By letters or Notices dated 19, 23 February 1999, 15 March 1999 and 22 April 1999, 15 June 1999, 10 October 2007, 5 November 2007 and or 1 April 2008.
45 The meaning of this allegation is that the Default Buy-back Notice and the exercise of the option were constituted by all eight letters, alternatively by the first seven letters, alternatively by the last letter. The conduct of the case by the plaintiff's counsel showed that counsel felt free to search through the letters and try to make a case from the best he could find in any one or combination of them, and he did not present his case on the basis that when the whole array was taken together, they together constituted a Default Buy-back Notice. A Black Letter lawyer might say that the pleading only raised for adjudication a case in which the first seven in the series constituted a Default Buy-back Notice, alternatively all eight and further alternatively the last of them on its own. This is what the pleading says but I do not think I should limit my understanding of it in that way. The form in which the allegation was made glossed the fact that there had been more than nine years delay between the Notice dated 23 February 1999 and the commencement of the proceedings.
46 As the plaintiff alleged a default buy-back Notice by a series of events concluding on 1 April 2008 it is not surprising that the defendants' pleading did not allege laches acquiescence and delay, and did not, until an amendment made during the hearing, allege abandonment of any contract which had been made, to be inferred from the many years of inactivity. It would have been futile to allege such matters in answer to the claim as pleaded, but they obviously came under consideration when the conduct of the claim at the hearing directed attention to events of February 1999 as the exercise of the option and not to the whole series, and they were debated at the hearing.
47 In reality only two documents in the series have any claim for consideration as notices of exercise of the option, the notice of 23 February 1999 and the letter and enclosure of 1 April 2008. The other letters do no more than provide context for the significant documents. The Statement of Claim masked what should be understood to be the legal effects of delay. If, as paragraph 18 alleged, the plaintiff had been ready, willing and able to comply with the contract and purchase the unit it would have pressed on, fairly soon after the Notice of 23 February 1999 by proffering, as in correspondence the plaintiff's solicitors professed readiness to do, a form of contract for exchange. The terms of the contract could be readily spelt out from provisions of Clause 8 and the timetable could also be understood; there was a contractual obligation to exchange contracts 14 days after exercise of option, and although strict compliance with that time limit was not required, the time limit fixed an indication of the pace at which BBA would have proceeded if it had been ready, willing and able to do so.
48 It is not possible for the plaintiff to rely on the Notice of 1 April 2008 as an exercise of the option because of provisions of the Retirement Villages Act 1999, which came into effect on 3 December 1999. Section 167 makes provision that an operator of a retirement village who holds an option to purchase residential premises from a resident must give written notice within 28 days after the resident permanently vacates the premises, otherwise the option lapses. Section 167 extends to the death of an owner of premises, and applies the concept of "permanent vacation" defined in s 8. Transitional provisions in Schedule 4 Clause 9 and Clause 13 have the effect that s 167 operates as if an owner who died before the commencement of the Act had permanently vacated on the commencement of the Act. If the option had not earlier been exercised, it lapsed on 31 December 1999.
49 The letter of 23 February 1999 is in my opinion the only event which comes under consideration as an exercise of the option. The terms of the letter do not follow closely what Clause 8(a) prescribed for the exercise of the option: notice in writing served upon the proprietor to require the proprietor to transfer the unit to the Service Company or its nominee for the price of $107,000. The letter does not in its terms make a requirement, or require transfer. Of course there is no reference to a nominee. The letter refers to the plaintiff's wish to exercise its right to re-purchase the unit and calls for arrangements to be made for the re-purchase.
50 It is well established that contractual provisions relating to circumstances in which and the manner in which an option to purchase land may be exercised must be observed. If the contract prescribes a method of exercise, that method must be strictly adhered to; see Tonitto v Bassal (1992) 28 NSWLR 564 at 574G (Sheller JA, with whom Handley JA and Hope AJA concurred). In that case the contract made detailed prescriptions for the manner of exercise, and not all the details were complied with, although what the party giving the Notice intended to achieve could be readily understood.
