Supreme Court of the NT|1992-06-03|Before: Asche CJ

ALLAN ROWLANDS HOLDINGS PTY LTD v. GAYE (NO. 1) PTY LTD No. AP 15/1990 Number of pages - 21 Contract - real property (1992) 107 FLR 313 [1992] NTSC 32 (3 June 1992)

COURT IN THE FULL COURT OF THE COURT OF APPEAL OF THE NORTHERN TERRITORY OF AUSTRALIA ASCHE CJ(1), MARTIN(2) AND ANGEL(3) JJ CWDS Contract. HRNG DARWIN #DATE 3:6:1992 Appearances not available. ORDER Insofar as the appeal is against the decision of the trial judge that the agreement of 8 August 1983 was not illegal and void the appeal is allowed. JUDGE1 ASCHE CJ This is an appeal from a ruling of Kearney J in respect of a number of proceedings between the parties arising out of an agreement between them as far back as 8 August 1983, which seems to have been the genesis of much litigation thereafter. 2. I do not think it necessary to set out in detail the rather complicated history of the proceedings between the parties. Regrettably it seems that the serial is "to be continued" whatever the outcome of this appeal may be. The only matters which appear relevant in this appeal are these:

There is a written agreement dated 8 August 1983 between the appellant as vendor and the respondent as "purchasers" (sic) which purports to be for the sale by the appellant of portion of N.T. Agricultural Lease Number 738. (Singular and plural nouns and verbs cavort gaily and inappropriately throughout the agreement but it would be tiresome to mention this more than once.)

law of the Northern Territory.". 3. Clause 5 of the agreement was later varied by consent so that the appellant instead of the respondent, was to arrange for the whole land to be subdivided in the way described in clause 5. The parties are at issue as to the extent of the costs of subdivision to be born by the appellant. Nothing turns on this in this appeal save that it reinforces the intention of the parties to subdivide the land. 4. Dispute arose between the parties as to the location of

