Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited - [2007] NSWCA 276

No judgment structure available for this case.

New South Wales

Court of Appeal

CITATION: Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited [2007] NSWCA 276

HEARING DATE(S): 3 and 4 May 2007

JUDGMENT DATE:
16 October 2007

JUDGMENT OF: Beazley JA at 1; McColl JA at 196; Campbell JA at 257

DECISION: 1. Appeal dismissed; 2. The appellant is to pay the respondent’s costs of the appeal on the basis of a hearing of one day’s duration and that there be no costs allowed to the extent that such costs are attributable to the preparation of the issues of whether specific performance was available in respect of an executed obligation and whether damages were an adequate remedy.

CATCHWORDS: CONTRACT – lease agreement – proper construction of clause in lease agreement – whether clause totally governed the rights and obligations of the parties where lessee failed to remove structure – whether clause augmented the rights of the parties – whether lessor intended to abandon any remedies for breach of contract arising by law – principle of concurrence - CONTRACT – implication of term in lease agreement – lessee required to remove structure on leased land before expiry of the lease term – lessee required consent from statutory authority before wharf could be removed – whether lessee under implied obligation to take all steps necessary to obtain such consent – whether lessee required to appeal from refusal of statutory authority to grant consent to remove wharf - CONTRACT – lease agreement – clause provided lessor could retain structure situated on leased land at expiration of term of lease or remove structure and seek liquidated damages – negotiations between lessor and lessee in relation to removal of structure occurred over six period – lessor sought removal of part of the structure – whether lessor had decided to retain the structure - ENVIRONMENT AND PLANNING – lessee required to remove wharf situated on leased land before expiration of lease term – pursuant to cls 36 and 37 of North Sydney Local Environment Plan 1989 (NSLEP 1989) removal of wharf required consent from North Sydney Council – whether NSLEP 1989 inconsistent with Sydney Regional Environmental Plan No 23 (SREP 23) so that Maritime Services Board was the relevant consent authority – whether “demolition” was included in “development” under the Environmental Planning and Assessment Act 1979 (NSW) so that SREP 23 applied to the exclusion of NSLEP 1989 - EQUITY – specific performance – failure to remove structure before expiry of term – distinction between specific performance and an order that a contractual obligation be performed in specie – where a contract has come to an end specific performance of obligations that were to be performed during the term is not available – where in specie performance of an obligation is sought the underlying equity required for such an order is one appropriate to the actual relative legal situations of the parties - EQUITY – specific performance – failure to remove structure before expiry of lease term – breach of clause provided for lessor to recover damages from lessee where lessor removed the structure – whether damages an adequate remedy - EQUITY – equitable damages sought pursuant to s 68(b) of the Supreme Court Act 1970 (NSW) – in determining an application for equitable damages pursuant to s 68(b) the trial judge was required to determine whether the court could have granted specific performance as at the date of the commencement of the proceedings - LOCAL GOVERNMENT – statutory construction of local government legislation – trial judge held exclusive control of wharf vested in Maritime Services Board pursuant to s 33 Sydney Harbour Trust Act 1900 (NSW) – trial judge applied rule of statutory construction that general legislation which is inconsistent with particular legislation does not repeal the particular legislation – whether trial judge erred in finding inconsistency between s 33 of Sydney Harbour Trust Act and s 68 of the Local Government Act 1993 (NSW) – whether Local Government Act was contrary to or diminished the lessor’s exclusive control in respect of the demolition of the wharf

LEGISLATION CITED: Civil Procedure Act 2005 (NSW) Sch 6 cl 5
Environmental Planning and Assessment Act 1979 (NSW) ss 4, 75, 76
Local Government Act 1993 (NSW) ss 68, 69, 205
Maritime Services Act 1935 (NSW) s 6
North Sydney Local Environment Plan 1989 cls 36, 37 Supreme Court Act 1970 (NSW) s 68(b)
Sydney Environmental Planning Policy 56 cls 2, 4, 6, 7, 14, 15
Sydney Harbour Trust Act 1900 (NSW) s 33
Sydney Regional Environmental Plan No 23 cls 4(1), 5, 8(4)
Uniform Civil Procedure Rules 2005 (NSW) rr 12.6(2), 14.27

CASES CITED: Australian Broadcasting Commission v Australasian Performing Rights Association Limited (1973) 129 CLR 99; [1973] HCA 36
Belle Design Group Pty Ltd v Woollahra Municipal Council (2004) 136 LGERA 1; [2004] NSWLEC 284
Berry v Mahoney [1933] VLR 314
Booker Industries Proprietary Limited v Wilson Parking (Qld) Proprietary Limited (1982) 149 CLR 600; [1982] HCA 53
BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266; [1977] HCA 40
Bridge Wholesale Acceptance Corporation (Australia) Ltd v Burnard (1992) 27 NSWLR 415
Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd (1963) 63 SR (NSW) 492
Butler v Attorney-General for the State of Victoria (1961) 106 CLR 268; [1961] HCA 32
Butt v M’Donald (1896) 7 QLJ 68
Butts v O’Dwyer (1952) 87 CLR 267; [1952] HCA 74
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24
Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312
Co-operative Insurance v Argyll Stores (Holdings) Ltd [1998] AC 1
Coulls v Bagot’s Executor & Trustee Company Limited & Ors (1967) 119 CLR 460; [1967] HCA 3
David Syme & Co Ltd v Lloyd (1985) 1 NSWLR 416
Dougan v Ley & Anor (1946) 71 CLR 142; [1946] HCA 3
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107; [2007] HCA 22
Ferguson v Wilson (1866) LR 2 ChApp 77
Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48
Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235
Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1
Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689
Gimtak Pty Ltd v Cathie [1998] VSC 6; [2001] V ConvR 54-645
Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129
Inetstore Corporation Pty Ltd (in liq) & Anor v Southern Matrix International Pty Ltd (2005) 221 ALR 179; [2005] NSWSC 883
J.C. Williamson Limited v Lukey and Mulholland (1931) 45 CLR 282; [1931] HCA 15
Kennedy v Vercoe (1960) 105 CLR 521; [1960] HCA 64
L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
Langley v Foster (1906) 4 CLR 167; [1906] HCA 28
Laserbem Pty Ltd v Gainsville Investments Pty Ltd & Anor [2004] VSC 62
Leighton Contractors Pty Ltd v East Gippsland Catchment Management [2000] VSC 26
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812; (2005) 56 ACSR 263
Lion Nathan Australia Pty Ltd (ACN 008 596 370) v Coopers Brewery Ltd (ACN 007 871 409) and Others [2006] FCAFC 144; (2006) 156 FCR 1
Mackay v Dick & Anor (1881) 6 App Cas 251
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21Masters v Garcia (No 2) [2006] NSWCA 15
McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
McMahon v Ambrose [1987] VR 817
Melluish (Inspector of Taxes) v BMI (No 3) Ltd [1996] AC 454
Mills v Ruthol (2004) 61 NSWLR 1; [2004] NSWSC 547
Mondel v Steel (1841) 8 M & W 858, 151 ER 1288
Moschi v Lep Air Services Ltd [1973] AC 331
Mulcahy v Blue Mountains City Council (1995) 87 LGERA 422
North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) [1940] HCA 7; (1940) 63 CLR 52
Nyhius v Anton (1979) 45 LGRA 93
Pacific Carriers Ltd v PNB Paribas (2004) 218 CLR 451; [2004] HCA 35
Pakenham Upper Fruit Company Limited v Crosby (1924) 35 CLR 386; [1924] HCA 55
Parramatta City Council v Stauffer Chemical Co (Aust) Pty Ltd & Ors (1971) 2 NSWLR 500
Park v Brothers (2005) 80 ALJR 317; [2005] HCA 73
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17
Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited (1979) 144 CLR 596; [1979] HCA 51
Sharp v Hunters Hill Council [2002] NSWLEC 27
Starline Drive-In Theatre Ltd v Federal Commissioner of Taxation [1964] HCA 68; (1964) 112 CLR 458
Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574; [1998] 1 All ER 883
Suttor v Gundowda Proprietary Limited (1950) 81 CLR 418; [1950] HCA 35
Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117
Tailby v Official Receiver (1888) 13 App Cas 523
Telecom & CPS Community Credit Cooperative Ltd v Heberg Pty Ltd [1993] ANZ ConvR 312
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Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors (2004) 219 CLR 165; [2004] HCA 52
Varley v Varley [2006] NSWSC 1025
Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue (2004) 55 ATR 1
Waterways Authority of New South Wales v Coal and Allied Operations Pty Ltd [2005] NSWSC 1285
Wentworth v Woollahra Municipal Council & Ors (1982) 149 CLR 672; [1982] HCA 41
Wilkie v Gordian Runoff [2005] HCA 17; (2005) 221 CLR 522
Wincant Pty Ltd v South Australia (1997) 69 SASR 126
Wolverhampton and Walsall Railway Co v London and North-Western Railway Co (1863) LR 16 Eq 433
Wood Factory Pty Ltd v Kiritos Pty Ltd (1985) 2 NSWLR 105
Woollahra Municipal Council v MacLennon [1970] 1 NSWR 273
Zografakis v McCarthy [2007] NSWSC 144
Cheshire and Fifoot’s Law of Contract (2002) LexisNexis Butterworths, Australia
Courtney, Wayne and Ben Curtin, “Construction Goes Off the Rails: an Analysis of Wallace-Smith v Thiess Infraco”, (2006) 22 Journal of Contract Law 287
Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (2002) Butterworths LexisNexis, AustraliaI
Pearce & Geddes, Statutory Interpretation in Australia (2006), Australia, LexisNexis
Spry, ICF, The Principles of Equitable Remedies 7th ed (2007) Australia, Lawbook Co.
Woodfall’s Law of Landlord and Tenant, Sweet & Maxwell, Vol 1

PARTIES: Waterways Authority of New South Wales (Appellant)
Coal & Allied (Operations) Pty Limited (Respondent)

FILE NUMBER(S): CA 40208/06

COUNSEL: MLD Einfeld QC; PW Larkin (Appellant)
TT Bathurst QC; M Dicker (Respondent)

SOLICITORS: Dibbs Abbott Stillman Lawyers (Appellant)
Allens Arthur Robinson (Respondent)

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 5099/99

LOWER COURT JUDICIAL OFFICER: Barrett J

LOWER COURT DATE OF DECISION: 15 December 2005; 23 March 2006

LOWER COURT MEDIUM NEUTRAL CITATION:
Waterways Authority of New South Wales v Coal and Allied Operations Pty Limited [2005] NSWSC 1285; Waterways Authority of New South Wales v Coal & Allied Operations Pty Limited [2006] NSWSC 183

- 89 -

CA 40208/06
BEAZLEY JA
McCOLL JA
CAMPBELL JA

16 October 2007

Waterways Authority of New South Wales

v

Coal & Allied (Operations) Pty Limited

Headnote

The appellant, as lessor of certain harbourside land at Waverton, entered into a lease with the respondent for a term of 21 years commencing on 1 January 1969. The lease term was extended on three occasions and expired on 31 December 1993. The respondent by agreement remained in possession of the land until May 1994.