51 Central to an exercise of option is the expression of the intention to exercise it. In concept the use of some particular form of words may be essential for an effective exercise; but whether this is so is a matter of interpretation of the contractual provision dealing with the giving of Notice. According to Clause 8(a) what the Notice is to do is "to require the proprietor to transfer the unit for … for the price of $107,000." In the terms of the notice of 23 February 1999 no explicit requirement to transfer is made, and the price is not referred to. However there is a clear reference to the right to re-purchase the unit, a statement of a wish to exercise the right and a call for arrangements for the re-purchase.
52 There have been many cases where courts have addressed attempts to exercise options couched in language which expresses a wish or intention to exercise the option. Depending on which expressions precisely are used, it may be right to interpret a notice as an indication of a wish or intention to act effectually by some future notice. Notwithstanding the strictness which is appropriate, courts have not readily interpreted notices as mere forecasts or indications in advance. The view which has been taken, guided by a series of decisions in the High Court of Australia, is in my opinion well shown by the following passage from the judgment of Samuels JA in Prudential Assurance Co Ltd v Health Minders Pty Limited (1987) 9 NSWLR 673 at 681E
The question which must be asked is to be extracted from the judgment of Dixon CJ in Ballas v Theophilos (No 2) (1957) 98 CLR 193 at 196 and may be formulated in this way: "Was the letter of 23 September 1986 a clear and unequivocal election to acquire the relevant property upon the terms specified in the option?" The answer is to be given by reference to the further question adopted by Isaacs J in Carter v Hyde (1923) 33 CLR 115 at 126, that is to say: "… Now, what would anybody when he received that letter fairly understand to be the meaning of it, in the circumstances of its receipt?" Finally, the terms of the letter itself for the purposes of applying Isaacs J's test are to be understood in the light of what Gibbs J (as he then was) said in Quadling v Robinson (1976) 137 CLR 192 at 201. There his Honour said:
"… However, it is not always easy to determine whether the purported exercise of an option should be understood as attempting to vary the terms of the option or as intending to accept its terms without modification, notwithstanding that they may have been misdescribed, or notwithstanding that the grantee of the option may have indicated that he intends to perform the contract in a manner for which the terms of the option do not provide. Thus although a notice misstates the terms of (1987) 9 NSWLR 673 at 682 the option which it purports to exercise, it may nevertheless amount to an unqualified and unconditional exercise of the option."
53 At 683G McHugh JA stated the matter in similar but shorter terms, and at 677-678 Kirby P gave a formulation of the applicable principles governing options which stated the matter to the same effect, although at considerably greater length with more detailed references to High Court authority. It is important to note, from Kirby P's principle 5:
5. Nonetheless, every case depends ultimately upon its own facts and the proper construction of the document which is in dispute.
54 The approach taken by the Court of Appeal in that case is, I would respectfully say, strongly supported by the earlier High Court decisions there referred to, and has been adhered to; Young v Lamb [2001] NSWCA 225, 10 BPR 18,553.
55 In my opinion, when the notice of 23 February 1999 is taken as a whole and placed in the context of the contractual relationship to which the defendants as executrices had succeeded, it clearly and unequivocally manifested an intention to exercise the option and to require the executrices to comply by transferring the property. A clearer expression could have been devised, but the recipient could not have doubted the meaning of the notice and the giver of the notice could not have escaped from commitment.
56 The defendants' counsel contended that the notice of 23 February 1999 failed in effect because it was not clearly directed to the Executors (or the Executrices) of the Estate of the Late Clifford Evans, but also referred to Dorothy Evans; counsel observed that there was no such entity as "the Executors of the Estate of the Late Clifford and Dorothy Evans". However even the most general understanding of the transactions of Mr and Mrs Evans would enable the recipient to understand that the Notice was intended to act (whatever else it may have covered) as an exercise of rights arising on the death of the second of them.
57 The defendants' counsel contended that as at 23 February 1999, after the successive deaths of Mr and Mrs Evans and grant of probate of Mr Evans' estate it was no longer possible for the death of Mr Evans to ground the giving of a buy-back Notice. This argument was constructed on what were contended to be textual anomalies in the references in the Occupancy Agreement to the occupants as proprietor, to the Executor or Executors of an occupant and to interpretation provisions in Clause 10 relating to inclusion of the plural in words importing the singular. In the Schedule the reference to the occupant and to the proprietor are given meanings which extend to Executors, Administrators and Successors in title. An introductory statement preceding the recitals adopts meanings specified in the Schedule "unless the context otherwise requires".
