | M P Amerena with R J Oliver for the plaintiff M D Hinson for the defendant |
SOLICITORS: | Windsor Craig Solicitors for the plaintiff Brisbane City Legal Practice for the defendant |
The Victoria Park Gold Club Inc (the Club) brings this action against Brisbane City Council (the Council) for specific performance of an agreement to lease part of the land which constitutes the Victoria Park Golf Course and of an associated agreement dealing with arrangements for access to the course by the Clubs’ members.
The case turns essentially on whether a particular Council officer had actual or ostensible authority to bind it, whether the parties intended to be bound by the terms recorded in a letter of 3 September 1999 and whether those terms are sufficient to constitute a concluded agreement.
The land on which the Victoria Park Golf Course is laid out is held by the Council under a deed of trust. Since the course was opened in the early 1930’s as a public golf course, the Club’s (or its predecessors) members have enjoyed specific or private entitlements for access to the course and associated facilities.
The terms of the relationship between the Club, its members and the Council have evolved over the years but nowhere formally or comprehensively recorded. By the time of the events giving rise to this action, the Club operated the clubhouse and function room erected on the course. Its members have favoured access to the course at specific times. The senior Council officer based at the course acted as the Club’s secretary/manager and the Council levied an annual fee from Club members for their use of the course and took a share of the bar profits.
By the early 1990’s the Club had become concerned to put in place comprehensive documented arrangements which would assure it security of tenure and its members access to the course. An Annual General Meeting of 23 September 1995 authorised the committee to negotiate with the Council to obtain the best possible terms.
Whilst the Council was receptive of the approach, discussions nevertheless moved slowly and in a stop start fashion. It is unnecessary to trace them in detail. In 1995 the Club put proposals for a lease of the course and facilities to secure access for its members. As will emerge these were rejected by the Council.
The Council too became concerned to define and regularise arrangements with the Club and its members. This was given impetus by a Council internal audit. A submission, dated 15 April 1996, was put to the Establishment and Coordination Committee recommending adoption of a specific option from among a number identified and the Council adopted the favoured option. The option was based “on the St Lucia links model” and involved negotiating a lease of the clubhouse and other specified facilities subject to customer service and quality requirements and a separate playing rights agreement.
Mr Stephen Sharry, the defendant’s Director of Major Venues wrote to the Club by letter dated 7 May 1996. The letter rejected the Club’s proposal for a lease of the golf course and related matters. It put forward the Council’s proposal. It concluded by asking for “a list of issues” to include in the negotiations and a response in 30 days “in order for discussions to commence concerning the … lease…and the playing rights agreement”.
Discussions commenced and continued, again it is unnecessary to traverse these in detail. On 22 January 1997, however, the Council wrote to the Club. The letter commenced:
“As a follow up to our meeting on Thursday 21 November 1996 at which it was verbally agreed to recommend to the Councils delegate that two agreements be entered into between the Brisbane City Council and the Victoria Park Golf Club Inc in regard to:
Item 1, Use of the Victoria Park Golf Course by Club Members
Item 2, Lease of the Clubhouse by Victoria Park Golf Club Inc
It was the Council’s understanding that the following points were agreed to and which will form the basis of a future usage agreement (licence) of the course for item 1 and lease of the Clubhouse for item 2.
This letter will serve as a “Letter of Intent”. Please confirm that the items set out in this letter are acceptable to you as discussed.
Approval will then be sought for this to take effect as of 1 January 1997 until a more formal Lease Agreement can be entered into.”
After canvassing matters of detail which it is unnecessary to set out the letter concluded:
“This letter only details the interim arrangements, subject to the completion of a formal lease and license agreements prior to 30 June 1997.”
The president of the Club apparently signed the letter by way of confirmation on 22 January 1997.
The parties did not complete a formal lease or a licence agreement prior to 30 June 1997. Discussions and the exchange of correspondence continued well past that date. It is convenient to note that among the detail canvassed by the letter was that the lease was for 10 years. One of the sticking points in the negotiations was that the Club wanted a 30 year term.
By the beginning January 1999 the Council, while committed to finalising a long term arrangement with the Club, had determined to go to public tender to obtain funds needed for the redevelopment of the clubhouse and associated facilities. The proposal, which ultimately went to tender on 16 October 1999, involved seeking private monies to develop a driving range and clubhouse facilities in return for rights in respect of the operation of the range and the facilities.