part of the boundary of "the land coloured red". Kearney J made declaratory and consequential orders on that question on 23 June 1989 and published his reasons on 19 July 1989. 5. The issue of damages had by consent been adjourned until after the issues litigated and determined on 23 June 1989. 6. On 11 May 1990 that issue of damages came to be tried before Kearney J. On that day senior counsel for the appellant (who had not been counsel in the earlier proceedings) raised for the first time and by oral application the issue of illegality. He submitted that the agreement was illegal and void under the Planning Act. He submitted that the declaratory and consequential orders made on 23 June 1989 should be recalled. His Honour applying cases such as In re Harrison (1955) 1 Ch 260 took the view that, if the submission as to illegality and nullity was correct, he could recall the orders since they had not been authenticated (O60). His Honour held that the process of authentication under O60 was equivalent to the earlier process of drawing up, passing and entering the orders. That is not disputed for the purpose of this appeal. 7. The learned trial judge held that the agreement was not illegal and void pursuant to the Planning Act. It is from this ruling that the appellant appeals. 8. The appeal is also directed to the consequential order which his Honour made that the appellant pay the whole of the costs of the appellant's oral application of 11 May 1990. 9. Whatever the fate of this appeal there is a further appeal pending from the earlier declarations and orders of his Honour. That is not a matter for this court at this time. 10. In this appeal the respondent has filed a Notice of Contention in the following form: "NOTICE OF CONTENTION The respondent does not seek a discharge or variation of the judgment pronounced, but contends that his Honour erred in accepting that ' ... if the agreement of 8 August 1983 is properly characterised as 'a transaction purporting to subdivide land in contravention of (Part V of the Planning Act)", it is on its face rendered illegal and void by the Planning Act, and there is no need for that illegality to be pleaded.' 3. The Respondent says that if the agreement is not on its face a transaction purporting to subdivide land in contravention of Part V of the Planning Act and thereby rendered illegal and void by the Planning Act, then it is necessary for that illegality to be pleaded." 4. Mr Southwood for the appellant refers to s83 of the Planning Act. That reads as follows: "83. Purported Subdivision Prohibited (1) No person shall enter into a transaction purporting to subdivide land in contravention of this Part. Penalty: $5,000 (2) A transaction purporting to subdivide land in contravention to this Part is void." 5. S84 provides that a person shall not subdivide land otherwise than in accordance with a plan of survey approved by the Surveyor-General. S85 provides that the Surveyor-General shall not approve a plan or survey unless he is satisfied that "consent ... has been given in relation to the subdivision, ... in accordance with the requirements of the relevant consent authority", or, "security to the satisfaction of the consent authority has been given for the due completion of that work". "Consent Authority" as defined in s4(1) can mean different persons in different contexts in relation to a subdivision application. See sub-section (b)(1), (11) and (111) of the definition. However it is common ground, and indeed the terms of clauses 5, 6 and 7 of the agreement make it clear, that no subdivision had been authorised under the Act at the time the agreement was executed. 6. His Honour accepted the first four submissions by counsel for the appellant and they are not attacked here. His Honour said as to these submissions: "First, the subject land, which had formerly been held under an Agricultural Lease, had become freehold land prior to August 1983 by virtue of the Crown Lands Amendment Act (No. 3) 1980. I accept that. Second, a plan of subdivision was not prepared until 1984 - that is, after the date of the agreement of 8 August 1983; consent to that subdivision was given later in 1984. I accept that it was not a subdivision which showed the boundaries as declared in the judgment of 23 June 1989, but as the defendant (wrongly) apprehended them. Third, s81(2) of the Planning Act (as it stood in August 1983) provided that Part V of that Act applied to 'freehold land to which a planning instrument does not apply'; the subject land was clearly in that category and subject to Part V of the Act. I accept that. Fourth, the subdivision in question was not excluded from the operation of Part V of the Planning Act by s82 of that Act, as at August 1983, because Regulation 12 of 1983 had come into force in March 1983. I accept that Part V applied to the subdivision." 7. Mr Southwood for the appellant submits that the terms of clauses 5, 6 and 7 must plainly and unambiguously be construed as "a transaction purporting to subdivide land" and, as such, and pursuant to s83, they constitute "a transaction entered into in contravention of this Part", and therefore void. He submits that the policy of the Act is clearly to prohibit all subdivisions and prospective subdivisions until properly authorised in accordance with the Act. The mischief intended to be cured is that of private individuals agreeing among themselves to subdivide land contrary to public policy and with the possibility of inadequate safeguards and planning in the execution of their purpose. 8. I think this sort of policy can be construed from the provisions of the Act. See generally : Part II setting up a Planning Authority, and particularly s32 - the functions of the Authority: Part III Planning Instruments, and particularly s44 where the Authority in preparing a draft planning instrument, is directed to take into account a number of matters of public interest; and ss49 and 50 inviting public submissions and providing for public hearings. 9. Although I consider the policy of the Act appears sufficiently plainly from the above I do not consider that we should also call to aid a document produced to the learned trial judge and to us, being the report of an "Inquiry into the Subdivision and Sale of Freehold Land near Darwin NT" of March 1975 (the "Nimmo" Report). This report by a highly respected Federal Judge pointed to hardship suffered by purchasers of land because of, inter alia, poor planning and preparation of subdivided land. It made various recommendations for improvement by legislation. I think it should be rejected for two reasons. First because it is an extraneous aid to the interpretation of the legislation and as such generally discouraged. (See Craies - Statute Law - 1971 - 7th Edition - p130). Secondly, because it does not clearly appear which of the recommendations were adopted and which were not and to what extent the Act followed those which were adopted. While acknowledging the high qualifications of the author and the sensible and constructive nature of his report I do not think that we can assume that the intent of parliament was to adopt everything recommended. Reports of Commissioners tend to become etiolated in their journey towards statutory endorsement and we would be unwise to assume that the one is a true image of the other. 10. Similarly, although the study of earlier legislation can often prove profitable in clarifying the intent of the Act and resolving possible ambiguities of expression, I did not find the examination here as helpful as it sometimes can be. 11. It did accentuate one matter, namely that the legislative policy seems plainly to move towards continually firmer control by parliament over land developers and subdividers. But it threw little light on the meaning of the expression "subdivide"; for the earlier Acts are rather confusing. No 23 of 1964 uses the expression (in s.18) but does not define it. Act 31 of 1973 defines "subdivision in relation to freehold land" as meaning: "a transaction entered into by virtue of which a person - (a) sells, grants, transfers, conveys or mortgages part of the freehold land to another person; (b) enters into a contract of sale or agreement for sale of part of the freehold land; (c) leases or grants a licence to use or occupy, part of the freehold land; or (d) otherwise disposes of part of the freehold land, and 'subdivide' and 'subdividing' have corresponding meanings." 12. Act 1 of 1974 amends Act 31 of 1973 by omitting the definition of "subdivision" and substituting a definition of "subdivide" which defines the activity in similar terms to the earlier Act but as a verb not a noun. It then provides that "subdivision" and "subdividing" have corresponding meanings. Act 48 of 1979 (Planning Act) repeals the earlier legislation and produces the present definition of "subdivision" different in terms from that given by Act 31 of 1973. The definition in Act 48 of 1979 is this: "subdivision in relation to land means an activity which involves - (a) the rendering of separate parts of the land available for separate occupation or use; or (b) the consolidating of parcels of land into one or more allotments, but does not include a subdivision prescribed by the regulations to be an excluded subdivision." 