58 Interpretation provisions in contracts can be a happy hunting ground for real and apparent logical anomalies arising from inclusions, transpositions from the singular to the plural and attempts to apply contractual provisions to all of a series of succeeding times and circumstances. It is inherently unlikely that parties to written agreements convey their true intentions in concealment under anomalies of these kinds. On the terms of the Occupancy Agreement as a whole I regard it as clear that the death of Mr Evans was an event giving rise to an option and was no less so after the Executrices had obtained probate of his will.
59 BBA's claim for specific performance rests on rights under the Occupancy Deed. Unless BBA's rights were acquired for value, BBA cannot obtain an equitable remedy such as specific performance; equity does not assist a volunteer, and an option conferred without consideration by a deed would not become a ground of equitable remedies. It is necessary to find valuable consideration in the provisions of the Occupancy Agreement itself. BBA cannot rely on consideration found in the provisions of the purchase contract, to which BBA was not a party. CGM assigned its rights under the purchase contract to BBA; assignment is alleged in the pleadings and not disputed. However the option was not conferred by the purchase contract and was not conferred on CGM, and the assignment and consideration furnished by CGM do not assist BBA's rights.
60 The defendant's counsel made a number of adverse observations on the contractual promises given by BBA to the Evans in the Occupancy Agreement. Counsel referred to illegality in a number of respects, but his submissions did not raise any serious question of illegality in relation to any contractual promise made by BBA. The force of counsel's contentions which claimed my attention was that they sought to show that contractual promises of BBA had no substance and that as consideration for any obligation undertaken by the Evans those contractual promises were illusory.
61 Rights purportedly conferred by By-law 32 are not conferred in respect of any lot, and they are not conferred on a proprietor. They are not exclusive rights, as By-law 32 in its own terms requires BBA to give licences to proprietors. In my opinion By-law 32 produced no practical effect.
62 At the basis of much of what BBA promised the Evans it would do is By-law 32, its apparent conferral on BBA of exclusive use of the common areas of the strata plan and the licence granted to the Evans by BBA to make use of the common areas. Underlying assumptions about what BBA could do with the common property rest on By-law 32.
63 In my opinion the right and opportunity of a lot owner to use common property, in an appropriate way is basal to an understanding of the rights of owners of lots in a strata plan. I do not see any express conferral of rights to use common property in the Strata Titles Act 1973; but that right is implied and is sufficiently conferred by the reference to the common property as common. It is common to all proprietors, and exclusive of anybody else. This basal assumption is context in which to approach s 58(7) of the Strata Titles Act, and demonstrates that it is only by following the means offered by s 58(7) and in accordance with its provisions that a by-law, made after the constitution of the body corporation and registration of its strata plan, can alter or qualify entitlements with respect to common property.
64 The rights which By-law 32 purportedly confers on BBA were not conferred upon a proprietor; BBA was not then a proprietor. It has been a proprietor on several occasions and for brief periods since then, but these were much later occasions when it has bought back lots under Occupancy Agreements and then re-sold them; rights in respect of the common property generally have no relation to those proprietorships.
65 In my opinion By-law 32 has never had any effect, and has never operated to give any exclusive rights to the plaintiff, to diminish any rights of proprietors with respect to common property, or to make the rights of proprietors dependent on any arrangement they have made with BBA.
66 Although much of what BBA promised the Evans it would do was illusory, in that it involved conferral on the Evans of licences and permissions to do things which they were entitled to do anyway, and also much of what was promised conferred little or no advantage because the Evans were entitled to have the subject matter of the promises performed for them by other persons or in other ways, there remained a core of advantage to the Evans in the promises given by BBA. The value given to them may not have been as great as a reading of the Occupancy Agreement might suggest; but there was value there, and in my opinion BBA is not a volunteer in its claim to enforce promises made by the Evans in the Occupancy Agreement.
67 Defendants' counsel contended that the Occupancy Agreement is void as against public policy in that clause 7, according to its terms, limits the rights of Mr and Mrs Evans as occupant and proprietor, by providing for events in which their rights in relation to Unit 40 would cease and determine. In my opinion it should be understood that notwithstanding anything in the Occupancy Agreement, Mr and Mrs Evans had the rights which came to them in accordance with the strata plan and the provisions of the Strata Titles Act 1973 which together form the constitution of the body corporate. BBA was not a member of the body corporate. Provisions of the agreement which purported to limit or provide for termination of the rights of the Evans operated only in accordance with and for the purposes of their contractual relationship with BBA. Their significance is in establishing events and circumstances in which BBA had contractual rights against them. In my opinion there is no rule of public policy which prevents the parties to the Occupancy Agreement from making the arrangements in clause 7. To this I make the large exception of the public policy against restraints on alienation of freehold land, with which I deal later.