The tender proposal was discussed at a meeting of 13 January 1999 between the Council and the Club negotiators. The discussion canvassed a lease to the Club of a specific part of the redeveloped clubhouse and associated issues and the Club was advised that it would be welcome to tender. It subsequently did, albeit unsuccessfully. The parties agreed to meetings on a regular basis to finalise the relationship between the Council and the Club.
The process of meetings and the exchange of correspondence continued. On 21 July 1999, Maxfield the Council’s Manager Golf Courses, Major Venues Brisbane wrote to the Club’s President, English. That letter enclosed a copy of proposed “Heads of Agreement”. The document provided for a 30 year lease term and identified the portions of the improvements on the course to which it applied and canvassed the issue of rent. It provided:
“The Club will execute a formal lease of the premises containing such terms and conditions as the Council shall reasonably require. The lease is subject to the prior approval of the Minister for Natural Resources in terms of the Land Act 1994.”
The letter went on to provide for course access, defined the Club’s rights as to the provision of food and beverages and other matters. The Club’s negotiators considered this letter a significant step forward.
On 26 August 1999 Messrs Sharry and Maxfield (and perhaps others) representing the Council meet with Messrs English, Bennion, Dempsey and Hamburger for the Club. The Club’s case is that Sharry was authorised to bind the Council, it will be necessary to return to that issue. I do not understand it to be contended there was a concluded binding agreement prior to this meeting. The Council negotiators presented a draft heads of agreement in terms which proved to be acceptable to the Club’s negotiators. All present were elated about what they believed had been achieved.
On 3 September 1999, Sharry wrote to English in terms which reflected the outcome of the August meeting and, it is contended by the Club, constituted a binding agreement. The letter is as follows:
“ VICTORIA PARK GOLF CLUB INC
PROPOSED LEASE AND BLOCK PLAYING TIMES
LEASE ARRANGEMENTS
1. Term:
Date of Commencement: 01.07.2000
Date of Termination: 30.06.2030
2.Premises:
(a)The ground floor of the Club building from the base of the lower foyer steps to include at the minimum a Spike Bar and male and female locker rooms, as per the attached plan. Spike Bar to include space for cold storage, sink, dishwasher, handbasins and bain marie.
(b)All of the Halfway House
(c)A sufficient area in the former resident’s structure to permit the inclusion of an administration office, store room and meeting room for the Club, as per the attached plan.
In addition to the above the Club is to have access to common toilets and showers for the use by all staff at Victoria Park Golf Course.
The Council is to provide costs of refurbishment and fitting out of those areas referred to in (a) above for the Council and the Club to consider options in determining a fair and reasonable rent, and, upon the Council entering into an agreement to lease with any party responsible for the doing of the building works referred to in (a) above, the Club will vacate the first floor of the building.
The Council will take all reasonable measures to ensure that the Club is provided with uninterrupted trade and/or appropriate compensation determined by a proportion formula e.g. monthly loss of trade, where the interruption to the trade is deemed to be unreasonable. The Club will commit to facilitate all parties associated with the redevelopment, including access to the Clubhouse to conduct work with the proposed redevelopment.
Rent:
The Club will pay, for the leased premises, the greater of, a base rent of $20,000 per annum or 10% of bar and food sales per annum. The base rent to be subject to an upward movement in the Consumer Price Index (all groups) for the City of Brisbane together with commercial outgoings specified in the attached schedule (i.e. proportionate use of course and premises subject to rates and other charges). The rent is to be exclusive of GST.
A suitable GST clause.
3. Documentation:
The Club will execute a formal lease of the premises containing such terms and conditions as the Council shall reasonably require. The lease is subject to the prior approval of the Minister for Natural Resources in terms of the Land Act 1994.
COURSE ACCESS
4. Block Times:
To secure the Club's use of the Course during Block Times, the Council will enter into a formal booking agreement with the Club, in the form of a Deed, granting block time bookings to the Club throughout the 30‑year period of the lease over the Club's premises. The Deed would be binding on the Council and legally enforceable by the Club.
The block times are as follows:
Tuesday 8.00am ‑ 9.00am
Wednesday 9.30am ‑ 10.30am
Thursday 11.00am ‑ 12.30pm
Saturday 7.30am ‑ 12.30pm
Sunday 11.00am ‑ 12.30pm
Block Times will apply for 51 weeks of the year. The Club will agree to forego its Block Times for one week of the year after consultation with the Council prior to the commencement of the golfing calendar.
Only financial members are permitted to play social golf free of charge outside the Block Times, and then only if it does not impede public access. Council reserves the right to set member's access criteria to the Club outside block times dependent on the public usage of the course at any time. However, Council will involve the Club in any decision that alters member's access to the course outside block times.