13. No mention is made of "subdivide" or "subdividing", and no mention of these terms is made in any later amendments. 14. I do not consider that in those circumstances one can go back to the definition of "subdivide" in Act 1 of 1974 because it can be as well argued that parliament dropped the definition as unsatisfactory as it could be argued that the definition is impliedly preserved in future legislation although not mentioned again. 15. Confining myself therefore to the present statute and the definition of "subdivision" given above, one must, I think, assume from the absence of any other definition of "subdivide" that it is intended that the noun governs the meaning of the verb, i.e. that to subdivide is the act or process of subdivision as defined, namely the rendering of separate parts of land available for separate occupation or use, or consolidating parcels of land into one or more allotments. 16. One then examines the terms of the agreement to determine whether what is disclosed is "a transaction purporting to subdivide land". If it is, then, for the reasons already advanced, and accepting the facts accepted by the learned trial judge, it would follow that the "transaction" is in contravention of Part V. 17. As the learned trial judge pointed out, there is no definition of "transaction" in the Act. His Honour remarked that he had been referred to various dictionary definitions, although he does not discuss them. I have myself examined some of the definitions. The Oxford English Dictionary defines the word, inter alia, as "the carrying on or completion of an action". The Macquarie defines "transact" as, inter alia, "to perform" and "transaction" as "the act of transacting". Hence a "transaction to subdivide land" must be something which involves the performance or act of subdividing, and a "transaction purporting to subdivide land" emphasises the purpose or intent of carrying out the act of subdividing. (See Macquarie - "purport", inter alia, "purpose or object".) As with some other concepts (e.g "attempt" in criminal law) the exercise becomes one of investigating whether the circumstances go beyond the boundaries of vague statements of intent, preliminary preparations of an ambiguous nature or unexplored hypotheses on the one hand; or whether, on the other hand, the situation has been reached where actions or statements of intent have progressed to a point where the enterprise is clearly underway and clearly moving to a planned conclusion. At that point the enterprise can be properly described in the terms of its intended conclusion i.e. in this case "a transaction purporting to subdivide land". Referring to clauses 5, 6 and 7 of the agreement it appears to me that that point had been reached. What was determined upon between the parties was to subdivide the land i.e., in the meaning already given, to render separate parts of the land available for separate occupation or use; and that determination was expressed in contractual terms with the clear intent that each party was bound to carry it to its conclusion. It was therefore a "transaction purporting to subdivide land" within the meaning of the Act. 18. Mr Hiley QC for the respondents submits this is not so. He refers to the preamble and clauses 1-4 of the agreement which he submits show that the agreement or "transaction" is primarily one of sale of land. I agree that the ultimate aim is the sale of the land but that very sale is clearly conditioned on the subdivision. Neither party contemplated one without the other. 19. Mr Hiley then argues that the separate transactions contemplated in clauses 5 and 6 are in futuro and do not arise until after the sale and then are contemplated to be done in a manner which will not contravene the Act. Bearing in mind the policy of the Act, I take the view that these clauses are not saved by any intent which can be spelled out that all things shall be done lawfully. In my view the mischief the Act is directed against is any transaction which, before the process of subdivision has been carried out in accordance with the Act, purports to subdivide land. S83 seems to me mandatory and has no exclusion clause exempting bona fide transactions to be carried out in futuro. That may seem a harsh interpretation, but a moment's reflection will show that the purpose of the Act would be severely interfered with if it were otherwise. Agreements could be drawn conditional upon the Planning Authority's approval of the subdivision contemplated. Expectations could be raised that thereby the approval would be granted. Great pressure could be placed on the Planning Authority by instances of personal hardship occurring to those who had purchased in expectation of a particular subdivision being approved. Of course it could be argued that such persons must know of the risks by the very terms of the contract. But overconfident representations might occur or even actual misrepresentation. Again no doubt it might be said that there would be remedies in law. But it seems to me that the intention of the legislature was to avoid all such controversies, all avenues to pre-empt decisions of the Planning Authority and make it clear that only after proper research and approval could subdivision take place. 20. In my view the reasoning of their Honours of the High Court in George v Greater Adelaide Land Development Company Limited [1929] HCA 40; (1929) 43 CLR 91 is conclusive for the circumstances of this case. 21. In George's case s.23 of the South Australian Town Planning and Development Act made it unlawful to subdivide any land into allotments or to offer for sale or to sell, or to convey transfer or otherwise dispose of any existing allotment or parcel of land except in accordance with the Act. A penalty was imposed on any person acting in contravention of the section. A contract for sale of certain allotments was entered into at a time when the provisions of the Act had not been complied with, but the contract was expressed to be subject to the provisions of the Act having been complied with. Subsequently to the contract the Act was complied with. The Court held that the contract was illegal and void. 22. Knox CJ said at p98: "The plain object of the Act and Regulations is to require the owner of any land which it is desired to sell in allotments to obtain the approval of the Government Town Planner to the proposed plan of subdivision, and this object can only be obtained by reading the regulations as imposing an obligation to obtain such approval before any allotment is sold, for the words 'who desires to' govern not only the word 'sell' but also the words 'offer for sale, convey, transfer or otherwise dispose of,' and a regulation which prescribes a course of conduct for an 'owner' who 'desires to transfer' would be wholly ineffective if the owner could lawfully transfer without first complying with the regulations prescribed. If the true meaning of the regulations be, as I think it is, that the steps prescribed must be taken before any sale or offer to sell an allotment is made, the provision in the contract that it was 'subject to the provisions of the Act being complied with' can have no effect, for the requirement of the Act and Regulations that the certificate of approval should be obtained and deposited with the plan before any sale of the land could lawfully be made could never be complied with in respect of this contract. For these reasons I am of opinion that the contract of 15th November 1925 contravened the provisions fo the Town Planning and Development Act and was therefore illegal and invalid." 23. Isaacs J said at p101-2: "The second (question) turns on the Town Planning and Development Act 1920. Murray CJ thought that the words 'subject to ... the provisions of the Town Planning and Development Act 1920 being complied with' saved the bargain, and on completion of all that the Act and the Regulations under it require, the contract was binding and enforceable. That depends on whether, before the Act is complied with, the law prohibits the making of the contract, or only the transfer of the land. In my opinion the effect of secs. 23 and 44 is to prohibit the making of the contract, either absolutely or conditionally. The purpose of the legislation is disclosed in sec. 19, and extends to the promotion of public interests, convenience and safety. To this end, traffic in land commencing with the offer to sell and continuing to the transfer and including all disposal, is forbidden, except in accordance with the provisions of the Act. Reg. 17, made in pursuance of sec. 50, prescribes the duty of the owner who wishes, inter alia, to offer for sale or sell any land. That duty begins with the deposit of a plan, and includes an application for approval, and the regulation read in connection with the Act itself connotes the obligation to await approval before even offering the land for sale. The attempted sale, having taken place before approval, is invalid, and the appellant defendant is entitled to succeed on the claim." 24. Starke J said at pp 103-4: "The question, therefore, is whether a sale subject to the terms of the Act being complied with is in contravention of the Act. Murray CJ in the Court below held that it was not, but consideration has led me to the conclusion that this