68 It was also contended that under the Occupancy Agreement BBA assumed a number of obligations which could not lawfully be assumed by it because they related to tasks which should have been and perhaps were performed by a strata manager. The body corporate had a strata managing agent, Peter Clisdell Real Estate Pty Ltd, appointed at the body corporate's first meeting on 13 February 1985, and so far as appears in office ever since. If and insofar as the Occupancy Agreement provided for BBA to do things which the strata managing agent was obliged to do, such as effecting insurance, maintaining common areas, ensuring that repairs were carried out, paying rates and charges or other matters, there is not in my opinion any element of illegality. No law forbids BBA from contracting with the Evans to do something which the strata managing agent was also obliged, in a different way, to do in the interests of the Evans.
69 I heard arguments relating to severability of provisions of the contract should they be held to be illegal, but as in my opinion none were illegal I do not address those arguments.
70 As an element in a claim for specific performance of a contract for sale of land, the very long interval between the time in 1999 when the correspondence died away and the time in 2007 when it was resumed, broken only by ineffectual negotiations in 2002, it is extremely striking and very adverse to the grant of specific performance. BBA did not prepare or proffer or demand execution of a form of contract. For that matter, if it be relevant, it did not demand preparation of a form of contract by the defendants. BBA did not pay or offer to pay a deposit. The nature of the business, illustrated by the time scale in sub-par (ee), indicated the need for continued action to press for completion of rights arising under the notice of 23 February 1999. Holding real property brings obligations for outgoings. Continuing changes in the value of money, the value of real property, and the relative value of those two mean that equitable enforcement after a long period becomes unfair and unjust. Sales of real property have their own inherent urgency, more so in an age of inflation of money.
71 This is not a case where there was even the slightest act of part performance. There was no act by the defendants which recognised the existence of any obligation throughout the whole series of events. Notwithstanding that it should have been relatively easy for BBA to raise money to carry out the transaction, if it did not have money of its available, there is no indication in BBA's conduct, over a period of more than eight years, that it was ready or willing to go on with the contract and complete it, nor, apart from quite general considerations, is there any indication that it was able to do so. This long period of inactivity gave every indication to the defendants that the project of requiring a buy-back was not being persisted with, but had been abandoned, leaving the defendants to carry on in the position of proprietors of Unit 40, with continuing obligations to meet, and without the advantage of receiving the payment which would have come to them if BBA's claimed entitlement had been pursued.
72 There is the substance or at least very strong elements of several different traditional grounds for withholding an equitable remedy; BBA has, whatever it may profess, not shown itself to be ready or willing, nor indeed shown in a clear way that it has been able to complete the contract at the times when it was entitled and also contractually obliged to press on towards completion. BBA has been guilty of remarkable laches and delay, and has given the defendants every indication, by its behaviour, of acquiescence in the defendants' not complying with the exercise of the option. To step back from equitable remedies to the common law, the behaviour of both parties over such a long period of years leads to the finding that both had abandoned performance of the contract which had come into existence; neither side called for the advantages nor did anything to discharge any of the obligations for so long that abandonment is the correct interpretation of their behaviour.
73 The plaintiff's counsel sought to deflect consideration of the plaintiff's not having ever prepared or tendered a form of contract for exchange, either before, or for that matter after commencement of the proceedings, by observing that it is customary in vendor and purchaser of matters for the purchaser to prepare the contract. This does not deflect the consideration because the plaintiff's solicitors several times indicated that they had a project of preparing the documents, the terms of the documents were prescribed by the terms of the Occupancy Agreement, information relating to calculation of the price was wholly in the hands of the plaintiff, and a person in the plaintiff's position who was truly ready, willing and able to go on with the purchase would have pursued the defendants with a form of contract for them to sign, accompanied by insistence that they should sign it.