Public Holidays will be treated as any other normal day in respect of Block Times, with Members having access to "Sunday" Block Times for conducting competitions.
The Club will have the right to reserve up to an additional eighteen (18) hours tee time per annum for Club Championships, pennants (as per the current pennant format), etc., as part of the Block Times, subject to three (3) months prior negotiation with the Council. In the event that the pennant format is changed requiring additional hours, the Council cannot reasonably refuse this additional time. Should Council provide additional time for extended use, the Club will provide back to Council the same period of time, at a time agreed to both parties or compensate Council in payment for the additional time by a proportion formula, eg loss of green fees.
Course Fee:
Council proposes two options for the course fee for the Club's access to the course during block times. In all instances the Booking Agreement will be 90% of the Clubs total membership fees less nomination fees.
Course Fee:
Year Minimum Fee 1 2000,000 2 Year 1 Minimum Fee + 8,000 + CPI* 3 Year 2 Minimum Fee + 8,000 + CPI* 4 Year 3 Minimum Fee + 8,000 + CPI*
CPI* will be any upward movement in the consumer price index (all groups) for the City of Brisbane. CPI will be calculated on the previous years minimum fee.
For year 5, and for all subsequent years the minimum fee will equate to the previous years minimum amount adjusted by any upward movement in the consumer price index (all groups) for the City of Brisbane.
The course fee will be exclusive of GST
Council undertakes to review every five years the Course Fee that is charged for Block Times. The review will compare fluctuations in course operating costs to determine whether adjustments to the Course Fee need to be undertaken to accurately reflect the cost associated with the course maintenance of Victoria Park Golf Course.
OPERATING RIGHTS
5. Course Maintenance:
The Council recognises that the Club is a key stakeholder in the Course. While the Council has the responsibility for course maintenance and improvements, it will consider requests and/or suggestions from the Club relating to such matters.
6. Food and Beverage:
The Club will be able to provide drinks and bar style snack food, (hot and cold), only in all areas where it has been granted specific operating rights, as follows:
Beverages ‑ soft drinks, tea, coffee, hot drinks and all types of alcoholic beverages.
(Snacks ‑ the Club reserves the right to operate a BBQ for providing the traditional "meal" after Pennant games, and platters after special events, e.g. Championships, Irishman's Day, Foursomes, etc) or by arrangement between the Club and the successful tenderer.
7. Hours of Operation:
The Club will operate the Spike Bar at a time commensurate with the operations of the Day/Night Driving, golf course and demand by the public, subject to economic viability.
The Club will operate an on‑course food and beverage facility, (either by an on‑course buggy or the Halfway House), on Saturday and Sunday from 7.30am to 4.00pm and on any other day when the booking sheet indicates bookings in excess of 150 patrons (including members of the public). The Club may elect to provide the service for fewer patrons.
8. Cleaning
The Club and the Council on an equally shared cost basis will be responsible for the daily cleaning of its leased facilities to a high standard commensurate with a first class facility.
The Club will have the right to use the common toilet facilities provided in the Clubhouse building. The Club must clean these toilets at least twice daily, or as may be additionally required, to the mutual satisfaction of (the Club) and the Council's Golf Course Manager.
TERMINATION
(a)Until formal documentation of the Agreement occurs, either party may terminate the Agreement by 30 days’ notice in writing to the other party if the other party (“the defaulting party”) commits a (material) breach of the above terms and conditions and fails to remedy such breach within (14) days of notification of the breach to the defaulting party.
(b)The standard default clause (No. 124 of the Property Law Act).”
The letter concluded with a clause:
“I, Ian English, for and on behalf of the Management Committee of the Victoria Park Golf Club Inc, am prepared to recommend the foregoing to a Special General Meeting of Members of the Victoria Park Gold Club Inc.”
English signed in terms of this clause on 15 September 1999.
On 16 October 1999 the Council called tenders for the development of a driving range and clubhouse facility on the Victoria Park course. In a letter of 22 November 1999, Maxfield, for the Council, informed English, for the Club, that as agreed “at a meeting on the 18 November 1999”, the current lease arrangement would remain in effect until 30 June 2001 if no redevelopment of the clubhouse was completed but as of 1 July CPI would be applied.
The tender proposal was the responsibility of the Council’s Community and Economic Development division. The function of that division was to effectively manage the Council’s assets with other departments being responsible for their operation. In the case of the Victoria Park Golf Course, the division was Recreation and Health, a unit of which was Major Venues headed by Sharry, a sub-unit of which was constituted by Maxfield, who was responsible for the management of golf courses.