Clause 7 of the lease provided that should the respondent fail to remove any structure on the leased land before the expiration of the term of the lease, the appellant could either retain any such structures, or itself remove them, with the respondent being required to pay liquidated damages for the cost of such removal.

The appellant brought proceedings in the Supreme Court seeking damages, a declaration that the respondent by failing to remove a wharf on the premises, was in breach of clause 7, and an order that the respondent specifically perform its obligations under clause 7, including the removal of the wharf. The appellant subsequently abandoned its claim for specific performance and identified its claim for damages as being brought in lieu of the claim for specific performance pursuant to s 68(b) of the Supreme Court Act 1970 (NSW).

The trial judge rejected the appellant’s claim on the basis that, as it would have been unlawful to remove the wharf as at the date of commencement of proceedings, being 17 December 1999, an order for specific performance would not then have been made. As a claim for specific performance would have been declined, equitable damages were not available pursuant to s 68(b) of the Supreme Court Act.

The appellant appealed against the trial judge’s rejection of its claim for equitable damages. The respondent filed a Notice of Contention seeking otherwise to uphold the trial judge’s decision, should the appellant establish its ground of appeal.

The relevant issues for determination by the Court of Appeal were:

(i) The proper construction of clause 7 of the lease, in particular, whether clause 7 totally governed the rights and obligations of the parties; or whether rights under the general law were still available;

(ii) Whether specific performance would be ordered in respect of an executed contract;

(iii) Whether damages were an adequate remedy, so that as a matter of law, specific performance was not an available remedy;

(iv) Whether the appellant had elected to retain the wharf;

(v) Whether North Sydney Council was the appropriate consent authority;

(vi) Whether the trial judge erred in finding that the Court would not, rather than could not, order specific performance;

(vii) Whether there was an implied obligation upon the respondent under the lease to take all steps necessary to obtain consent for the demolition of the wharf.

In relation to (i)

HELD per BEAZLEY JA, (CAMPBELL JA agreeing); McColl JA agreeing in a separate judgment:

Australian Broadcasting Commission v Australasian Performing Rights Association Limited

Pacific Carriers Ltd v PNB Paribas

Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors

(2) Clause 7 provided that the respondent was to remove structures from the demised land prior to the expiration of the term. A breach of clause 7 would occur should the lessee not remove structures at that time: [47], [50], [239]

McCOLL JA additionally as to the principles of construction:

McCann v Switzerland Insurance Australia Ltd

Wilkie v Gordian Runoff

Stocznia Gdanska SA v Latvian Shipping Co

Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd

Concut Pty Ltd v Worrell

In relation to (ii)

HELD per BEAZLEY JA (CAMPBELL JA agreeing):

J.C. Williamson Limited v Lukey and Mulholland

Wolverhampton and Walsall Railway Co v London and North-Western Railway Co

Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd

Bridge Wholesale Acceptance Corporation (Australia) Ltd v Burnard

Masters v Garcia (No 2)

Pakenham Upper Fruit Company Limited v Crosby

(8) The relevant time to consider the underlying equity is likely to be at the time of making the order, but in considering the availability of the remedy, it is necessary to consider the positions of the parties at the commencement of the proceedings. Although the respondent breached its obligation to remove the wharf, at the date of commencement of the proceedings, there was no outstanding obligation of which in specie performance could be ordered: [68]-[70]

In relation to (iii)
HELD per BEAZLEY JA (CAMPBELL JA agreeing):
(9) The obligation sought to be enforced did not fall within any of the traditional categories of case where damages have been considered to be an inadequate remedy. Nor was there anything that made the obligation under clause 7 analogous to those categories where damages are considered inadequate. The obligation was to remove a particular structure. Breach of the obligation gave rise to a right to claim damages, either under clause 7, or on the construction of the contract, as found by his Honour, at law. On either bases, damages were an adequate remedy: [98]

In relation to (iv)
HELD per BEAZLEY JA (CAMPBELL JA agreeing):
(10) The appellant was not seeking removal of the wharf. If it was seeking removal of any part of the wharf, which itself was not clear, it was only seeking removal of the deteriorating timber portion. This provided support for the proposition that the appellant intended to retain the steel structure and as a result, had elected to retain the wharf for the purposes of clause 7: [162]-[163]

HELD per McCOLL JA (obiter)
(11) Reasonable minds may differ as to the question whether the fact the wharf had not been removed meant the appellant had decided to retain it. The trial judge’s finding that the appellant had not decided to retain the wharf was to be preferred. The position the appellant found itself in at the time the proceedings were commenced in relation to the wharf was reached more by a process of attrition than an active desire on its part to retain the wharf – whose demolition it had been seeking even before the lease expired: [246]

In relation to (v)

(12) The respondent was required to remove the wharf at the expiry of the term of the lease, at that time the amendments to the Sydney Regional Environmental Plan No 23 (SREP 23) had not yet come into force, as a result, pursuant to the North Sydney Local Environment Plan 1989 (NSLEP 1989), North Sydney Council was the relevant consent authority: [113]

(13) Sections 75 and 76 of the Environmental Planning and Assessment Act 1979 (NSW) did not have the effect of incorporating the extended meaning of “development” into SREP 23. Thus, “development” for the purposes of SREP 23, prior to its amendment on 22 March 1994, did not include demolition. Accordingly, there was no inconsistency between SREP 23 and NSLEP 1989, with the result that pursuant to NSLEP 1989, as at the expiry of the lease, North Sydney Council was the planning authority and its consent was required for the demolition of the wharf: [120]-[121]

(14) When regard was had to the effect of ss 68 and 69 of the Local Government Act 1993 (NSW), s 33 of the Sydney Harbour Trust Act 1900 (NSW) and s 68 of the Local Government Act could co-exist. There was nothing in the Local Government Act that was contrary to or diminished the appellant’s exclusive control in respect of the demolition of the wharf: [132]-[133]

In relation to (vi)
HELD per BEAZLEY JA (CAMPBELL JA agreeing):
(15) In determining the appellant’s claim for equitable damages pursuant to s 68(b) of the Supreme Court Act 1970 (NSW) the trial judge was required to determine whether the court could have granted specific performance as at the date of the commencement of proceedings. The trial judge did not fall into error in applying this test. Having found that consent was necessary for demolition of the wharf, and that no consent was in existence at the date of the commencement of the proceedings, his Honour found that an order for specific performance would require the doing of an unlawful act. For that reason, specific performance could not be ordered: [170], [173]

In relation to (vii)

HELD per BEAZLEY JA (CAMPBELL JA agreeing):

Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited

BP Refinery (Westernport) Pty Limited v Shire of Hastings

HELD per McCOLL JA (Obiter):

CA 40208/06

BEAZLEY JA
McCOLL JA
CAMPBELL JA

16 October 2007

Waterways Authority of New South Wales

v

Coal & Allied (Operations) Pty Limited

Judgment

1 BEAZLEY JA:

Introduction

2 The appellant, as lessor of certain harbourside land at Waverton, claimed that the respondent was in breach of cl 7 of a lease dated 13 January 1972, which required the lessee to remove any structure upon the demised premises prior to the expiration of the term of the lease.

3 By proceedings commenced in the Equity Division of the Supreme Court, the appellants sought a declaration that by failing to remove the wharf, the respondent was in breach of cl 7 of the lease and sought an order that the respondent specifically perform its obligations under cl 7, including removing the wharf. The Waterways Authority also sought damages. The appellant subsequently abandoned its claim for specific performance and identified its claim for damages as being brought in lieu of the claim for specific performance pursuant to s 68(b) of the Supreme Court Act 1970 (NSW) (the Supreme Court Act).

4 The trial judge, Barrett J, rejected the claim on the basis that, as it would have been unlawful to remove the wharf as at the date of commencement of proceedings, an order for specific performance would not then have been made. As a claim for specific performance would have been declined, under s 68(b) of the Supreme Court Act equitable damages were not available.

5 The appellant appeals against his Honour’s rejection of its claim for equitable damages. The respondent has filed a Notice of Contention seeking otherwise to uphold his Honour’s decision, should the appellant establish its ground of appeal.

6 The original parties to the lease, the Maritime Services Board of New South Wales and J & A Brown Abermain Seaham Collieries Limited, as lessor and lessee respectively, have changed name and/or corporate structure on more than one occasion. The Waterways Authority of New South Wales (formerly the Marine Ministerial Holding Corporation) is the successor in title to the Maritime Services Board. Coal & Allied (Operations) Pty Limited (C & A) is the successor in title to J & A Brown. It is convenient to refer to the lessor and lessee as the Waterways Authority and C & A respectively, regardless of the point of time at which those present entities came into existence and/or succeeded to the relevant interest in the lease. However, it will sometimes be convenient to refer to the parties by their correct names at a particular point in time.

The lease

7 The trial judge made the following findings at [126] in respect of C & A’s obligations to remove the wharf:

“1. The failure of C&A to remove the wharf at or before the expiration of the term created by the memorandum of lease dated 12 January 1972 (as subsequently varied) constituted breach by C&A of the contractual promise contained in clause 7 of the memorandum of lease.

2. It would not have been unlawful for C&A to remove the wharf at any time during the period commencing on 10 November 1992 (when [the Waterways Authority], in exercising the “exclusive control” over Sydney Harbour vested in it by s.33 of the Sydney Harbour Trust Act 1900, required C&A to remove all structures and equipment) and ending at the expiration of the term created by the memorandum of lease (as varied).

3. Because no relevant consent of the Minister for Ports and Waterways was for the time being in force, it would have been unlawful for C&A to remove the wharf on the day on which these proceedings were commenced, being 17 December 1999.

4. If [the Waterways Authority’s] application for an order for specific performance requiring C&A to remove the wharf were pressed, the court would decline to make that order.

8 The lease commenced on 1 January 1969 for a term of 21 years and was thus due to expire on 31 December 1989. The term was extended for a further term of one year from 1 January 1990 and the lessee was subsequently granted a licence to remain on the premises until 31 December 1992. There was a further extension until 31 December 1993, on the basis that the lease provisions continued to apply. C & A remained in possession of the land up until May 1994, pursuant to an informal arrangement between the parties, but at the time it yielded up possession in May 1994, it had not removed the wharf. His Honour’s judgment thereafter proceeded on the basis that the lease terminated on 31 December 1993, which, he observed, at [11], was accepted by the parties.

9 Clause 7 of the lease provided that should C & A fail to remove the structures, the Waterways Authority could either retain any such structures or itself remove the structure, with C & A being required to pay liquidated damages for the cost of such removal. The structure in question was a wharf.