74 During his final address the plaintiff's counsel relayed to me, while dealing with readiness, willingness and ability to complete, his client's expression of being then willing to complete, and informed me that a bank cheque for $107,000 was available in Court then and there. I do not, of course, doubt that what counsel then said was true, but I did not accept the proffered undertaking or take control of the bank cheque in any way.
75 After this long period of inactivity BBA is not a purchaser whom equity should, in my opinion, assist. It would be oppressive to wake up this long dead exercise of option and set it in motion again. It is as dead as the Dodo, and as incapable of flight.
76 The plaintiff's counsel contended that if specific performance was withheld the plaintiff should recover damages for breach of contract. This is not a case where the plaintiff has been shown to be entitled to specific performance but it has been withheld on discretionary grounds, leading to a claim for compensation under the legislation referred to as Lord Cairns' Act. BBA is simply not entitled to specific performance. As circumstances in which the defendants could become obliged to complete the contract have never existed, it should not be said that their not having completed it has been a breach of contract which has caused BBA to suffer any loss. BBA did not do the things which it was obliged to do if it was to have an entitlement to performance. For that reason BBA has not in my opinion become entitled to any damages at common law.
77 For the foregoing reasons the proceedings should be dismissed.
78 It is doubtful whether BBA had an equitable interest and hence a caveatable interest in lot 40 when the caveat was lodged, but these doubts cease to apply when one of the conditions in which the option may be exercised has occurred; the option then has some claim to be regarded as a conditional contract to sell the land; see Laybutt v Amoco Australia Pty Limited (1974) 132 CLR 57 at 76 Gibbs J. The Buy-back Deed did not create an equitable interest or a caveatable interest, and the caveat does not refer to it. See Mackay v Wilson (1947) 47 SR(NSW) 315 at 325, Moraitis Fresh Packaging (NSW) Pty Ltd v Fresh Express (Australia) Pty Ltd [2008] NSWCA 327 at 72, 73 (Giles JA).
79 Judicial consideration of restraints on alienation has extended over many centuries and began with attempts to incorporate restraints on alienation into the title of freehold land. However for a long time the case law has almost always related to restraints on alienation imposed by contract in ways which seem not to affect title although they impose practical burdens on title. Under the Real Property Act 1900 and in the Torrens System the creation and registration of newly invented estates and forms of landholding is not practically possible, and only contractual restraints are likely to be devised or encountered. In the Occupancy Deed the provision authorising a caveat attempts to move some distance towards incorporating the option, and the restraint which it implies, into title; it does not succeed in doing so, but illustrates the nature of the restraint.
80 The restraint was imposed by CGM in the purchase contract in provisions which required the Evans to enter into the Occupancy Agreement and the Buy-back Agreement and thereby to confer rights on BBA, and not on CGM. There is no difficulty in recognising these contracts as restraints imposed on the Evans as purchasers and transferees by CGM as vendor and transferor of title when lot 40 was transferred to them. (As plaintiff's counsel alluded to the concept of trusts of contractual promises obtained by one contracting party for the benefit of another person who was not a contracting party, I should say that there is no indication in the facts that there was intention to create a trust of any promise, trusts are not involved and the relationships are all contractual).
81 The option created by the Occupancy Agreement is not limited in time; it lasts forever. It is not limited to the lives of the Evans, or the lives of their executors, and it is not limited to the continued existence of a residential retirement village; it is not limited at all. (It is not affected by perpetuities law; see Perpetuities Act 1984 s 15.) The Occupancy Agreement creates an implied contractual obligation not to transfer title in a way which would defeat the option. That is to say, the Occupancy Agreement restrains, effectively prevents, alienation to any transferee other than BBA itself. I should add to the last sentence the qualification "unless an opportunity to exercise the option is given", but economic circumstances make that no more than theoretically an exception because of the high likelihood that decline in the value of money, increase in the value of real property or both, well established in 1987, would continue and that at the end of the lifetimes of the Evans, or at one of the other events precipitating the option, lot 40 would be worth more than its 1987 price. That is the driving economic force which created the option arrangement, and means that the difference between what is found in the Occupancy Agreement and a total restraint on alienation leaving no recourse but to transfer the land to BBA is only nominally a difference.
82 Consideration of validity then should proceed on the basis that there is a total restraint on alienation of the freehold estate in fee simple, leaving the Evans and their successors with no recourse but to surrender it and receive the 1987 price. A total restraint on the alienation of the freehold estate in fee simple, which is what has been invalid since the origin of the law on restraints of alienation, is what the present facts present.