decision cannot be supported. The principle is undoubted that a transaction expressly or impliedly forbidden by statute is unlawful. The Town Planning and Development Act 1920 renders unlawful not only conveyances and transfers of allotments, but also the acts of offering for sale or selling such allotments. Selling, in the case of land, includes the making of agreements for its conveyance in consideration of a price in money: and this is so whether the agreement be absolute or conditional, for a conditional agreement for the sale of land is none the less a sale of land, and therefore a selling of it. Once this

point is reached, the case becomes clear, for the Act prohibits the mere making of the agreement, and making the agreement 'subject to the provisions' of the Act 'being complied with' cannot save it." 25. The learned trial judge was of the view that "the language of the legislation and the contractual instrument under consideration in George (supra) was different in its meaning and effect to that in the present case". 26. It is true that s23 of the South Australian Town Planning and Development Act states that "it shall not be lawful ... (b) for any person to subdivide ... or (c) ... sell except in accordance with the provisions of this Act"; whereas s.83 of the Planning Act states, "No person shall enter into a transaction purporting to subdivide land in contravention of this part". It is true also that the instrument under consideration in George's case was a contract for sale of certain allotments "subject to ... the provisions of (the Act)" whereas the instrument under consideration here is a contract for sale which contemplates a subdivision. With respect to the learned trial judge I do not consider these differences of expression or form of instrument to be material to the general principle stated in George. 27. I would also, with respect, disagree with the view of the learned trial judge that the agreement was not a "transaction purporting to subdivide land" because, his Honour says, "it contemplated the subdividing of land and thereafter the sale of one of the two lots in the subdivision". Accepting that that analysis given by the learned trial judge is correct, it would seem to me, for the reasons already given, that such an agreement providing for both subdivision and sale in the one document is still a "transaction purporting to subdivide land", even if one adopts the analysis given by his Honour. 28. Mr Hiley refers to Braham v Walker [1961] HCA 7; (1960-1961) 104 CLR 366. In that case s.568 of the Local Government Act (Victoria) provided that a person was liable to a penalty if, before a plan of subdivision of land to which the section applied was sealed he sold such land or any part thereof in allotments. On 9 March 1955 the plaintiff entered into a series of agreements with the defendant for the purchase by him from her of certain land. One of these agreements was an option for the purchase of one part of the land involved. That option was stated to be dependent on a number of conditions the effect of which was summed up by Dixon CJ at p374: "Clearly it was intended that the grantor of the option ... should be bound but bound only upon the contingency occurring of the municipality approving, that is sealing, the plan of subdivision." 29. The plan was approved and sealed by the Council on 4 April 1955. The plaintiff subsequently purported to exercise the option. The defendant claimed that the transaction was illegal. The High Court held that it was not. The reasoning of Dixon CJ (with whom Kitto and Windeyer JJ agreed) appears at p376-7: "But there is a very substantial reason why it may be said that the plaintiffs did not sell the land in allotments before the plan was sealed. The reason is that by the very conditions of the contract or contracts upon which the option depended the option could not become binding as a contract to sell unless and until the plan was sealed; in other words it became a 'sale' only when the plan was sealed and it was exercised. Neither in terms nor in policy did the provisions of s.568 deny legality to such an option exercisable only if the plan were sealed. All that the option bound the defendant to do was to enter into a contract of sale with the plaintiffs if the option were exercised and that could only be after the plan was sealed by the council of the municipality. The purpose or principle discoverable in the provisions is to make the approval of a subdivision by the municipal council and the formal expression of that approval by the sealing of a plan a preliminary condition of the subdivision being carried into effect by contract or otherwise. The principle is completely observed and the purpose fulfilled by an option the exercise of which on its terms must be suspended until the plan is sealed. In terms it cannot be said that land is 'sold' by such an option unless and until the plan is

sealed." 30. It seems to me the case is distinguishable from George's case because since no "sale" took place on 9 March 1955 the parties had not then entered into any transaction prohibited by the Act. In the present case it seems to me that there is such a transaction. The Preamble to the agreement dated 8 August 1983 expressly recites that "the parties have agreed that the vendors will sell to the purchasers a parcel of land as hereinafter described." 31. A statute prohibiting certain conduct may render a contract void or illegal. The terms of the statute must be examined carefully to see what consequences flow. See Yango Pastoral Company Pty Limited and Others v First Chicago Australia Limited and Others [1978] HCA 42; (1978) 139 CLR 410. At 430 Jacobs J says: "When a statute expressly prohibits the making of a particular contract, a contract made in breach of the prohibition will be illegal, void and unenforceable, unless the statute otherwise provides either expressly or by implication from its language." 32. At 423 Mason J says: "The principle that a contract the making of which is expressly or impliedly prohibited by statute is illegal and void is one of long standing but it has always been recognized that the principle is necessarily subject to any contrary intention manifested by the statute. It is perhaps more accurate to say that the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a