10 Pursuant to the lease, the Waterways Authority leased to C & A Lots 1, 2 and 3 in deposited plan 542933, being part of the land in certificate of title volume 5018 folio 1, which was land located at Waverton on which C & A conducted coal loading operations. The wharf, which is at the centre of the present controversy, is erected mainly on Lot 2 and was already in situ at the time the lease was granted on 13 January 1972. Lot 2 forms part of the bed of Sydney Harbour and does not adjoin dry land. The wharf stands wholly within and occupies substantially the whole of Lot 2. At the shore end of the wharf, the wharf extends over an area of the eastern boundary of Lot 2 and a retaining wall and is affixed to dry land, slightly inland from the retaining wall. The land between the eastern boundary of Lot 2 and dry land is also Crown land.

11 The coal loading operations conducted by C & A extended both over the leased land as well as over a small portion of Crown land. The wharf itself is predominantly of timber construction, but is also partly constructed of steel. It has steel gantry bearing rails along which a crane moved to carry coal to ships for the purposes of loading. The crane has been removed, but the steel gantry remains.

12 The primary clause with which the present proceedings are concerned is cl 7 of the lease. Clause 7 provided:

prior to the expiration of the said term

13 Clauses 8 and 11 are also relevant. Clause 8 provided:

AND

14 Clause 11 provided

“That the Lessee shall and will at all times during the said term conform to and comply with (a) all statutes (whether Commonwealth or State and including statutes administered by the Board) and all by-laws regulations or orders thereunder now or hereafter in force in any way applicable to the said demised premises or their use or howsoever otherwise relating thereto including but without affecting the generality of the foregoing the Public Health Act, 1902 the Inflammable Liquids Act, 1915-1953 and the Local Government Act, 1919 and any Act or Acts amending the same (b) the rules regulations and requirements of the Fire and Accident Underwriters Association of New South Wales (c) the requirements now or hereafter imposed of all public municipal and/or other authorities (including the requirements of the Board imposed under any statute administered by it or under any regulation made thereunder) having jurisdiction in respect of the said demised premises and whether such requirements be indicated by order made against or notice served upon the Board or the Lessee or otherwise.”

15 Other terms of the lease should also be briefly noted. Clause 4 contained a covenant to repair structures erected on the leased premises; cl 26 contained a right to terminate the lease on the giving of six months notice if the property or any part of it was required for public purposes; and cl 27 permitted the lease to be determined if the leased premises or any adjoining land owned or occupied by C & A was used contrary to the County of Cumberland Planning Scheme Ordinance.

16 The Waterways Authority adduced evidence that the cost of demolition of the timber part of the wharf as at the date of hearing was $1,075,000. C & A accepted that that was the cost of demolition as at the date of hearing but did not agree, should the Waterways Authority establish its claim for damages, that that sum was the amount to which the Waterways Authority was entitled by way of damages.

Issues on the appeal

Issues raised by the Waterways Authority on its appeal

17 The Waterways Authority’s principal argument on the appeal was that the trial judge erred in concluding that, as at 17 December 1999, being the date upon which it commenced proceedings, the Court would not have made an order for specific performance, because at that date there was no relevant consent for C & A to remove the wharf. On the Court’s reasoning, as there was no consent, any removal on that date would have been unlawful: (see trial judge’s reasons at [124]).

18 The Waterways Authority contended that his Honour, in reaching this conclusion, applied the wrong legal test and that the question for his determination was whether, as at the commencement of proceedings, specific performance could have been awarded, not whether specific performance would have been awarded: see Mills v RutholPty Ltd (2004) 61 NSWLR 1; [2004] NSWSC 547.

19 Underlying this submission was an argument that there was an implied obligation on C & A to obtain consent for the removal of the wharf. C & A contended that the Waterways Authority should not be permitted to advance this argument, as it had had not been advanced at trial. Rather, C & A submitted that the Waterways Authority’s primary case at trial was advanced on the assumption that no planning consent was required or, alternatively, if it was, as it was the relevant consent authority, it would have granted that consent.

Issues raised by C & A on its Notice of Contention

20 C & A submitted that both the appeal and its Notice of Contention raised the following issues:

(1) The operation of cl 7 of the lease. C & A submitted that after the expiry of the lease there was no remaining obligation on it to remove or demolish the wharf. As there was no remaining obligation, there was nothing in respect of which a decree of specific performance could be made and, it followed, no basis for an award of damages pursuant to s 68(b) of the Supreme Court Act . C & A’s only obligation was a secondary obligation to pay damages in accordance with the terms of the lease, which was only activated if the wharf was demolished: see Moschi v Lep Air Services Ltd [1973] AC 331. This issue raised the proper construction of cl 7 and in particular, whether cl 7 totally governed the rights and obligations of the parties.

(2) Whether specific performance would be ordered in respect of a fully executed obligation.

(3) That damages were an adequate remedy for the alleged breach, so that, as a matter of law, specific performance was not an available remedy. If damages were an adequate remedy, it was submitted that equitable damages were not available.

(4) Whether the Waterways Authority had elected to retain the wharf. If it had elected to retain the wharf, C & A contended that the Waterways Authority had no right to damages of any kind, either contractual or equitable.

21 If C & A is correct in any of the first three of these issues, the matters raised by the Waterways Authority as the principal basis of its appeal will not arise. Accordingly, it is convenient first to deal with the issues as identified by C & A. Before doing so, it is necessary to deal with a problem that bedevilled the conduct of the appeal.

22 Both the Waterways Authority and C & A sought to raise issues not raised in the Court below. In the case of the Waterways Authority, it argued that the trial judge should have found that cl 7 of the lease gave rise to an implied obligation to obtain all necessary consents for the demolition of the wharf.

23 The new issues raised by C & A were that specific performance would not be granted of an executed obligation and that damages were an adequate remedy. Both parties contended that the Court should not entertain the new issues now sought to be raised. It will be necessary to determine whether leave should be granted to raise the new issues, but that is best dealt with as part of the consideration of the issue in question.

24 However, C & A’s resistance to the question of there being an implied obligation to obtain consent for the wharf to be removed, can be disposed of immediately. In its submissions in reply before the trial judge, the Waterways Authority argued that the question of the need to obtain consent was a false issue and was not one raised by it. It submitted in any event that C & A’s submission that C & A was not required to obtain any necessary statutory approvals under cl 7 of the lease was misconceived. It argued that in circumstances where C & A had an obligation to remove the structure, it had a commensurate obligation to take all reasonable and lawful steps to do so: see Butts v O’Dwyer (1952) 87 CLR 267; [1952] HCA 74. Alternatively, it contended that such a term was necessary to be implied to give business efficacy to the lease: Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 and BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266 at 283; [1977] HCA 40.

25 In my opinion, the matter was sufficiently raised, although dealt with differently by the trial judge and thus it is open for the Waterways Authority to argue this point. The question of whether there was an obligation to obtain consent then kept in issue the identity of the relevant authority and whether consent had in any event been applied for and been refused. It will be convenient to deal with these questions after the question of whether damages were an adequate remedy.

Proper construction of cl 7

26 C & A submitted at trial that cl 7 was a code such that the rights and obligations of the parties in relation to the removal or retention of the wharf were governed solely by the clause. It followed that the Waterways Authority’s only entitlement to damages was as specified in the clause.

27 The trial judge dealt with the construction of cl 7 at [15]ff of his judgment and specifically dealt with the question of whether cl 7 was a ‘code’ in the sense referred to by C & A at [27]ff. His Honour held, first, that the clause was not concerned with “tenant’s fixtures as such”. There was no dispute about this and it is to be observed that the wharf was in place at the time the lease was granted. It might also be observed that the wharf is undoubtedly a fixture and is thus the property of the Waterways Authority, being affixed to its land.

28 Next, his Honour observed that cl 7 specified the time at (or within) which structures were to be removed, namely, prior to the expiration of the term of the lease. In that regard, his Honour observed that cl 7 did not contemplate removal after the expiry of the term. That was to be contrasted with the provisions of cl 8. Clause 8 provided that in the case of termination prior to the end of the term due to breach, or otherwise as specified in cl 26, structures were to be removed within six calendar months of the lessee being given notice to do so and further provided that there be a special right of occupation for the period during which removal was to be effected and for which a payment of rent was required.

29 His Honour then dealt with that part of cl 7 that operated should the structure not be removed as the clause stipulated. His Honour observed that in that case, the lessor could either retain the structure or remove the structure and sell or otherwise dispose of it. Given that the wharf is a fixture forming part of the lessor’s land, his Honour considered, at [18], that the requirement that C & A remove the wharf prior to the expiration of the term was, in substance “an obligation to yield up the land in the condition it was in before structures … were placed upon it”. His Honour thus considered that the covenant was a covenant to undertake “certain work upon and in relation to the land before the expiration of the term”.

30 His Honour found support for this construction in the provisions of cl 4, which required the lessee to place and keep structures “in good and efficient condition and in a thorough state of repair” and to deliver them up in such condition and state of repair at the expiration or sooner determination of the term. The provisions of cl 4 were specifically made subject to the provisions that appeared thereafter, so that cl 7 had precedence over cl 4. It followed that the obligation to deliver up structures in a state of repair at the expiration of the term pursuant to cl 4 did not apply to structures which fell within cl 7, being structures that the lessee was required to remove before expiration. In short, his Honour construed cl 4 as applying to seawalls and reclamations, whilst cl 7 applied to structures and relevantly, the wharf, which were upon the land. His Honour thus construed cls 4 and 7 as each being a provision “by which the lessee is bound to leave the leased property in a particular condition”: see judgment [20].

31 His Honour’s consideration of the question whether cl 7 was a code commenced at [32] with the proposition that a provision that allowed a landowner to retain fixtures after the expiration of a lease did not create in the landowner any right or interest the landowner did not already have. Accordingly, the creation of the permission in cl 7 for the lessor to retain fixtures that the lessor, as landowner, already owned, had to have some other significance. His Honour considered that the significance was that the lessee was given an implied licence to remove structures as a concomitant of having a contractual obligation to do so. He said that the lessor had an express right to revoke that licence which could be done by electing to retain the structures.

32 His Honour concluded at [34] that the true effect of cl 7 was to preclude any right of the lessor to sue for damages if it either elected to retain the structures or, alternatively, elected to remove them. He considered that should the lessor elect to retain the structures, the lessee’s right to remove them was revoked and it followed, there was a relaxation or forgiving of the lessee’s duty to remove. In the second situation, where the lessor elected to remove the structures, his Honour considered that the lessor could not sue the lessee for damages for its breach of the covenant to remove. In that case, the lessor was confined to the right to damages specified in the clause.

33 His Honour stated at [35]:

“I have said that the ordinary right to sue for damages is precluded if the lessor resorts to either of the alternatives expressly made available by clause 7. This means that, upon the proper construction of clause 7, there is no breach of contract by the lessee if the lessor acts in either of those ways. But there will be a breach of contract, actionable as such, if the lessor resorts to neither of the alternatives expressly made available by clause 7 – that is, if it does not itself remove the structures and does not take advantage of the part of the clause expressed by the words ‘may if it so desires retain the same’.”