83 Plaintiff's counsel urged on me the view that there are public policy considerations which support the Court treating the restraint as effective. These contractual arrangements were said to serve general utility including the public utility of arrangements in which a retirement village is organised, BBA is placed in a position largely to manage the affairs of the village and persons aged 55 or over have the opportunity to contract to buy a unit and have the advantages of the organisation of the retirement village at a lower value than the unit would otherwise bring, if they agree and accept that the capital gain will not come to them but will go to the person organising the retirement village. Counsel accompanied this contention with the suggestion that the price at which the Evans bought had been reduced below what the price would have been if there had been no buy-back arrangement. The price reduction is not part of the contractual arrangement, although it is not difficult to suppose that there was such an element of choice.
84 Although counsel did not articulate matters this way, the public policy which he put forward should be re-stated as the public policy in freedom of contract, in allowing people to pursue what they understand to be their own interests and the means of achieving them, by whatever contracts they choose to make. This is a public policy consideration of high importance. In my opinion it is outweighed by the very long-established public policy consideration favouring free alienability of freehold estates in fee simple. There are very wide fields for freedom of contract in relation to the organisation of retirement villages. The subject is regulated by statute, but within that regulated environment there is room to organise retirement villages on a way which does not leave the capital gain to those who live in them, by employing other mechanisms; contractual licences not involving any transfer of property, leases which it is well established can be made in terms which prevent their being alienated, and can be made defeasible on the death of the lessee, and the grant of freehold estates for life. The public policy relating to freedom of contract can be fully served without impinging the public policy against restraining alienation of freehold estates in fee simple.
85 In Re Rosher (1884) 26 ChD 801 (Pearson J) the testator devised real property to his son subject to a right of pre-emption granted to the widow at a price one-fifth of the value of the property at the date of the testator's death. Pearson J held (at 810) that this was an absolute restraint on sale during the widow's life. Re Rosher was considered and approved in Reuthlinger v Macdonald and others (1976) 1 NSWLR 88 where Needham J said that the correctness of Re Rosher had not been doubted since. In Reuthlinger v Macdonald the restraint under consideration did not relate to real property but personalty, shares in a private company, and the restraint was not imposed on the transfer of ownership of the share, but was imposed by an agreement among shareholders made in association with the conversion of the share from non-voting preference shares into ordinary shares. Needham J, with the advantage of deep learning in property law, addressed whether Hall v Busst (1960) 104 CLR 206 decided that contractual restraints on alienation of property unrelated to transfers of property are void.
86 Needham J's consideration was broad and valuable. However what were there under consideration were contractual constraints on alienation of property unrelated to transfers of property, and that is not this case, where the restraints were imposed as part of and in accordance with terms of the agreement for transfer. Hall v Busst itself was a decision on a covenant executed by the purchaser at the same time as the contract of sale was executed, a covenant against transfer without the consent of the vendor. Needham J while following what in his view was decided by Hall v Busst expressed dissatisfaction with that decision. The application to the case before me of the decision in the majority in Hall v Busst is not open to the consideration which Needham J gave to it or to his Honour's doubts. Needham J pointed out at 98 that with one exception "… every case and every author's view referred to related to the question of restraint in association with the passing of property, either by will or inter vivos." Needham J's expression of his doubt was, at 99, "if I were free to decide the issue, I would hold that the doctrine does not apply to contractual restraints, unrelated to the grant or transfer of property. But the passage I have set out from the judgment of Dixon CJ (1960) 104 CLR 206 at 217, 218, appears in terms to state the contrary."
87 The Court of Appeal affirmed Needham J's decision: Reuthlinger v Macdonald & Ors unreported 20 October 1976 (L W Street CJ, Glass and Samuels JJA). There are expressions of approval of Needham J's discussion of the law: L W Street CJ at 1 and 3, Glass JA and Samuels JA at 5: it is not however completely clear that the Court of Appeal endorsed Needham J's expressions of doubt.