question of statutory construction and that the principle to which I have referred does no more than enunciate the ordinary rule which will be applied when the statute itself is silent upon the question. Primarily, then, it is a matter of construing the statute and in construing the statute the court will have regard not only to its language, which may or may not touch upon the question, but also to the scope and purpose of the statute from which inferences may be drawn as to the legislative intention regarding the extent and the effect of the prohibition which the statute contains." 33. At 429 Mason J also makes this observation: "There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished........in the present case Parliament has provided a penalty which is a measure of the deterrent which it intends to operate in respect of non-compliance with s.8. In this case it is not for the court to hold that further consequences should flow..... ." 34. Following these observations it seems that the respondent would be on somewhat firmer ground if it could point to s83(1) as the only provision adversely affecting the transaction. 35. If the penalty there imposed was, to use the words of his Honour quoted above, "a measure of the deterrent which (Parliament) intends to operate in respect of non-compliance" this court might well hold that no further consequences should flow. But, again to follow the principles laid down by his Honour in the passages quoted above, it seems as a matter of plain statutory construction that Parliament intended further consequences in this case; and those consequences are clearly set out in s83(2) that the transaction contemplated should be void. 36. In Ovenden v Palyaris (1975) 11 SASR 65 the SA Planning and Development Act contained two prohibitions. S44(1) provided that a person "shall not (dispose) of any land other than an allotment or an undivided share of an allotment to any person .... without the approval in writing of the Director". A penalty was provided for non-compliance. S.59(1) provided that "No person shall divide any allotment except in accordance with a plan of subdivision deposited in the Lands Titles Registration Office of the General Registry Office". Both s44 and s59 however contained a subsection (s44(6) and s59(4)) that it should not be an offence if the agreement was subject to the approval of the Director and s59(4) further provided that it should not be an offence under that section if the agreement was subject to the necessary plan of subdivision being deposited in the Land Titles Registration Office. 37. The contracts under consideration (which contemplated subdivision) contained no clause pursuant to s44(6) that they were subject to the approval of the director. They did, however, contain a clause which the court held complied with s59(4) which made the contracts "subject to the units being granted strata titles". The Full Court held that the contracts, being validated by s59(4) "in the sense of being made not illegal" should be valid for all purposes. (See Bray CJ at 74). 38. Furthermore the court held that in one of the contracts under consideration there was a further defence because that particular contract contained what his Honour Bray CJ referred to as "a true condition precedent". "The respondent, as far as I can see, is under no liability at all, apart from the payment of deposit, before the grant of strata titles". 39. I do not think that this case assists the respondent here. There is no provision in the Northern Territory Act which allows the parties to escape from a prohibition by making a contract "subject to the approval" of some authorised person. Nor is there any section similar to s59(4). It is significant that Bray CJ said at 71:- "So if ss.44(1) and 59(1) and (2) had stood alone, I think