34 It followed on his Honour’s reasoning that cl 7 was not a ‘code’. He considered that in the situation where the lessee did not remove the structures during the term, a breach of cl 7 would have been committed and be actionable by way of a claim for common law damages, should two conditions exist after the end of the term: first, if the Waterways Authority did not remove the structures itself as contemplated by cl 7, and secondly, if it did not act in accordance with that part of the clause expressed by the words “may if it so desires retain the same”: see judgment at [36].

35 Senior counsel for C & A submitted that this conclusion was erroneous. C & A accepted, as found by the trial judge, that the lessee’s obligation to remove structures on the demised land under cl 7 was limited to the period during which the lease was in force, as was apparent from the express words of cl 7 that “the lessee shall … remove any structure … erected … on the … demised premises … prior to the expiration of the … term”.

36 C & A submitted that cl 7 did not provide the lessor with the option to require the lessee to remove the structure after determination of the lease. Nor did it provide that the lessor may claim damages for the costs of demolition before the demolition actually occurred. Rather, it provided that if such structures were not removed at the expiry of the term, the Waterways Authority had two options, either to retain the structures, or remove them, and in the latter case, to charge the lessee the costs of removal less the proceeds of any sale of such structure. In short, damages for breach, which on this construction occurred if the lessee failed to remove the structures at the expiry of the term, were only claimable in accordance with the terms of the clause itself.

37 Senior counsel for C & A submitted that this construction was supportable by giving the words of cl 7 their plain and ordinary meaning: see Australian Broadcasting Commission v Australasian Performing Rights Association Limited (1973) 129 CLR 99; [1973] HCA 36; Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors (2004) 219 CLR 165; [2004] HCA 52 and that further, that construction produced a sensible commercial result in a lease between a major commercial entity and a Government institution.

38 In Australian Broadcasting Commission v Australasian Performing Rights Association Limited, Gibbs J stated at 109 that, for the purposes of construction the whole instrument was to be considered as “the meaning of any one part of it may be revealed by other parts” and that, so far as possible, the individual clauses must be read harmoniously with the other clauses. However, the Court was required to give effect to unambiguous words. Stephen J, at 114-115, also emphasised the requirement to give effect to unambiguous words, noting in that case that the parties were large commercial entities who had agreed to enter into a formal contract governing their complex commercial arrangements for many years into the future.

39 In Pacific Carriers Ltd v PNB Paribas (2004) 218 CLR 451; [2004] HCA 35; the Court said of the documents under consideration in that case that their meaning was

“… to be determined by what a reasonable person in the position of [the appellant] would have understood them to mean. That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to [both parties] and the purpose and object of the transaction.”

Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales

40 These principles underlie the objective theory of contract reaffirmed by the High Court in Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors.

41 Senior counsel for C & A submitted that upon the application of the proper principles of construction, cl 7 was unambiguous. It fully governed the relationship of the parties in respect of structures on the leased land as at the expiry of the lease. It was submitted that there was no reason to add words into the clause, such as was, in effect, necessary on the construction given to cl 7 by the trial judge, or to make a breach of it amenable to other remedies.

42 It was submitted that this construction of cl 7 was supported by the operation of cl 8. It was said that the combination of cls 7 and 8 provided a careful scheme for when removal of the structure was to take place. In the case of cl 7, removal was to be prior to the expiry of the lease. In the case of cl 8, if the lease was terminated prior to the expiry of the term, then, should the lessor give notice requiring removal, removal had to be undertaken within a period of six months from the date of the notice.

43 It was submitted that should the lessee fail under either clause to remove the structure, then the Waterways Authority could remove it itself, and in that case had the benefit of a claim for liquidated damages, the amount of which was to be conclusively proved by a certificate of the Board’s Engineer-in-Chief. Alternatively, it could retain the structure if it so wished. The benefit for the lessee in both clauses was that, if it wished, it could control the cost of removal by undertaking the task itself, provided that it did so in accordance with the terms of the lease. That was prior to the expiry of the term in the case of cl 7; or within six months of being given notice to do so, in the case of cl 8.

44 The wharf was already in existence at the commencement of the lease. Accordingly, the trial judge’s construction of cl 7 is correct, namely, that it was a covenant to put the leased premises into a certain state at the expiry of the term, that is, with all structures removed, whether on the land at the commencement of the lease or placed there during the term of the lease. C & A did not dispute this, although the consequences that otherwise flowed, particularly in relation to the measure of damages, were in dispute.

45 Next, the requirement in cl 7 is ‘mandatory’, in the sense that it was something that the lessee was required by the terms of the lease to do: “the lessee shall without notice remove the wharf prior to the expiration of the … term”. The clause then provided for what could occur if that was not done, namely, the lessor was entitled to retain the structure or remove it at the lessee’s cost. Clause 7 did not contemplate removal by the tenant after expiry of the term, as observed by his Honour at judgment [16]. C & A accepts that this is correct, although the Waterways Authority maintains that C & A’s obligation to remove the wharf was, under the terms of cl 7, a continuing obligation. In my opinion, his Honour’s construction on this point was clearly correct. The words requiring removal prior to expiry of the term were unambiguous.

46 The essential point of differentiation between Barrett J’s construction and that advanced by C & A is that, thereafter, his Honour considered that the lessor still maintained a right to common law damages, whereas C & A submitted that all rights were governed solely by the clause. It is apparent that his Honour considered that as there were well known consequences for breach of a covenant to put premises into an agreed state at the end of the lease, there were additional rights to which the Waterways Authority was entitled other than those specified in cl 7. Those consequences included that the measure of damages for breach, subject to certain exceptions, was the expenditure necessary to put the premises into the contracted state, regardless of whether that expenditure was undertaken or not: see Telecom & CPS Community Credit Cooperative Ltd v Heberg Pty Ltd [1993] ANZ ConvR 312 per Fullagar J at 65,273-65,274.

47 In my opinion, this approach does not pay sufficient regard to the unambiguous words of cl 7, or to the notion that underlay cls 7 and 8 requiring removal of the wharf. Clause 7 provided that the lessee was to remove structures from the demised land prior to the expiration of the term, notwithstanding that such structures were fixtures and thus part of the demised land. In this sense, the Waterways Authority deprived itself of its right to insist that the wharf be left in place. It was only if C & A failed to remove the wharf that the Waterways Authority could elect to retain in. On the other hand, if the lease was terminated prior to the expiry of the term, which could occur at any time during the period, the Waterways Authority retained the wharf unless it gave notice for its removal.

48 This difference in the manner in which the Waterways Authority could deal with its land and, relevantly, fixtures on the land, was understandable. Although C & A had been given the benefit of a long lease so as to continue its coal loading operations, the long-term industrial use of the site, situated as it was in a residential locality and on the Harbour, was not contemplated and the requirement that the structures be removed was consistent with the Waterways Authority’s long-term objectives. However, if the lease was terminated at an early point, the Waterways Authority may not have been ready to consider alternative options for the use of the site, so that retention of the wharf may have suited its purposes. Clause 8 thus gave it the option to require the wharf to be removed only if that did suit its purposes at that time.

49 It would be a strange result if the position of the lessor was more advantageous at the expiration of the term, than if termination of the contract occurred during the term through default or breach by the lessee as would be the case if the Waterways Authority’s construction of the clause was accepted.

50 There are other reasons why cl 7 should be read according to its terms. Contrary to the trial judge’s finding, I am of the opinion that breach of cl 7 would occur should the lessee not remove structures at the expiry of the term. The effect of his Honour’s view is that the failure to remove constitutes a condition precedent to the right of the lessor to remove or retain. On his Honour’s approach, breach occurs at some other time post expiration of the term, that is, in circumstances where the lessor neither chooses to retain nor to remove the structure. I am unaware how, as a matter of principle, an obligation that does not survive the termination of the contract can be breached after termination.

51 Further, on his Honour’s construction and if his Honour is correct as to the proper approach to damages, the result upon breach would be substantially different from the position that the parties agreed to under the lease. Pursuant to cl 7, the Waterways Authority can retain or remove the wharf. However, it cannot, under the clause, retain and claim damages. That is the right that, according to his Honour, was available on breach. I do not consider that the reasonable person in the position of the parties would have understood that to be the case.

52 If I am correct in this construction of cl 7, the rights of the parties upon the termination of the lease are governed by the terms in cl 7, so that the Waterways Authority may remove the wharf itself or it may retain it. If it removed the wharf, it was entitled to the cost of doing so as specified by cl 7. If it retained the wharf, there is no question of any money adjustment between the parties.

Is specific performance an available remedy?

53 If I am correct in deciding that the rights of the parties upon the term of the lease are contained wholly within cl 7, then no question of specific performance arises. However, if cl 7 does not fully govern the rights of the parties, so that upon expiry of the lease there remained a right to common law damages for breach should C & A have failed to remove the wharf, the question also arises whether specific performance is an available remedy. This question raises two issues. The first is whether specific performance may be ordered of an executed obligation. The second is whether damages is an adequate remedy and if so, whether that precludes the grant of specific performance.

54 The Waterways Authority submitted that as neither of these issues had been raised in the Court below, this Court should not now entertain the question. It conceded, however, that the first question, that is, whether specific performance could be ordered of an executed obligation, was not a matter that raised evidentiary issues. It did not otherwise assert it was prejudiced. However, it submitted that if C & A was successful on this point (or on any other point not argued below) costs consequences should follow. I will deal with the question of costs later, but , if my construction of cl 7 is wrong, this question is fundamental to determining the Waterways Authority’s entitlement to relief. Accordingly, leave should be granted to argue the matter.

Can specific performance be ordered in respect of an executed contract?

55 C & A submitted that, even if cl 7 was not a code, specific performance was not available for the performance of a contract that was fully executed. It submitted that its obligation was to remove the wharf prior to the expiration of the term. In that sense, its obligation under cl 7 was fully executed and it had only a secondary liability to pay liquidated damages should the Waterways Authority itself remove the wharf: see Moschi v Lep Air Services, where Lord Reid, at 345-346, stated that after termination, contractual obligations no longer existed as obligations. The obligation to perform disappeared and by operation of law, was replaced by an obligation to pay damages. See also Diplock LJ at 350, who observed that there were exceptional ancillary obligations that might survive the termination of the contract, such as mutual promises to submit disputes to arbitration.

56 The Waterways Authority contended that specific performance was available in respect of executed contracts and referred to Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129, where it was held that cancellation and rescission of a contract in consequence of repudiation did not affect accrued rights to the payment of instalments of the contract price. Lord Fraser of Tullybelton at 1150 stated “[t]hat remained … a debt due”. Senior counsel for the Waterways Authority submitted that this was authority for the proposition that the initial obligation (in that case, a debt) remained, notwithstanding that the contract had come to an end. In other words, a party was not relegated to a claim for common law damages.

57 I do not consider that Hyundai Heavy Industries Co Ltd is of assistance. The question in that case was, as to the liability of a guarantor for accrued money obligations as at the date that the contract was brought to an end by repudiation. It was argued that as the contract had been brought to an end, the guarantor had no liability for instalments that had accrued due and which had not been paid. The reference to this instalment remaining a debt due was made in that context. No question as to specific performance of the primary obligation arose. The question here is whether relief in the form of specific performance could be granted of an obligation to carry out a specific act (not a money obligation), which under the contract, had to be carried out prior to the expiry of the lease.