Maxfield wrote to English on 5 January 2000 about progress “since our agreement mid year”. The letter referred to the potential effect of the inner city bypass and the bus way and associated compensation issues on the course and its development. The tender project was said to be “on hold”. The letter concluded by saying that the Council would not fund the redevelopment of the clubhouse but offered the Club the opportunity to provide a management plan for its redevelopment or to support the Council in seeking out a third party to redevelop and manage the whole clubhouse. The Club responded on 30 January with “an expression of interest” to enter into negotiations with the Council “to deliver the outcomes sought by the [request for tender]”.
In early February 2000 the Council, acting through its Establishment and Coordination Committee rejected tenders for the design, construction and operation of the golf course, driving range, pro shop and clubhouse facilities at the Victoria Park Golf Course and authorised the Divisional Manager, Community and Economic Development to enter into negotiations for agreement and lease for the design, construction and operation of golf driving range, pro shop and clubhouse facilities in accordance with “the provisions of section 46 of the City of Brisbane Act 1924” after the precise location of the inner northern busway had been finalised. The negotiations were to be with a preferred developer, represented by Mr Bickle, which had been an unsuccessful tenderer. For unexplained reasons this decision was made without the Committee or the Community and Economic Development division being aware of the letter of 3 September 1999 and the associated negotiations. Mr Pearce, the officer of the Community and Economic Development section who took up the course authorised by the Establishment and Coordination Committee only became aware of the letter after the Club took up the position, having become concerned that its position was being eroded, that the letter evidenced an agreement.
In the meantime, the relevant Council officers became concerned that Bickle would be deterred by an arrangement whereby the Club operated some facilities potentially in competition with the preferred developed, although acknowledging Bickle was keen to accommodate the Club’s requirements. The concern widened to one that in any event the arrangements contemplated with the Club having trading and other rights would compromise the Council’s long-term management of the course to effect the best return.
As I have said, the views just canvassed were arrived at without knowledge of the letter of 3 September 1999 or associated events. At a meeting of 1 June 2000, the Club’s negotiators became aware that the arrangements reflected in the letter of 3 September 1999 were in jeopardy and reacted strongly.
By letter of 22 June 2000, the Club expressed incomprehension that decisions were made without the Establishment and Coordination Committee being aware of the position with respect to the Club. The letter stated that the Club “remained committed to a positive and constructive outcome with the Council and the preferred developer” and set out a number of “recommendations” after saying:
“Irrespective of the above disappointing circumstances the Management Committee remains committed to achieving a positive and constructive outcome with the Council and with the preferred developer to ensure that all parties achieve their objectives. As you are aware from your attendance at the meeting with Mr Bickle on 15 June 2000, he has no objection to the following recommendations.”
The Council responded with a letter of 30 June 2000. The letter stated approval “in principle” could not be given to the 3 September 1999 letter proposals and that they were not “a suitable basis” for the relationship between the Club and the Council and that the terms of the document should be regarded as “formally withdrawn”.
I turn to the issue of Sharry’s authority. There is no issue that he was an officer employed by the defendant as Manager of Major Venues, Brisbane and that his responsibilities in that office included Victoria Park Golf Course. It is admitted he was authorised to prepare lease proposals for consideration by the parties. It may be safely concluded he was authorised to negotiate for the purpose of developing those proposals which included arrangements for access by the plaintiff’s members as well as a lease. The crucial issue is however whether he was authorised to bind the Council to the terms of any proposal.
The club relies on the Council’s adoption of the recommendations contained in the submission of 15 April 1996 as constituting actual authority. The recommendations relevantly were:
“9.2The Victoria Park Golf Course shall be operated on the same model as St Lucia Golf Links as detailed in option 3 with negotiations being carried out with the Victoria Park Golf Club Incorporated for a category “A” sporting association lease for the club catering, beverage, function room, bar, club office and locker room facilities.
9.3A separate agreement for playing rights and subscription shall be negotiated in accordance with the Brisbane City Council Ordinances chapter 9 Municipal Golf Courses.
.….
9.4The above recommendations shall be conveyed to the Victoria Park Golf Club and the Club be given 30 days to respond.”
The adoption has to be read in the context of the whole submission and against the background of the proposal in the submission of 15 April 1996. I accept what has been canvassed earlier. That said, I am unable to construe the outcome of the Council’s adoption of the proposal contained in the submission of 15 April 1996 as going beyond authorising the proponent, the Manager, Department of Recreation and Health (of which Major Venues was a sub-unit) to initiate negotiations with the Club. As will be apparent from what has already been said, Sharry became involved in those negotiations. I am unable to construe the documents or decision as an actual authorisation to anybody to conclude agreements with the Club. Essentially it set boundaries for and initiated a negotiating process. I note that it is of some significance that the Council chose not to expressly authorise an officer to bind it. It is, therefore, necessary to turn to the issue of apparent or ostensible authority.