that George's case would have applied, since there is no suggestion that the Director of Planning had approved the contract, in writing or otherwise, and we would be forced to hold, again subject to the point about condition precedent, that the contract was illegal and invalid ... ". 40. Nor could it be said that clauses 5, 6 and 7 could be construed as conditions precedent. They are, as Starke J puts it in George's case at 103 "mere terms of an existing agreement", although clause 7 might be regarded as a condition subsequent. 41. The case of Landall Construction and Development Co Pty Ltd v Bogaers (1980) WAR 33 is, in my view, also distinguishable from the present case. S20(1) of the Town Planning Act of WA provided that:- "No person shall lay out, grant, or convey a street, road, or way, or subdivide or sell land as lots until a plan of subdivision has been approved by the Board." 42. S26 provided a penalty for any person contravening the provisions of the Act. 43. The respondent owned 10 acres of land and wished to sell all but about half an acre. She entered into a contract with the appellant agreeing to sell the 9 acres subject to the approval of the Town Planning Board to the plan of subdivision. The appellant paid a deposit. The subdivision was not approved. The appellant sought to recover the deposit. The respondent pleaded illegality. The plea succeeded at the trial. On appeal, the Full Court held that the legislation did not prevent a conditional agreement of this nature. I note that by then the Act had been amended so that an agreement made "subject to the approval of the Board to the subdivision of the land being obtained" was permitted or, to use the words of the amending Act "the agreement shall be deemed not to have been entered into in contravention of that subsection" (i.e. s20(1)). However, their Honours did not base their judgments on this, but on the basis that in any event (and their Honours overruled two earlier decisions of single judges on this point) an agreement to sell land which was not at the date of the agreement in lots, and which was expressed to be subject to the approval of the Town Planning Board to the plan of subdivision did not infringe s20. It was not an agreement to sell land other than as lots. Wallace J said at 45:- "The Act does not expressly prohibit the making of conditional executory contracts for sale of unapproved lots." See also Lombardo v Development Underwriting (WA) Pty Ltd (1971) WAR 188. 44. In my view the terms of s20 of the Western Australian Act are more confined than the terms of s83 of the Northern Territory Act. The Western Australian Act forbids a person to "layout, grant or convey .... or subdivide or sell land as lots until a plan of subdivision has been approved by the Board". The expression in the Northern Territory Act is "enter into a transaction purporting to subdivide". This in my view is much wider and would cover what Wallace J refers to as "conditional executory contracts". 45. To agree to a sale conditional upon certain approvals being given would be to "enter into a transaction", and if that transaction envisaged subdivision as an essential purpose of the agreement it would be "purporting to subdivide". It would be illegal and, by the express terms of s83(2), void. 46. The respondent, however, submits that it is too late to raise the plea of illegality and that the learned trial judge was correct when he refused to give leave to amend the defence on the application made to him on 11 May 1990. On general principles there is much to be said for refusing an amendment at such a late stage. Mr Hiley points out that: The application was not made, (a) until two years after the original hearing had concluded. (b) Almost one year after his Honour had announced his decision. (c) Five years after the proceedings had commenced. (d) More than six years after the agreement. 47. Mr Southwood, however, submits that if the transaction is illegal on the face of it the court is bound to take note of the illegality once that illegality comes to its notice even if it is not pleaded. That position was accepted by the learned trial judge who said:- "I accept that if the agreement of 8 August 1983 is properly characterised as 'a transaction purporting to subdivide land in contravention of (Part V of the Planning Act)' it is on its face rendered illegal and void by the Planning Act, and there is no need for that illegality to be pleaded. In those circumstances the Court would not enforce the agreement; see Wetherell v Jones (1832) 3 B and Ad 221 at 225-226; [1832] EngR 405; 110 ER 82 at 84, and the later cases cited by Mr Mildren, particularly the discussion of general principle in Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410." 48. The appellant in its Notice of Contention disputes that conclusion, but it seems to me that his Honour's observations are plainly correct. See Yango Pastoral Company Pty Ltd v First Chicago Australia Limited [1978] HCA 42; (1978) 139 CLR 410. 49. At 413 Gibbs ACJ sets out "four main ways in which the enforceability of a contract may be affected by a statutory provision which renders particular conduct unlawful". The first two of these apply to the present case namely, "(1) the contract may be to do something which the statute forbids; (2) the contract may be one which the statute expressly or impliedly prohibits". See also the remarks of Mason J at 423 previously referred to. 50. At 414 Gibbs ACJ cites remarks of Devlin J in St John Shipping Corporation v Joseph Rank Ltd (1957) 1 QB 267 at 287: "The fundamental question is whether the statute means to prohibit the contract. The statute is to be construed in the ordinary way; one must have regard to all relevant considerations and no single consideration, however important, is conclusive." 