58 Reliance was also placed on “Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies”, 4th ed (2002) Australia, Butterworths LexisNexis at 20-005 to 20-020, where the authors do make reference to specific performance in the case of executed contracts, but do so in the context of drawing a distinction between specific performance in its “proper sense” and relief analogous or approximate to specific performance, although for reasons I give below, that labelling will not be a critical distinction in this case. The real issue is the circumstances in which an order to perform an obligation under an executed contract will be made. However, an understanding of the distinction is necessary for the purposes of resolving what I have referred to as the ‘real issue’.

59 Specific performance in the strict sense has been described as “an order of the court directing a party to a contract to perform his obligations thereunder according to its terms”: “Equity and the Law of Trusts”, PH Pettit, 9th ed, p 628. In JC Williamson Limited v Lukey and Mulholland (1931) 45 CLR 282; [1931] HCA 15 Dixon J explained at 297 that specific performance in the proper sense:

“… is a remedy to compel the execution in specie of a contract which requires some definite thing to be done before the transaction is complete and the parties rights are settled and defined in the manner intended.”

60 His Honour stated that specific performance in this strict sense was not available unless the order provided complete relief so that the contract could be carried into full and final execution. The resultant position was that the parties would thereby be placed in their respective positions as contemplated by the contract.

61 Likewise, in Wolverhampton and Walsall Railway Co v London and North-Western Railway Co (1863) LR 16 Eq 433, Lord Selborne LC at 439 stated that specific performance in its proper sense:

“… presupposes an executory as distinct from an executed agreement, something remaining to be done … in order to put the parties in the position relative to each other in which by the preliminary agreement they were intended to be placed.”

Tailby v Official Receiver

62 The distinction between specific performance in the true sense and an order that a contractual obligation be performed in specie, was acknowledged in Pakenham Upper Fruit Company Limited v Crosby (1924) 35 CLR 386; [1924] HCA 55, where the Court observed that the relevance of the distinction lay in the underlying basis that attracted the intervention in equity. In the case of true specific performance, the equity that gave rise to the remedy was the need to place the parties in the relative legal positions contemplated by the contract. In the case of an executed agreement, some other basis for the intervention of equity must be established “appropriate to the actual legal relative situations of the parties” (emphasis added) having regard to the terms of the contract. It is apparent that when their Honours referred to the “actual relative legal situations of the parties”, they were referring to those obligations which, under the terms of the contract, remained to be performed. Otherwise, there would no obligation of which performance could be ordered.

63 The distinction between specific performance in its strict sense and an order made requiring performance of a term of a contract has continued to be drawn: see Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd (1963) 63 SR (NSW) 492: Bridge Wholesale Acceptance Corporation (Australia) Ltd v Burnard (1992) 27 NSWLR 415; Masters v Garcia (No 2) [2006] NSWCA 15. In Bridge Wholesale Acceptance Corporation (Australia) Ltd v Burnard Clarke JA (Mahoney and Meagher JJA agreeing) stated, at 423, that where the applicant has carried out its part of the bargain, the contract is not executory and the relief sought is analogous to specific performance, in the sense that “a party seeks the aid of the court to compel the other party to perform its obligations according to the terms of the contract”.

64 It follows from these principles, that where a contract has come to an end, in the sense that all the obligations under it have been performed, or, in the case of a lease, the term of the lease has expired, specific performance of obligations that were to be performed during the term is not available. A straightforward example is to be found in McMahon v Ambrose [1987] VR 817, where it was held (per Murray J at 819; Marks J at 849-850) that the Court did not have jurisdiction to grant specific performance, or equitable damages in lieu thereof, in respect of an oral agreement for lease where the term of the lease had expired at that time when proceedings were commenced.

65 Senior counsel for the Waterways Authority submitted that McMahon v Ambrose was not authority for this proposition, as it derived from a long line of authority applicable to leases where the courts, by the application of a fiction, backdated leases. The correctness of that submission is not apparent on the face of the judgment and the principle stated seems straightforward and obvious. However, if further authority is needed, another example is to be found in Laserbem Pty Ltd v Gainsville Investments Pty Ltd & Anor [2004] VSC 62 where Kaye J observed at [58] that if the time for performance of the lease under consideration had expired at the date of institution of the proceedings, the court would not grant a decree of specific performance, nor would it grant equitable damages in lieu. The position was otherwise where proceedings had been commenced before the time for performance of the agreement had expired.

66 There are in fact numerous examples of this principle in the cases. The Millstream Pty Limited v Schultz [1980] 1 NSWLR 547 involved a contract for the delivery of deer. As it turned out, the vendor did not have and was not in a position to deliver deer of the contractual description on the contract date. McLelland J, having noted that damages under s 68(b) of the Supreme Court Act will only be awarded where the court could properly have awarded specific performance at the commencement of proceedings (subject perhaps to discretionary defences), held the court would not order specific performance where the contract could not have been performed in specie on the contract date.

67 Although I have indicated that the ‘label’ attached to the remedy sought in this case is not of particular importance, the principles, and in particular the nature of the equity that must be attracted for the purposes of relief where performance of an obligation of a fully executed contract is sought, is relevant. If relief was available in this case, it would be relief analogous to specific performance. The underlying equity is one that requires the making of an order “appropriate to the actual legal relative situations of the parties”: see Pakenham Upper Fruit Company Limited v Crosby at [62] above.

68 The relevant time to consider that question is likely to be at the time of making the order. But in considering the availability of the remedy, it is necessary to consider the positions of the parties as at commencement of the proceedings. At that time, C & A had no contractual obligation to remove the wharf. Nor did it have any right under the lease to re-enter the premises to do so. The fact that the Waterways Authority may, or even would, have granted permission to C & A to do so is not to the point. A court will not, by way of specific performance or an order analogous to specific performance, remake the parties’ bargain.

69 Conversely, the Waterways Authority had no right to require C & A to re-enter and remove the wharf. In this regard, the language of cl 7 is significant. The obligation was to remove “prior” to the expiration of the term. That language was specific, and did not allow, by way of implication, for periods of grace, or for the removal of the wharf within a reasonable time after the expiry of the term. A failure to remove prior to the expiry of the term, meant that upon expiry, C & A was in breach of its contractual obligation.

70 It follows, therefore, that although C & A had breached its obligation to remove the wharf, at the date of commencement of the proceedings there was no outstanding obligation of which in specie performance could be ordered. Put another way, an order to remove the structure would not be an order according to the terms of the contract.

71 For this reason alone, the appeal, in my opinion, fails.

Are damages an adequate remedy?

72 C & A submitted, alternatively, that even if cl 7 did not wholly regulate the rights and obligations of the parties, damages were an adequate remedy, as had been admitted by the Waterways Authority in its pleadings, so that, as a matter of law, specific performance was not available. The determination of this question involves, in the first instance, an understanding of the nature of the court’s equitable jurisdiction to grant specific performance.

73 The basis of the court’s equitable jurisdiction to grant specific performance, as explained by Windeyer J in Coulls v Bagot’s Executor & Trustee Company Limited & Ors (1967) 119 CLR 460 at 503; [1967] HCA 3, is because “damages, cannot satisfy the demands of justice”; or as Lord Selborne said in Wilson v Northampton and Banbury Junction Railway Co (1874) 9 Ch App 279 at 284, the court will grant specific performance instead of damages “only when it can by that means do more perfect and complete justice”: see also Inetstore Corporation Pty Ltd (in liq) & Anor v Southern Matrix InternationalPty Ltd (2005) 221 ALR 179 at 184; [2005] NSWSC 883 at [30]-[31]; Varley v Varley [2006] NSWSC 1025 at [23]-[24].

74 Before proceeding to consider each of these contentions, it should be said that although the authorities discussed above maintain a distinction between true specific performance and an order analogous thereto, general equitable principles including the adequacy of damages apply when what is sought is an order analogous to specific performance: “Equity: Doctrines and Remedies” at 20-015.

75 In Dougan v Ley & Anor (1946) 71 CLR 142; [1946] HCA 3 Dixon J at 150 said that the foundation of specific performance was that damages would not give the party seeking relief

“… the compensation to which he was entitled; that is, would not put him in a situation as beneficial to him as if the agreement were specifically performed’.”

76 Williams J said at 153:

“It is clear that the Court of Equity will not decree specific performance of a contract where a money payment, or in other words damages, will afford an adequate remedy for the breach …”

77 Recently, in Co-operative Insurance v Argyll Stores (Holdings) Ltd [1998] AC 1, Lord Hoffmann (with whom Lord Browne-Wilkinson, Lord Slynn of Hadley, Lord Hope of Craighead and Lord Clyde agreed) said, at 11, that it had been established since the nineteenth century that

"… the power to decree specific performance was part of the discretionary jurisdiction of the Court of Chancery to do justice in cases in which the remedies available at common law were inadequate. This is the basis of the general principle that specific performance will not be ordered when damages are an adequate remedy.”

78 In Wentworth v Woollahra Municipal Council & Ors (1982) 149 CLR 672; [1982] HCA 41, the Court, at 678, observed that Lord Cairns himself had considered that Chancery had a power to award equitable damages, provided the plaintiff had made out, at the commencement of the suit, the ingredients of a case for equitable relief, notwithstanding that the claim ultimately failed on discretionary grounds: see Ferguson v Wilson (1866) LR 2 Ch at 91-92. Their Honours concluded by assuming, without finally deciding, that equitable damages were available even if the claim for equitable relief was defeated by a discretionary defence, for example, laches, acquiescence, or hardship. This case is not concerned with the question of relief where equitable defences have been raised. The question is whether damages are an adequate remedy.

79 C & A submitted that, in this case, damages were an adequate remedy. It advanced this submission as a matter of principle, but also relied on an admission in the pleadings filed by the Waterways Authority to that effect. I will turn to that question first.

80 In the Statement of Claim filed on 17 December 1999, the Waterways Authority claimed a declaration that C & A was in breach of cl 7 (para 16(a)); an order for specific performance (para 16(b)) and damages (para 16(c)).

81 In para 17 of its amended defence, C & A pleaded:

“In answer to the whole of the Statement of Claim, the Defendant says specific performance would be an inappropriate remedy if the Plaintiff is entitled to any remedy (which is denied), because damages would be an adequate remedy and is the remedy provided for by clause 7 of the Lease if (which is denied) the Defendant had breached clause 7 of the Lease.”

82 In para 3 of its reply, the Waterways Authority pleaded:

“In answer to paragraph 17 the Plaintiff admits that damages is an adequate remedy.”

83 On the first morning of the hearing, C & A filed a further amended defence in which it made amendments to paras 15, 15A and 17A. Its pleading otherwise remained unchanged, including the assertion in para 17 that damages were an adequate remedy. The Waterways Authority, after a contested application to do so, was granted leave to file a reply to the further amended defence in which it pleaded only to paras 15, 15A and 17A (in an expanded form in each case). The ‘admission’ in para 3 of its original reply was not repleaded.