The principles applicable to determining whether or not an agent has ostensible or apparent authority are considered and stated in Freeman & Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd & Anor (1964) 2 QB at 480 particularly by Diplock LJ at 502 and following. Freeman was approved by the High Court in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Company Pty Ltd (1975) 133 CLR 72; Northside Developments Pty Ltd v Registrar-Generaland Ors (1990) 170 CLR 146 and National Commercial Banking Corporation of Australia Ltd v Batty (1986) 160 CLR 251. As these cases show ostensible or apparent authority arises from a representation made or permitted by a principal to a third party that an agent has authority. The agent is essentially a stranger to the transaction.
I am not persuaded that Sharry’s position of Manager, Major Venues, a business unit of the Council constituted the Council holding him out as having an authority to bind in respect of arrangements between it and the Club. It is true he had a position in the Council hierarchy. He reported to the manager of the Recreation and Health section who presumably reported to the Council’s chief executive. Maxfield, the Manager Golf Courses, a participant in the negotiations and a major line of communication, reported to Sharry. Whether Sharry’s position in the hierarchy was high or low is a matter of opinion. At the best for the Club those considerations are neutral. This case is not an example of a corporate principal permitting an employee or officer to enter into contracts in the ordinary course of its business so founding an inference he is authorised to do so.
From time to time during negotiations with Council officers prior to the letter of 3 September 1999, Mr Dempsey, one of the Club’s negotiators raised the issue of the authority of the Council officers present to make a binding agreement. He received what might be described as placatory answers along the lines “don’t dwell on the past…we can do this…we can sort this out”.
Sharry denies stating he had authority.
It is difficult at this stage to conclude more precisely what was said or what was made of it. Each side’s recollection of an incidental matter arising in complex negotiations which extended over a considerable period of time and the most crucial aspect of which took place going on for two years ago is now coloured by the events which gave rise to this litigation and the litigation itself. There is no contemporaneous record and no suggestion that it was a condition of the Club’s participation in the negotiations that Sharry or anyone else be authorised to conclude a binding agreement.
In any event, the issue seems to me something of red herring. Sharry did not have actual authority. He could not confer authority on himself so as to bind the Council. That could only be done by the Council or someone authorised by it to do so; see Freeman v Lockyer (supra) per Lord Diplock at 505-506. There is no evidence that anyone with authority did so.
In my view it is not established Sharry had authority to bind the Council, his authority was to negotiate. That is sufficient to dispose of the matter but it is perhaps desirable to deal with one or two other matters.
These are whether, issues of authority aside, the parties to the August 1999 negotiations intended that the terms arrived at were final and conclusive and if so whether they did so with sufficient certainty to constitute a complete agreement. There are signs that the agreement arrived at in August was not final and complete.
The Club’s negotiators were satisfied with the outcome of the August meeting and inclined to resign if the terms were not acceptable to the Club membership. Nevertheless, irrespective of whether or not they had authority to bind the Club, they wished the terms to go to a General Meeting. After September the Club entered in discussions involving Bickle with respect to his involvement in the redevelopment of the course.
Perhaps more importantly there were outstanding issues as to determining the rent. The letter of 3 September 1999 provided:
“The council is to provide costs of refurbishing and fitting out … to consider options in determining a fair and reasonable rent...”
The letter also referred to a “base” rent of $20,000 or 10% of bar and food sales to be subject to CPI adjustments “together with commercial outgoings specified in the attached schedule”. No schedule was in fact attached and the evidence does not permit it to be identified. The existing or current arrangements with respect to leases and fees were regarded by the parties as being until there was a concluded agreement with respect to the relationship between Club and Council in respect of the course. The terms of the letter of 3 September do not provide an “entire mechanism” for determining the rent; c.f. Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 604-605. Those being the considerations the letter of 3 September 1999 did not constitute a concluded agreement.
It seems to me that the provisions of the letter of 3 September 1999 as to rent do not finally resolve the rent to be paid but anticipated further negotiation with a view to agreement being reached. No doubt the negotiators were confident that agreement would be reached but there was not in fact agreement as to rent or how it was to be fixed. Those being the considerations, the letter of 3 September 1999 did not constitute a concluded agreement.
The considerations being those canvassed, I dismiss the plaintiff’s action.
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