88 In Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551 Handley JA addressed the validity of an obligation in a contract for sale of land to re-sell the land to the vendor at the same price if industrial premises were not erected within two years. This restriction was quite unlike the subject of Dixon CJ's observations in Hall v Busst, which related to an indefinite prohibition of alienation, unqualified in time and circumstances. There was an express covenant not to transfer the land prior to erection of the premises and a provision that should the premises not be completed within 24 months, the land was to be sold back at the original price. The restriction on sale was no more than a negative stipulation which would otherwise have been implied; see Handley JA at 555B-C. Handley JA said, of the restrictions in that case, "restraints of this kind, arising as incidents of a personal contract for sale or other disposition of land stands right outside any legal doctrine which invalids contractual restraints on alienation." This judgment, with which Meagher JA agreed is, with respect, not open to doubt and illustrates that there is a wide field for operation for rights of re-purchase, options and rights of pre-emption in contracts associated with land sales, and also in contracts not associated with land sales, with appropriate qualifications in time and circumstances and falling short of indefinite prohibitions of alienation.
89 In Caboche & Bond v Ramsay (1993) 119 ALR 215 there is some consideration by Gummow J at pages 226-228 of law relating to restraints on alienation, and the curiously narrow distinctions which can arise in it. The restraint in that case, and the circumstances in which it was created and operated, have no real relation to the present facts. Gummow J dealt with contractual constraints at pp 231-232, expressed the view "furthermore, it would appear in the case of contractual restraint that the question is one of degree …." and referred to Reuthlinger, somewhat largely, at 94-101. Gummow J's observation was referred to with approval in Moraitis at [81]. In my understanding the matter of degree is the degree to which the contractual restraint impedes the public policy favouring free alienability. On the present facts there is really no question of degrees; both documents have the practical effect of entirely limiting alienability to re-sale at the original purchase price, and to BBA or its nominee.
90 Observations of Brennan J in Nullagine Investments Pty Ltd v The Western Australian Club Inc (1993) HCA 45; (1993) 177 CLR 635 show his Honour's view that when this doctrine is applied to contractual restraints the application must be based on public policy. I understand that the public policy referred to is the public policy in favour of free alienability of property. By contrast, the degree to which that public policy is injured by an arrangement such as that in Wollondilly Shire Council v Picton Power Lines Pty Ltd is slight. The restraint in Moraitis, which the Court of Appeal did not allow to be debated on appeal, could be regarded as operating as a complete prohibition, by the reasoning adopted in Re Rosher, although that case related to contractual licence and not a property right. What Brennan J's observation excludes, where the restraint is imposed by contract and not by the instrument granting the interest, is repugnancy to the grant of the interest.
91 In Moraitis Fresh Packaging (NSW) Pty Ltd v Fresh Express (Australia) Pty Ltd [2008] NSWCA 327, 14 BPR 26,339 which related to a contractual restraint on signing a contractual licence to occupy a market stand, Giles JA (dissenting), in obiter dicta not necessary for decision but no less valuable for that, at par [70]-[84] considered the possible application of the law of restraints against alienation in that case; but without reaching a conclusion, as the Court of Appeal did not allow the issue to be raised. There was further consideration by Hodgson JA at pars [100]-[146].
92 There was also consideration of the law and its operation on right of first refusal granted to the vendor in the contract of sale of land, in John Nitschke Nominees Pty Ltd v Hahndorf Golf Club Inc [2004] SASC 128 (Full Court) where after an extensive review of Australian and other authorities at [99] to [120] the Full Court concluded at 121 "… it would appear to be established by the authorities that a right of first refusal will attract the operation of the doctrine in certain circumstances. Relevant factors will be the scope of the initial prohibition, whether the right exists for a limited period or indefinitely, whether the grantor of the right must extract a similar promise from subsequent purchasers and whether the right is to be exercised by reference to a fixed price."
93 When their Honours' view is applied to the Buy-back Deed in this case, consideration of the relevant factors is altogether adverse to validity. A similar exercise when applied to the Occupancy Agreement is also adverse to the validity of the option.
94 In my opinion, both the Occupancy Agreement and the Buy-back Deed impose invalid restraints on alienation, the provisions relating to the option are not effective for that reason and provisions requiring buy-back have no operation. BBA's claim should be dismissed for this additional reason.
95 My conclusion is that BBA fails on claims 1 and 2, and also on claims 3 and 9 and the ancillary claims. BBA is not entitled to the interest claimed in the caveat. My order is: Give judgment for the defendants with costs.
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