84 C & A submitted that, given the admission in the Waterways Authority’s original reply, that damages were an adequate remedy, it had been entitled to assume that the claim for damages made in the Statement of Claim was a claim for common law damages. It said that it only became aware that the claim was for equitable damages in lieu of specific performance from the Waterways Authority’s preliminary outline of submissions dated 10 August 2005, filed in the week before the hearing.

85 C & A contend that, in filing its reply to the further amended defence, the Waterways Authority had not withdrawn its original reply. Senior counsel for the Waterways Authority submitted that the new reply to the further amended defence was, unquestionably, a complete statement of its pleading and replaced any previous pleading. Both parties make reference to the transcript of the application to file a reply to the further amended defence in support of their respective positions. Senior counsel for the Waterways Authority also relied on the form of the pleadings, the fact that the issue as to whether damages were an adequate remedy had not been argued at trial and the fact that there had been no reference to the admissions and to the pleadings themselves during the course of the hearing.

86 On examination, the original reply and the new reply, although not providing a conclusive answer, appear to fully plead to the further amended defence. If the new reply was a complete substitute, there would have been an implied joinder of issue on para 17 so as to constitute a denial that damages were an adequate remedy: see Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 14.27.

87 C & A point out that even if the new reply was a complete substitute, the Waterways Authority had not obtained the leave of the Court, nor the consent of C & A, to withdraw the admission as required by UCPR r 12.6(2). (The Civil Procedure Act 2005 (NSW) and the UCPR commenced operation on 15 August 2005, the first day of the trial, and applied to these proceedings pursuant to Sch 6 cl 5(1) of the Act. Rule 21.3(2) of the Supreme Court Rules 1970 (NSW) was in the same terms.)

88 As Campbell JA observed in The Nominal Defendant v Gabriel & Anor [2007] NSWCA 52, at [112], there are principles that govern the exercise of the Court’s discretion in determining whether leave should be granted. However, for the reasons I give below, as I consider that C & A should be permitted to raise the question whether damages were an adequate remedy, but not on the basis of the admission, it is not necessary to consider those principles.

89 The argument that damages were an adequate remedy and that it had been admitted that that was the case, took the Waterways Authority by surprise when raised by C & A on the appeal. C & A conceded that the proposition, that specific performance could not have been awarded because damages was an adequate remedy, had not been argued at trial in the way in which it was now sought to be advanced and no reliance had been placed on the ‘admission’. C & A submitted, however, that that question was a matter of law and it having been put in issue in the proceedings, then, if the Waterways Authority had proposed to prove that damages was not an adequate remedy, it might have been expected that in the conduct of its case, such evidence would have been adduced. Senior Counsel also submitted that the question whether specific performance was available was always an issue in the trial, although the focus of the argument at trial was on the operation of cl 7, rather than on the question of the adequacy of damages.

90 The Waterways Authority submitted it was prejudiced, should leave be given to raise this question. In particular, it submitted that it would undoubtedly have sought leave to withdraw the admission had the matter been raised at trial. It also submitted it may have sought to adduce evidence from one of its officers, or cross-examined one of C & A’s witnesses as to the public amenity considerations relevant to the desirability of demolition of the timber structure of the wharf.

91 The principles governing the raising of a new point on appeal are well established. They were restated by the High Court most recently in Park v Brothers (2005) 80 ALJR 317; [2005] HCA 73, where the Court stated at 324:

Whisprun Pty Ltd v Dixon

Suttor v Gundowda Pty Ltd

Water Board v Moustakas

Whisprun Pty Ltd v Dixon

Mallet v Mallet

David Syme & Co Ltd v Lloyd

92 Perhaps unusually, questions relating to the public and heritage character of the wharf, its public amenity and the considerations of various public entities in respect of it, was the subject of detailed evidence in this case. Much of it is canvassed below. The evidence of C & A’s witness could not have been relevant to that question, nor could the personal view of its own witness. Accordingly, I would reject the submission that the Waterways Authority is prejudiced because further evidence might have been adduced.

93 The question of prejudice arising from being deprived of the opportunity of seeking leave to withdraw the admission is different. That may give rise to a relevant prejudice, if reliance on the admission was the basis upon which C & A now sought to establish its position on this issue. However, whilst staking its claim on the admission as an initial strategy, as I understand C & A’s case, it submits that it is apparent in any event that damages are an adequate remedy in this case.

217 The question whether a contracting party is confined to the remedies specified in the contract has been considered in a number of authorities. These establish that “clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of the contract arising by operation of law”: Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585; [1998] 1 All ER 883 at 893; Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717 per Lord Diplock. Gleeson CJ, Gaudron and Gummow JJ cited Stocznia Gdanska and Gilbert-Ash with approval in Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 (at [23]), adding that “an express provision for termination for breach in certain circumstances may be regarded as designed to augment rather than to restrict or remove the rights at common law which a party otherwise would have had on breach”.

218 Cheshire and Fifoot’s Law of Contract (2002) LexisNexis Butterworths, Australia, at [21.3] refers to the principle described in Concut as the “presumption of concurrence”. Other commentators have said that the presumption:

expressio unius

Wallace-Smith v Thiess Infraco

Journal of Contract Law

219 While the question whether a clause is an exhaustive statement of the parties’ rights and remedies must turn upon each contract and the surrounding circumstances peculiar to it, the approach taken in authorities which have considered the point offers some guidance.

220 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd concerned the question whether a clause specifying the manner in which sub-contractors should be paid excluded the contractor’s right to common law set-off in respect of breaches of contract by the sub-contractors. The clause relevantly provided:

contra accounts and/or other claims

221 The Court of Appeal had held that the phrase I have emphasised confined the contractor to deducting amounts which had been determined and embodied in a judgment of a court of law or an arbitrator. Lord Diplock (at 715) regarded the Court’s conclusion as strained and clearly erroneous. He referred (at 717) to the principle of law applicable to building contracts, as well as contracts for the sale of goods, that when the buyer of the goods or the person for whom the work has been done is sued by the seller or contractor for the price, it was competent for the defendant to defend the proceedings by showing how much less the subject-matter of the action was worth, by reason of the breach of contract: Mondel v Steel (1841) 8 M & W 858, 151 ER 1288. He then said (at 717-718):

Sale of Goods Act

To rebut that presumption one must be able to find in the contract clear unequivocal words in which the parties have expressed their agreement that this remedy shall not be available in respect of breaches of that particular contract

222 In Stocznia Gdanska SA v Latvian Shipping Co, the House of Lords considered whether, as the purchasers contended, cl 5.05 of a shipbuilding contract was an exhaustive code governing the sellers’ rights and remedies in the event of rescission, excluding their common law rights to sue defaulting purchasers for unpaid instalments as a debt. Clause 5.05 relevantly provided:

[2] In the event of such rescission by the Seller of this Contract due to the Purchaser's default as provided for in this Clause, the Seller shall be entitled to retain and apply the instalments already paid by the Purchaser to the recovery of the Seller's loss and damage and at the same time the Seller shall have the full right and power either to complete or not to complete the Vessel and to sell the Vessel at a public or private sale on such terms and conditions as the Seller deems reasonable provided that the Seller is always obliged to mitigate all losses and damages due to any such Purchaser's default.
[3] The proceeds received by the Seller from the sale and the instalments already paid and retained shall be applied by the Seller as mentioned hereinabove as follows:

[i] First, in payment of all reasonable costs and expenses of the sale of the Vessel.

[ii] Second, if the Vessel has been completed, in or towards satisfaction of the unpaid balance of the Contract Price, or if the Vessel has not been completed in or towards satisfaction of the unpaid amount of the cost incurred by the Seller prior to the date of sale on account of construction of the Vessel, including work, labour and materials which the Seller would have been entitled to receive if the vessel had been completed and delivered.

223 Lord Goff of Chieveley (at 617) noted the serious consequences of accepting the purchaser’s argument, namely that “the basis for winding up the purchaser by reference to the unpaid instalment could be lost; a guarantor of the instalment might cease to be liable under his guarantee; and an assignment or charge of the debt to a third party could lose its value”, then said:

Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd

224 In Berry v Mahoney [1933] VLR 314, cl 12 in a contract for sale of land provided that in the event of the purchasers committing any breach, all moneys paid by them under the contract should be forfeited to the vendors who were entitled, on giving the purchasers seven days’ notice in writing, to rescind the contract, enter upon the property sold and resell it and recover the deficiency in price from the purchasers as liquidated damages. The Full Court held cl 12 did not exclude or restrict other rights or remedies available to the parties apart from the special conditions. Mann ACJ (with whom Lowe and Gavan Duffy JJ agreed) said (at 321):

“We think that the provision as to resale and as to the recovery of the difference between what is obtained by resale and what was contracted to be paid is a provision in the vendor’s favour to enable him to determine, if he so desires, in a simple and convenient way the amount of his damages, instead of having recourse to a Court of law to ascertain them … the presence of clause 12 of the conditions of sale does not exclude other remedies available upon general principles to the vendor or the purchaser apart from and outside of this special condition.”

225 Lowe J (at 324), in some additional remarks, described cl 12 as “an enabling clause introduced for the benefit of the vendor” which did not restrict the rights he had apart from that clause.

226 In Taylor v Raglan Developments Pty Ltd [1981] 2 NSWLR 117 (at 135) Powell J followed Berry v Mahoney in rejecting the purchaser’s submission that that cl 16 of the standard Contract for Sale of Land restricted or removed the vendor's ordinary rights at common law in the event of default by the purchaser. His Honour described the submission as “bold and startling”, observing that:

“I say this since, the contract not having been rescinded but, rather, terminated in futuro for breach, and since the right to retain the deposit and the right to damages for breach are the normal rights of an innocent vendor, it would mean giving to cl 16 of the contract a meaning which, far from enlarging, or even protecting, the rights of an innocent vendor, would, at the very least severely limit, if not totally remove, the rights which, in the absence of cl 16 he would otherwise have.”

Taylor was referred to with approval in Concut (at [23], footnote 19) and was recently described as “[t]he locus classicus as to the relationship between the alternative regimes prescribed by clauses such as cl 9.3” in the Standard Contract for the Sale of Land - 2000 ed: see Zografakis v McCarthy [2007] NSWSC 144 (at [11]) per Hamilton J.

227 In Progressive Mailing House v Tabali, the lessee argued that cl 10 of a lease dealing with “Default, Termination etc”, exhaustively defined the lessor’s rights, so that, having re-entered, the lessor could not rely upon the rights it would have had if it had accepted the repudiation of the contract or rescinded on the ground of breach of an essential term.

228 Mason J (at 30) rejected that submission saying:

“If it be accepted that the principles of contract law apply to leases, it is not easy to see why the mere presence of an express power to terminate should be regarded as excluding the exercise of such common law rights as may otherwise be appropriate. It is, of course, open to the parties by their contract to regulate the exercise of the common law right to determine for repudiation or fundamental breach. But in this case the parties have not attempted to do so.”