51. In my view, and applying that test, and for the reasons I have given the fundamental question here is clearly answered that the statute means to prohibit the contract. The terms of the contract offend against the mischief to which the Act was directed. Having regard to the terms of s83 the contract is illegal and void on the face of it. 52. In Yango's case their Honours were of opinion that the legislative intention expressed by the statute then under consideration was the measure of the deterrent which parliament intended to operate in respect of non-compliance with its provisions. Non-compliance did not make the transaction illegal and void but rather made it a valid contract subject to the penalty provided. See Mason J at 429-430. As their Honours point out however it is essentially a matter of statutory construction and in this case it seems to me that the provisions of s83 of the Northern Territory Planning Act go much further than the provisions of s8 of the Commonwealth Banking Act which was the section under consideration in Yango's case. There is in the Northern Territory Act a specific prohibition against just that sort of transaction which occurs in the agreement between the appellant and the respondent, whereas in Yango's case it was not the contract which was prohibited but rather the carrying on of banking business without authorisation. Furthermore the Planning Act not only imposes a penalty for breach of s83(1) but specifically provides in s83(2) that the prohibited transaction is void. 53. The general principle is that a party must plead illegality to be able to rely on it at trial. (Thompson - The Rights of Parties to Illegal Transactions - 1991 - Federation Press - 216: O.13.07(a): Williams - Civil Procedure 1 13.07.105 and the cases there cited). That however is subject to the rule that if the illegality is apparent on the face of the contract the court is bound to deal with it even if it is not pleaded. North-Western Salt Company Limited v Electrolytic Alkali Company Limited (1913) 3 KB 422. "... if the contract sued on is ex facie illegal or void there are no facts to plead and the defendants are not bound to plead that it is illegal, because that is law, not fact; but if it is not so ex facie and he desires to raise the plea on facts ultra, they must plead those facts" (per Farwell LJ at 425)." 54. However there is wisdom in the remark of Herron J in Ford v Bartley (1956) WN (NSW) 383 at 385 that, "when the matter is not pleaded the defence in such actions takes a grave risk." 55. On appeal to the House of Lords, the decision of the Court of Appeal in the North Western Salt Company case was reversed (1914) AC 460. The principles stated in the Court of Appeal were not disputed but their Lordships held that the evidence did not disclose the ex facie illegality which would have justified and indeed demanded the Court's intervention. Instead, the purported illegality needed to be adduced from circumstances not all of which were before the Court. The defence not having been pleaded, and the illegality not having been proved it could not succeed. Viscount Haldane LC said at 469: "My Lords, it is no doubt true that where on the plaintiff's case it appears to the Court that the claim is illegal, and that it would be contrary to public policy to entertain it, the Court may and ought to refuse to do so. But this must only be when either the agreement sued on is on the face of it illegal, or where, if facts relating to such an agreement are relied on, the plaintiff's case has been completely presented. If the point has not been raised on the pleadings so as to warn the plaintiff to produce evidence which he may be able to bring forward rebutting any presumption of illegality which might be based on some isolated fact, then the Court ought not to take a course which may easily lead to a miscarriage of justice. On the other hand, if the action really rests on a contract which on the face of it ought not to be enforced, then, as I have already said, the Court ought to dismiss the claim, irrespective of whether the pleadings of the defendant raise the question of illegality." 56. In this case I am satisfied that the agreement is on the face of it illegal. It requires no further evidence and consistently with the remarks of Lord Haldane cited above, the court is bound to take note of it. Mr Hiley has in fact urged us that further evidence might be called such as the application of a planning instrument or the consent of the Planning Authority, but I cannot see how anything of that nature could be raised in such a way as to cure the illegality on the face of the instrument. It is conceded that the plan of subdivision was not prepared until 1984 and consent was given later in 1984 whereas the agreement was 8 August 1983. These facts are specifically found by the learned trial judge. I think the court is in very much the same position as the Full Court of Victoria found itself in Potato Producers Co-operative Limited v Pavone [1962] VicRp 35; (1962) VR 231 where the head-note states: "Since the agreement was ex facie illegal and the Court was unable to imagine any evidence which could have been adduced below justifying its provisions, the Court on appeal was bound, even though the point had not been taken at the trial, to hold that the agreement was illegal and void on grounds of public policy." (See pp. 239, 243). 57. George's case establishes that, at least where the contract or transaction was prohibited by statute, restitution is not available save where the parties can be said not to be in pari delicto because of "some element of fraud, duress or oppression or some circumstances creating a fiduciary relationship between the parties" per Knox CJ at 101. Isaacs J says at 102: "The statute in the present case strikes directly, not only at the subsequent transfer of the land, but also at the contract itself." See also Starke J at 104. 58. So in Clegg v Wilson [1932] NSWStRp 6; (1932) 32 SR (NSW) 109 at 120-121: "In cases where the contracts are illegal because expressly or impliedly forbidden by statute the view appears to have been uniformly taken that the maxims Ex turpi causa non oritur actio and In pari delicto potior est conditio defendentis et possidentis apply, notwithstanding the executory nature of the contract. ... The explanation of these cases appears to me that where parties, who are contracting on an equal footing, and each of whom knows, or is deemed to know the law, propose to enter into an agreement, prohibited by statute, and which they know, or are deemed to know, is so prohibited, they both purpose the doing of an illegal act, and that illegal purpose is achieved by the mere making of the contract whether anything further remains to be done thereunder or not." 59. The parties here are plainly in pari delicto so far as the agreement is concerned. There seems no way in which the court could alter that position by some form of restitution. Insofar as Mr Hiley suggests otherwise and suggests possible amendments to the pleadings I could not agree with him. 60. The appellant has also appealed against the order of costs of the application of 11 May 1990 made against it. Although the appellant succeeds here I do not think the order for costs below should be altered. The appellant succeeds on a point first raised during the application about which the respondent had no notice and which now dramatically changes the position of the parties. The respondent should retain the order made by His Honour that it pay 90% of the costs of the trial in which no defence was raised that the agreement was illegal and void. On the other hand, since the appellant has now succeeded on the argument it raised on 11 May 1990 it should have its costs of that day. 61. As to costs of the appeal they must follow the event. The orders will be:

That insofar as the appeal is against the decision of the

learned trial judge that the agreement of 8 August 1983 was not illegal and void. (a) the appeal is allowed. (b) declare that the agreement entered into on the 8th day of August 1983 between the appellant as vendor and the respondent as purchaser is void and of no effect. 2. In lieu of paragraphs 1, 2 and 3 of the order of his Honour Kearney J made on 2 October 1990 order that the plaintiff/respondent's action No. 281 of 1985 be dismissed. 3. Insofar as the appeal is from paragraphs 5, 6 and 7 of the order of Kearney J on 2 October 1990: (a) As to paragraph 5 the appeal is dismissed and the order confirmed that the appellant pay 90% of the plaintiff's costs of the trial which took place from 18 to 22 April 1988, 14 to 16 June 1988, 23 June 1989 and 19 July 1989. (b) As to paragraph 6, the appeal is allowed, the order that the respondent have the whole of the costs of the appellant's oral application of 11 May 1990 is set aside and in lieu thereof order that the respondent pay to the appellant the costs of such application. (c) As to paragraph 7, the appeal is dismissed and the order confirmed. 4. That the respondent pay the appellant's costs of this appeal. JUDGE2 MARTIN J I have had the benefit of draft reasons for judgment of the Chief Justice and I am in general agreement with them. 2. What becomes abundantly clear upon reading the many cases which were referred to in argument is that little or no guidance is available except the obvious, and that is, that each case depends upon its own facts and the application of law to those facts. 3. The things to be noted about the contract in question here are: (a) at the time it was entered into the vendor (appellant) was not the owner of the land; (b) it held an option to purchase the land; (c) the parties agreed that the vendor would sell a parcel of that land to the purchaser; (d) the vendor was entitled to receive the whole of the consideration for the transaction of $60,000, prior to the time at which it was contemplated the transaction would be completed; (e) the vendor undertook to complete the purchase of the land in which the parcel in question formed part; (f) the purchaser (later the vendor) contracted that it would arrange for the land to be subdivided in such a way that the parcel to be transferred to the purchaser could be transferred to it; (g) the contract, through paragraphs 5 and 6, proceeds upon the basis of an expectation that steps for obtaining subdivision approval would be taken and that there would be a transfer of the parcel of land to the purchaser within 14 days thereafter; (h) in the event that the subdivision was not possible, the vendor was to lease the parcel to the purchaser. 4. Looking at the definition of "subdivision" and s83(2) of the Planning Act, what is rendered void is a transaction, the purpose of which is to render separate parts of the land available for separate occupation and use, in contravention of Part V of the Act. There can be no doubt that a contract is a transaction and the whole purpose of the contract in question here (with all its deficiencies) is to divide the subject land into two parts and to either transfer or lease one part to the purchaser. It is not necessary that the transaction or activity under consideration should of itself have the effect of making separate parts of land available for separate occupation, it is only necessary that activity or transaction involves that purpose or objective. 5. Part V of the Act prescribes a detailed scheme relating to the subdivision of land, designed to protect the public interest including the interest of those who may seek to separately occupy or use the separate parts of land derived from a subdivision. There is no acknowledgment in the contract of the existence of the Planning Act and references to the "sealing of the subdivision" and "approval thereof by the Northern Territory Land Registration Office" display a singular lack of knowledge of what is required to subdivide land in accordance with Part V. The agreement to transfer with reference to those events, which have nothing to do with the Act, is a transaction made void by s83(2). Furthermore, clause 7 of the contract contemplates that if a subdivision leading to a transfer is not possible, then separate parcels of the land will be made available, one of which will be for the separate use and occupation of the purchaser by means of a lease. This provision is in contravention of Part V. At least the earlier provisions paid regard to there being some formal requirements, the latter does not. It reflects the fact that the full consideration for the proposed transfer or lease would have passed from the purchaser prior to completion. 6. Whether a provision making the contract subject to compliance with the Planning Act would save it does not arise for consideration. There is none expressed and none should be implied since given the matters which are to be taken into account by a consent authority and its powers (see especially 93 and 94 of the Act), a prudent vendor in the position of the appellant at the time the contract was signed might well be unwilling to agree to so simple a term. 7. The express provisions of s83(2) make it unnecessary to consider whether the offence created in subsection (1) of s83, which renders a transaction of the type under consideration here illegal, also makes it void. The parliament has expressly overcome the uncertainty which can sometimes arise. 8. With respect, I agree with his Honour the Chief Justice, that the failure to plead illegality of the contract was not fatal to the defendant's case, and that even though the point had not been taken until late in the litigation process the Court was bound to find that the agreement was illegal and void in accordance with the statute. 9. I agree with the orders proposed by the Chief Justice. JUDGE3 ANGEL J The principle issue on this appeal is whether the agreement in writing dated 8 August 1983 between the appellant/vendor and the respondent/purchaser is rendered void by s83(2) of the NT Planning Act (as in force as at 8 August 1983). The issue turns on whether the agreement constitutes a "transaction purporting to subdivide land" in contravention of Part V of the Planning Act. 2. Section 83 of the Planning Act provides: "(1) No person shall enter into a transaction purporting to subdivide land in contravention of this Part. Penalty: $5,000 (2) A transaction purporting to subdivide land in contravention of this Part is void." 3. If the agreement in question, on its ordinary construction, is a "transaction purporting to subdivide land" in contravention of Part V of the Act, then it is void by statute and the court is bound to have regard to that legal consequence irrespective of whether it was specifically pleaded or not; cf Edler v Auerbach (1950) 1 KB 359 at 371. Whether the parties intended to contravene the Act is irrelevant: St John Shipping Corp v Joseph Rank Ltd (1957) 1 QB 267 at 283; the appeal concerns an agreement 'in writing' - see Outer Suburban Property Ltd v Clarke [1933] SAStRp 23; (1933) SASR 221 at 226 - and the only question is whether the written terms of the agreement constitute a 'transaction purporting to subdivide land in contravention of ' Part V of the NT Planning Act. 4. The phraseology employed in s83 of "a transaction purporting to subdivide land" is not specifically defined or otherwise averred to by the Act. The term "subdivision", is defined in Act 48 of 1979 such that: "subdivision in relation to land means an activity which involves - (a) the rendering of separate parts of the land available for separate occupation or use; or (b) the consolidating of parcels of land into one or more allotments, but does not include subdivision prescribed by the regulations to be an excluded subdivision" 5. I respectfully agree with the learned Chief Justice as to the meaning and effect of the Planning Act provisions relating to the regulation of subdivisions of land. 6. It was submitted that the definitions previously employed by the legislation, of "subdivide" and "subdivision in relation to freehold land", are relevant to the interpretation of the Act in its present form. I respectfully agree with the learned Chief Justice that this cannot be the case. These old definitions were repealed. There is no reason to justify their resurrection after burial. In this instance, in my respectful view, employment of previous definitions hinders rather than helps the interpretive process. 7. Examining the written terms of the contract in the light of the legislative scheme operating for its regulation, I respectfully agree with the learned Chief Justice that the agreement does constitute "a transaction purporting to subdivide land." 8. Notwithstanding this conclusion, the respondent submitted that the agreement is saved from falling foul of s83 because it was not entered into "in contravention of" Part V. Further to this, the respondent submitted that the agreement is in fact "subservient" or subject to the operation of the Act and its requirements, albeit not expressly so. Evidence of this, so the respondent submitted, is to be found in the agreement itself, especially, it was contended, in the provisions of clause 7 which, it was said operates to save the agreement in the event an application be refused by the Planning Authority. 9. I cannot accept this submission. In my view, clause 7 itself contravenes s83 of the Act, providing as it does for the rendering of separate parts of land available for separate occupation or use. Furthermore, as Isaacs J said in George v Greater Adelaide Land Development Co Ltd [1929] HCA 40; (1929) 43 CLR 91 at 102, it is the "mere fact of entering into it" (the contract) that attracts the prohibition, in the present case the operation of s83. Express or implied terms of a contract indicating it to be subject to the provisions of the Act (as in George) or clauses of a contract providing for alternatives in the event of planning being refused (as in the present case) can have no effect. The instant a contract "purporting to subdivide land", within the meaning provided for in the Planning Act is entered into "the Act (is) already contravened". 10. It was urged by the respondent that the present case is analogous to that of Ovenden v Palyaris Construction Pty Ltd (1975) 11 SASR 65. In that case the Full Court of the Supreme Court of South Australia held that a contract which provided that it was subject to the granting of strata titles was valid. The clause so providing was held to be a condition precedent such that contractual obligations arose only on its fulfilment: see per Bray CJ at 75. Bray CJ (at 71, 74) distinguished George on the ground that s59(4) of the Planning and Development Act SA, avoided the absolute prohibition consequent upon applying George. 11. The NT Planning Act does not contain any provision equivalent to s59(4) of the SA Planning and Development Act at issue in Palyaris. I respectfully agree with the learned Chief Justice that Palyaris has no application to the present case, and that the present contract is void by virtue of s83(2) of the NT Planning Act. 12. I agree with the orders proposed.

Town Planning and Development Act 1920

ALLAN ROWLANDS HOLDINGS PTY LTD v. GAYE (NO. 1) PTY LTD No. AP 15/1990 Number of pages - 21 Contract - real property (1992) 107 FLR 313 [1992] NTSC 32 (3 June 1992)

At a glance

Court

Decision date

Before

Source

Judgment (10 paragraphs)

ALLAN ROWLANDS HOLDINGS PTY LTD v. GAYE (NO. 1) PTY LTD No. AP 15/1990 Number of pages - 21 Contract - real property (1992) 107 FLR 313 [1992] NTSC 32 (3 June 1992)

Legislation Cited (1)

Cases Cited (4)