229 His Honour (at 32) identified the weakness in the appellant’s argument as being that cl 10 did not exclude liability for non-performance of obligations accruing after the date of re-entry but, rather, explicitly preserved “any claim the lessor might have had against the lessee in respect of any breach of covenants and provisions.”

230 In Gimtak Pty Ltd v Cathie [1998] VSC 6; [2001] V ConvR ¶54-645 (to which the primary judge referred (at [28]ff)) cl 8.2(b) of a lease to the Minister administering the Education Act 1958 in respect of the Preston College of T.A.F.E. gave the lessor option in the event the lessee had not removed fixtures or fittings to cause them to be removed and recover the costs from the Lessee as a liquidated debt payable on demand. The lessor sought damages from the Minister and the State of Victoria (the “lessee”) in respect of the lessee’s failure to comply with the lease obligations to make good the premises on departure. The lessee argued that cl 8.2(b) constituted a regime to deal with the consequences of its failure to remove fixtures and fittings or to re-alter alterations when requested to do so and that the lessor was obliged to incur the cost of the making good exercise before it was entitled to recover damages. Smith J rejected that submission. He held that cl 8.2(b) gave the lessor an option, which it might or might not exercise, to remove the fixtures, fittings and floor coverings and re-alter the alterations. If it did so then it could recover the costs incurred as a liquidated debt payable on demand, but if it did not it was left with its rights under cl 8.2(b) to seek damages for breach of the obligations set out in that clause.

231 In Leighton Contractors Pty Ltd v East Gippsland Catchment Management [2000] VSC 26, Byrne J considered an argument that a contractual provision permitting limited rights of deduction excluded a right to raise an equitable set off. After noting (at [23]) that the argument depended upon an expressio unius inference, his Honour applied Gilbert-Ash to hold that the removal of the right to defend required “something more explicit than an inference of this kind”.

232 Finally I turn to Concut v Worrell. That case concerned the question whether a service agreement Concut entered into with Mr Wells on 1 December 1986 replaced an anterior oral contract of employment. Concut summarily dismissed Mr Wells in 1988. He brought an action in the Supreme Court of Queensland for damages for wrongful termination of his employment. Concut resisted the claim on the basis that Mr Wells had breached his conditions of employment in a manner which gave it the right to dismiss him without notice and without the payment of any penalties. The primary judge dismissed Mr Wells’ claim. He concluded that the dismissal was justified on the basis of serious misconduct on Mr Wells’ part which most probably occurred prior to 1 December 1986.

233 The Queensland Court of Appeal (by majority) upheld Mr Wells’ appeal, holding, relevantly, that the service agreement became the exclusive charter of the contractual rights and duties of the parties, and that subsisting rights and liabilities under the prior contract, including those arising by reason of breach thereof, were compromised or released: see Concut (at [8], [20]).

234 The service agreement contained a provision (cl 6) dealing with dismissal for misconduct: Concut (at [13]). In the High Court the respondent argued, inter alia, that cl 6(a) (which dealt with serious misconduct) had a prospective and exclusive operation so that Concut was precluded from dismissing Mr Wells during the currency of the service agreement for misconduct anterior to the date of the service agreement: see Concut (at [21])

235 The appeal was allowed. Gleeson CJ, Gaudron and Gummow JJ concluded (at [18]) that the Court of Appeal’s interpretation of the service agreement as a new and discrete contract of employment which had the effect of terminating and replacing the anterior oral agreement between Concut and Mr Wells did not accord with the manifest intention of the parties. Their Honours noted (at [23]) that contracts between master and servant were a typical class of contract in which terms would be implied by law. They recognised that the parties could exclude the implication of terms typically implied in contracts between master and servant, they held, applying Stocznia Gdanska and Gilbert-Ash, that “clear words are needed to rebut the presumption that a contracting party does not intend to abandon any remedies for breach of the contract arising by operation of law”.

236 In their Honours’ view (at [23] – [24]), however, cl 6(a) operated prospectively and was a provision of the nature of that referred to by Powell J in Taylor (at 135), designed to augment rather than to restrict or remove the rights at common law which Concut otherwise would have had in respect of a breach of any term implied by law, in particular Mr Wells’ contractual and fiduciary obligations to act in a manner compatible with the due and faithful performance of his duty, or consistently with the confidential relation between himself and the appellant. Nor did cl 6(a) release or compromise such rights as Concut may have had at the time of the execution of the service agreement by reason of Mr Wells’ past misconduct.

237 McHugh J also held that the Court of Appeal had erred and (at [41], [44]) that there was only one contract of employment between Concut and Mr Wells. Kirby J also concluded that Concut’s right to dismiss Mr Wells for pre-1 December 1986 misconduct survived execution of the service agreement. In his Honour’s view (at [54] – 55]) “it would be yet another illustration of impermissible expressio unius reasoning to conclude that the express provisions of the service agreement, such as cl 6, were intended to replace whatever legal consequences flowed from the previous oral agreement between the parties, including for any breach of such agreement”. Rather, the “better, more practical and commercially realistic view [was] that the service agreement was intended to vary and supplement the oral employment agreement between the parties, not to rescind it”. His Honour added (at [56]) that:

“It would take much more explicit provisions in the service agreement to persuade me that it was intended, objectively, to deprive the employer of the remedies normal to the discovery by it of such a breach by a senior employee of one of the most basic terms ordinarily implied in an employment contract. This is particularly so given the essential character of an employment relationship recognised by the common law, which continued from the commencement of the oral contract until the employee's dismissal, regardless of the intervening execution of the service agreement.”

238 The description of the principle of concurrence as “the contract law counterpoint to the expressio unius rule” (Courtenay and Curtin, above), and the reference in both Concut and Leighton’s to the rule as an analogical reasoning tool in interpreting a contract calls to mind the increasing convergence of principles of statutory and contractual interpretation: see Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812; (2005) 56 ACSR 263; approved on appeal in Lion Nathan Australia Pty Ltd (ACN 008 596 370) v Coopers Brewery Ltd (ACN 007 871 409) and Others [2006] FCAFC 144; (2006) 156 FCR 1; The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207 (at [63] ff) per McColl JA (Mason P agreeing); Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 (at [13]) per Spigelman CJ. Application of the expressio unius rule in the contractual context should be approached with the same caution adopted in statutory interpretation: see generally the discussion in Pearce & Geddes, Statutory Interpretation in Australia (2006), Australia, LexisNexis, at [4.28] ff.

Construction of cl 7

239 It is convenient at the outset to deal with the appellant’s argument that cl 7 imposed a continuing obligation on the respondent which survived the expiry of the lease. In my opinion that submission should be rejected. The respondent’s obligation to remove the wharf was expressly limited to it doing so prior to the expiration of its term. That obligation did not survive the expiry of the lease. There is no sensible reason to conclude that the parties intended any other scenario. Cessation of the respondent’s obligation on expiration of the term of the lease is consistent with the fact that once the lease expired the respondent had to give up possession of the property comprised in the lease: Woodfall’s Law of Landlord and Tenant, Sweet & Maxwell, Vol 1 at [17.002]. Thereafter it had no legal right to enter the premises it had formerly occupied. Clause 7 recognised that the respondent’s obligation did not, and could not, survive expiry of the lease, and that the only (former) party to the lease which thereafter had control of the land and the legal right to deal with the wharf was the appellant.

240 Further, in my view cl 7 was intended to deal exhaustively with the parties’ obligations and rights in relation to the wharf. The clause established a regime dealing with each party’s obligations, the time when each was to be performed and the consequences in terms of payment by either party or their respective entitlements to compensation in the event that a particular step was taken. Thus the respondent was obliged to remove the wharf prior to the expiration of the term of the lease at its cost and without compensation. If it did not remove the wharf or any part of it by the time the lease had expired then the appellant could retain the wharf (or any part thereof) and not pay compensation. Alternatively it could remove and sell or otherwise dispose of the wharf and recover the cost of so doing from the respondent on demand in a claim for liquidated damages, after deducting the net proceeds of any sale of the wharf.

241 Clause 7 modified the situation which would ordinarily exist between landlord and tenant in relation to structures erected on the land. The wharf, being fixed to the land on which it stood by timber piles sunk into the bed of the harbour (primary judgment at [7]) was undoubtedly a landlord’s fixture. Once fixed, it became part of the land and was owned by the appellant as long as it remained fixed: Melluish (Inspector of Taxes) v BMI (No 3) Ltd [1996] AC 454 (at 473) per Lord Browne-Wilkinson. Fixtures which form part of the realty pass with the land: North Shore Gas Co Ltd v Commissioner of Stamp Duties (NSW) [1940] HCA 7; (1940) 63 CLR 52 at 68 per Dixon J; Wincant Pty Ltd v South Australia (1997) 69 SASR 126 (at 142) per Olsson J (with whose observations in relation to the law of fixtures Doyle CJ agreed), primary judgment (at [31]). The tenant is not entitled to remove them.

242 However parties to a lease may provide for the tenant to remove fixtures it would not otherwise have been entitled tor remove: Melluish. This, as the primary judge held, was, in part, the purport of cl 7. It was intended to ensure the leased premises were left clear of structures, whether erected at the time of the lease or during its term. It imposed an obligation on the respondent, and granted it permission, to do an act otherwise prohibited.

243 Thus cl 7 was framed specifically with a view to adjusting what otherwise would have been the parties’ rights. Without cl 7 the respondent could have walked away from the land at the expiration of the term leaving the wharf in situ. The appellant could not have required it to remove it, nor sought compensation for it remaining: it formed part of its land. Clause 7 conferred a benefit on the appellant, enabling it to have the wharf removed at the respondent’s cost, whether because the respondent complied with its obligation to do so prior to the expiration of the lease or because the appellant removed it after the term expired. It also gave the appellant the option to retain the wharf without paying the respondent compensation.

244 The conclusion that cl 7 exhaustively defined the parties’ rights and remedies is also supported by cl 8. That provision gave the appellant the option, in the event of early determination of the lease, to require the respondent to remove the wharf at its cost, and, in the event of non-compliance gave the appellant the option to remove the wharf and recover the cost from the respondent. Once again an express regime was formulated for removal of the wharf, spelling out each party’s rights and obligations.

245 It might be accepted, as the primary judge did (at [32] – [33]), that “at the time … the lease[s] [was] executed no one could tell whether removal of the improvements immediately prior to the determination of the term would be more advantageous to the lessors or to the lessee”: Starline Drive-In Theatre Ltd v Federal Commissioner of Taxation [1964] HCA 68; (1964) 112 CLR 458 (at 460) per Kitto J. Accordingly, while the respondent accepted the obligation to bear the cost of the wharf being removed, whether before or after the term expired (the only difference being who carried out that task), the appellant was entitled to retain the wharf, an option it would no doubt exercise if it determined that course was advantageous to it.

246 Once the respondent left the premises however it could have no control over the fate of the wharf, nor any idea what the appellant’s intentions were in relation to it. The mere fact that the wharf remained in situ post expiration did not necessarily mean the appellant had decided to retain it. As the facts of this case indicate, reasonable minds may differ as to the question whether the fact the wharf has not been removed means the appellant has decided to retain it. The primary judge concluded (at [44]) it had not. Beazley JA (at [162]) has reached the opposite conclusion, with which Campbell JA agrees. For my part I would, with respect, prefer the primary judge’s finding. As he clearly demonstrated, the position the appellant found itself in at the time the proceedings were commenced in relation to the wharf was reached more by a process of attrition than active desire on its part to retain the wharf – whose demolition it had been seeking even before the lease expired.

247 It can be assumed that the parties were alive to the uncertainty which might flow to decide if the consequences of the respondent’s breach of cl 7 at the expiration of the lease were determined from the mere fact that the wharf continued to remain on the land. The respondent would have been in breach of its cl 7 obligation. It is plain, in my opinion, that the parties turned their minds to the possibility of the respondent being exposed to a claim for damages in respect of that breach. They sought to limit the uncertainties which might bedevil such a case by prescribing a regime for the appellant to recover damages for breach from the respondent: they were only recoverable if the appellant had removed the wharf and the (net) cost of so doing had been quantified.

248 In my opinion by expressly dealing with the circumstances in which the appellant could recover damages in respect of the respondent’s breach of its cl 7 obligation, the parties manifested their intention that the appellant would not be entitled to recover damages if it had not removed the wharf. The regime they created makes it plain they intended to exclude any right on the appellant’s part to recover damages other than in the circumstances cl 7 prescribed.

249 Such an interpretation gave the parties certainty at the commencement of the lease in 1972 as to the consequences of non-removal of the wharf twenty-seven years later on 31 December 1999 when the lease was to expire. It addressed the parties’ commercial interests in a practical and commercial manner.

250 The conclusion that cl 7 constitutes a code is consistent with the authorities dealing with the principle of concurrence. I start with the general proposition that the ordinary consequence of the breach by the respondent of its obligation to remove the wharf prior to the expiration of the term of the lease would be that the appellant would have a cause of action for damages against the respondent in the nature of the secondary obligation referred to by Lord Diplock in Moschi v Lep Air Services Ltd [1973] AC 331 at 350; see also Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849–850.

251 However, as I have sought to explain, cl 7 was an exceptional provision to be found in a lease. Clause 7 was not merely a provision in the appellant’s favour designed to augment existing rights: cf Concut, Berry, Taylor, Gimtak. Rather it represented an adjustment of the parties’ rights in circumstances where an obligation was imposed upon the respondent which it would not ordinarily have been required to undertake. Concluding that cl 7 is an exhaustive statement of the parties’ rights and remedies does not, therefore, do violence to the implication of terms which are fundamental to the relationship between landlord and tenant: cf Gilbert-Ash, Stocznia Gdanska SA, Concut.

252 Further the interpretation I favour does not substantially limit the appellant’s rights. It ensures that it can recover damages for the respondent’s breach if it has itself acted to restore the land to the condition it would have been in had the respondent performed its cl 7 obligation. To that extent, cl 7 reflects the general principle that damages in contract are awarded with the object of placing the plaintiff in the position in which it would have been had the contract been performed: Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 (at 11-12); Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64.

253 In my opinion, with respect, the primary judge erred in concluding that cl 7 did not exhaustively contain the parties’ rights in respect of the removal of the wharf at, or after, the expiration of the term of the lease.

254 The conclusion that the appellant could not recover damages unless the wharf had been removed means the Court would not have granted specific performance at the date proceedings were commenced. The primary judge’s decision should be affirmed on the basis of Ground 2 in the Amended Notice of Contention.

255 In writing the above I have assumed that the respondent’s failure to remove the wharf constituted a breach of cl 7 on its part. I am conscious that the respondent sought to argue that its failure to remove the wharf did not constitute a breach in circumstances where it had attempted unsuccessfully to obtain consent to demolish the wharf prior to the expiration of the term. Having regard to the conclusion I have reached on the interpretation of cl 7, it is unnecessary to decide this question.

256 I agree with the orders Beazley JA proposes.

257 CAMPBELL JA: I agree with Beazley JA.

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Citations

Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited [2007] NSWCA 276

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CITATION:	Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited [2007] NSWCA 276
HEARING DATE(S):	3 and 4 May 2007
JUDGMENT DATE:	16 October 2007
JUDGMENT OF:	Beazley JA at 1; McColl JA at 196; Campbell JA at 257
DECISION:	1. Appeal dismissed; 2. The appellant is to pay the respondent’s costs of the appeal on the basis of a hearing of one day’s duration and that there be no costs allowed to the extent that such costs are attributable to the preparation of the issues of whether specific performance was available in respect of an executed obligation and whether damages were an adequate remedy.
CATCHWORDS:	CONTRACT – lease agreement – proper construction of clause in lease agreement – whether clause totally governed the rights and obligations of the parties where lessee failed to remove structure – whether clause augmented the rights of the parties – whether lessor intended to abandon any remedies for breach of contract arising by law – principle of concurrence - CONTRACT – implication of term in lease agreement – lessee required to remove structure on leased land before expiry of the lease term – lessee required consent from statutory authority before wharf could be removed – whether lessee under implied obligation to take all steps necessary to obtain such consent – whether lessee required to appeal from refusal of statutory authority to grant consent to remove wharf - CONTRACT – lease agreement – clause provided lessor could retain structure situated on leased land at expiration of term of lease or remove structure and seek liquidated damages – negotiations between lessor and lessee in relation to removal of structure occurred over six period – lessor sought removal of part of the structure – whether lessor had decided to retain the structure - ENVIRONMENT AND PLANNING – lessee required to remove wharf situated on leased land before expiration of lease term – pursuant to cls 36 and 37 of North Sydney Local Environment Plan 1989 (NSLEP 1989) removal of wharf required consent from North Sydney Council – whether NSLEP 1989 inconsistent with Sydney Regional Environmental Plan No 23 (SREP 23) so that Maritime Services Board was the relevant consent authority – whether “demolition” was included in “development” under the Environmental Planning and Assessment Act 1979 (NSW) so that SREP 23 applied to the exclusion of NSLEP 1989 - EQUITY – specific performance – failure to remove structure before expiry of term – distinction between specific performance and an order that a contractual obligation be performed in specie – where a contract has come to an end specific performance of obligations that were to be performed during the term is not available – where in specie performance of an obligation is sought the underlying equity required for such an order is one appropriate to the actual relative legal situations of the parties - EQUITY – specific performance – failure to remove structure before expiry of lease term – breach of clause provided for lessor to recover damages from lessee where lessor removed the structure – whether damages an adequate remedy - EQUITY – equitable damages sought pursuant to s 68(b) of the Supreme Court Act 1970 (NSW) – in determining an application for equitable damages pursuant to s 68(b) the trial judge was required to determine whether the court could have granted specific performance as at the date of the commencement of the proceedings - LOCAL GOVERNMENT – statutory construction of local government legislation – trial judge held exclusive control of wharf vested in Maritime Services Board pursuant to s 33 Sydney Harbour Trust Act 1900 (NSW) – trial judge applied rule of statutory construction that general legislation which is inconsistent with particular legislation does not repeal the particular legislation – whether trial judge erred in finding inconsistency between s 33 of Sydney Harbour Trust Act and s 68 of the Local Government Act 1993 (NSW) – whether Local Government Act was contrary to or diminished the lessor’s exclusive control in respect of the demolition of the wharf
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Sch 6 cl 5 Environmental Planning and Assessment Act 1979 (NSW) ss 4, 75, 76 Local Government Act 1993 (NSW) ss 68, 69, 205 Maritime Services Act 1935 (NSW) s 6 North Sydney Local Environment Plan 1989 cls 36, 37 Supreme Court Act 1970 (NSW) s 68(b) Sydney Environmental Planning Policy 56 cls 2, 4, 6, 7, 14, 15 Sydney Harbour Trust Act 1900 (NSW) s 33 Sydney Regional Environmental Plan No 23 cls 4(1), 5, 8(4) Uniform Civil Procedure Rules 2005 (NSW) rr 12.6(2), 14.27
CASES CITED:	Australian Broadcasting Commission v Australasian Performing Rights Association Limited (1973) 129 CLR 99; [1973] HCA 36 Belle Design Group Pty Ltd v Woollahra Municipal Council (2004) 136 LGERA 1; [2004] NSWLEC 284 Berry v Mahoney [1933] VLR 314 Booker Industries Proprietary Limited v Wilson Parking (Qld) Proprietary Limited (1982) 149 CLR 600; [1982] HCA 53 BP Refinery (Westernport) Pty Limited v Shire of Hastings (1977) 180 CLR 266; [1977] HCA 40 Bridge Wholesale Acceptance Corporation (Australia) Ltd v Burnard (1992) 27 NSWLR 415 Burns Philp Trust Co Pty Ltd v Kwikasair Freightlines Ltd (1963) 63 SR (NSW) 492 Butler v Attorney-General for the State of Victoria (1961) 106 CLR 268; [1961] HCA 32 Butt v M’Donald (1896) 7 QLJ 68 Butts v O’Dwyer (1952) 87 CLR 267; [1952] HCA 74 Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337; [1982] HCA 24 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 Co-operative Insurance v Argyll Stores (Holdings) Ltd [1998] AC 1 Coulls v Bagot’s Executor & Trustee Company Limited & Ors (1967) 119 CLR 460; [1967] HCA 3 David Syme & Co Ltd v Lloyd (1985) 1 NSWLR 416 Dougan v Ley & Anor (1946) 71 CLR 142; [1946] HCA 3 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 81 ALJR 1107; [2007] HCA 22 Ferguson v Wilson (1866) LR 2 ChApp 77 Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48 Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3; (1986) 160 CLR 1 Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 Gimtak Pty Ltd v Cathie [1998] VSC 6; [2001] V ConvR 54-645 Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129 Inetstore Corporation Pty Ltd (in liq) & Anor v Southern Matrix International Pty Ltd (2005) 221 ALR 179; [2005] NSWSC 883 J.C. 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Woodfall’s Law of Landlord and Tenant, Sweet & Maxwell, Vol 1
PARTIES:	Waterways Authority of New South Wales (Appellant) Coal & Allied (Operations) Pty Limited (Respondent)
FILE NUMBER(S):	CA 40208/06
COUNSEL:	MLD Einfeld QC; PW Larkin (Appellant) TT Bathurst QC; M Dicker (Respondent)
SOLICITORS:	Dibbs Abbott Stillman Lawyers (Appellant) Allens Arthur Robinson (Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 5099/99
LOWER COURT JUDICIAL OFFICER:	Barrett J
LOWER COURT DATE OF DECISION:	15 December 2005; 23 March 2006
LOWER COURT MEDIUM NEUTRAL CITATION:	Waterways Authority of New South Wales v Coal and Allied Operations Pty Limited [2005] NSWSC 1285; Waterways Authority of New South Wales v Coal & Allied Operations Pty Limited [2006] NSWSC 183