C G Maloney Pty Ltd v Noon

Judgment 1The plaintiff, C G Maloney Pty Ltd ( "CGM" ) was the developer of a retirement village at 34 Campbell Parade, Bondi Beach, known as the Bondi Beach Astra Retirement Village ( "the Retirement Village" ). 2In 1996, the late Mr Brian Noon and his wife, the late Mrs Jennifer Noon, purchased unit 42 in the Retirement Village ( "the Property" ) for $197,000 by an Agreement for Sale of Land ( "the Agreement" ) between themselves as purchasers and CGM as the vendor, dated 11 October 1996: see pages 16-97 of Exhibit A1. 3The Agreement contained a clause in the following terms: "Termination of Residence Contract by the Resident/Sale of the Unit by the Purchaser 15. (1) If:- (i) the resident wishes to terminate the Residence Contract; (ii) the resident dies (in which case the Service Company may at any time thereafter deem the resident to have served upon the Service Company the notice referred to in paragraph (a)); (iii) the resident abandons the unit (in which case the Service Company may at any later time deem the resident to have served upon the Service Company the notice referred to in paragraph (a)); (iv) the purchaser wishes to sell, or dispose of the unit; (v) the resident dies; or (vi) the Tribunal makes an order terminating the Residence Contract (in which case the resident shall be taken to have served upon the Service Company the notice referred to in paragraph (a)); the following procedure shall apply:- (a) the resident or the resident's executors or administrators as the case may be shall immediately or as soon as possible thereafter, give to the Service Company one (1) months' written notice of termination of the residence contract or as appropriate the purchaser or her/his legal personal representative shall give to the Service Company one (1) month's notice of intention to sell or dispose of the unit. Each such notice once given shall not be withdrawn or revoked without the consent in writing of the Service Company (any notice or deemed notice by the resident or the resident's executors or administrators as the case may be to terminate the Residence Contract shall itself be taken as notice by the purchaser of intention to sell or dispose of the unit and any notice by the purchaser of her/his intention to sell the unit shall itself be taken as notice by the resident of termination of the Residence Contract); ..." 4The words "Service Company" were defined to mean Bondi Beach Astra Retirement Village Pty Ltd and I shall refer to that company as " Astra". 5Mrs Noon died on 20 October 2001 and Mr Noon died on 28 October 2007. On Mrs Noon's death, her interest as joint tenant passed to Mr Noon. Mr Noon's interest in the Property passed to his executors ( "the Executors" ), although as yet no transmission of the interest has been noted on title. 6CGM and Astra, before Mr Noon's death, had lodged caveats on the title of the Property. The CGM caveat is found at pages 201-203 of Exhibit A1 and the interest claimed was in the following terms: "A specifically enforceable right to compel the sale of the property by the registered proprietor to Bondi Beach Astra Retirement Village Pty Ltd arising from the terms of the instruments and facts referred to below. Alternatively an estoppel preventing the registered proprietor from denying the interest claimed. Alternatively an equitable interest in the land to secure a claim for unjust enrichment in connection with the denial of the alleged right" 7A similar caveat was lodged by Astra at around the same time: see pages 199-200 of Exhibit A1. 8Mr Noon served a lapsing notice on CGM and Astra which led to proceedings in this Court ( Bondi Beach Astra Retirement Village Pty Ltd v Noon [2009] NSWSC 461 ). 9Following Mr Noon's death, a letter of 6 November 2007 was sent by solicitors acting on behalf of CGM and Astra to the Executors in the following terms (see Exhibit B): "Re: Estate of the late BRIAN NOON We are the solicitors who act on behalf of of the Bondi Beach Astra Retirement Village Pty Limited and CG Maloney Pty Ltd. We are instructed by our client that Mr Brian Noon passed away on or about 28th October 2007 and both our clients and our office wish to express our sympathy at this time. At the time of the deceased purchasing the property known as Unit 42 Bondi Beach Astra Retirement Village, the deceased entered into an Agreement with our client which provided that our client had the right to buy-back the unit for the original sale price from Mr Noon upon a number of events happening, one being upon the death of Mr Brian Noon. We are instructed by our client that Mr Brian Noon purchased the property from our client CG Maloney Pty Ltd for $197,000.00 and we hereby advise that our client Bondi Beach Astra Retirement Village Pty Ltd exercises its rights in respect of its Buy-Back Agreement with the deceased to purchase the unit for the sum of $197,000.00. As previously advised to Pike Pike & Fenwick, this notice is being given for the purpose of satisfying the machinery provisions of the Retirement Villages Act 1999. Should you have any queries in respect of this matter then please do not hesitate to contact Stephen Wawn from our office." (emphasis added) 10The Executors resisted the claims of Astra and CGM and took over defence of the proceedings. The matter was heard by Smart AJ who determined in favour of CGM that it was entitled to require sale of the Property to it in accordance with Clause 15 of Disclosure Statement B of the Agreement (referred to in [3] above), and that notice (ie Exhibit B) had been given by CGM, not Astra. 11The Executors then brought an appeal to the Court of Appeal ( Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202 ) and were successful. The ambit of the case before Smart AJ and the Court of Appeal, which I shall refer to as "t he First Proceedings", is of importance in this matter and I shall return to the details shortly. 12Within a few weeks of the Court of Appeal's decision in the First Proceedings, CGM lodged a fresh caveat (see pages 343-345 of Exhibit A2) claiming the following interest in the Property: " Nature of the estate or interest 1 An equitable interest in the Land arising from the right to require the registered proprietor and his or her executors, administrators and successors in title, should he or she or they wish to sell or dispose of the Land, to give to the Service Company a month's notice of that intention, pursuant to the terms of clause 15(1)(iv) and 15 (1)(a) of Disclosure Statement B of the Agreement for Sale of Land entered into between the Registered Proprietor and CGM dated 11 th October 1996 ("the Agreement for Sale of Land") And/Or 2 An equitable interest in the land arising from the right, should no Buyback Notice be served following the giving of the notice referred to in paragraph 1 above, to require the registered proprietor and his or her executors, administrators and successors in title to require any transferee from him her or them to enter into an agreement with the Service Company, incorporating the special conditions of the Agreement for Sale of Land with any necessary alteration to suit the circumstances, pursuant to Clause 15(1)(c) of Disclosure Statement B of the Agreement for Sale of Land;" 13The Executors again served a lapsing notice which led CGM to commence proceedings in this Court seeking a declaration that it has the interest described in the caveat referred to in [12] above and seeking ancillary relief designed to protect that interest. Astra is not a party to these proceedings. 14The Executors dispute that CGM has any interest in the Property and dispute CGM's entitlement to propound such claims given the context and outcome of the First Proceedings. 15Mr B Coles QC appears with Mr B DeBuse for the plaintiff and Dr A S Bell SC appears for the Executors. 16The relief sought in the First Proceedings went through several iterations. The form of final relief sought was relevantly contained in the Further Amended Statement of Claim ( "FASOC" ) found at pages 209-210 of Exhibit A1: "1 A declaration that there exists a specifically enforceable agreement between the Plaintiffs, or one of them , and the Defendants entitling the Plaintiffs or one of them to repurchase the property known as Unit 42/34 Campbell Parade, Bondi Beach ("the Unit") for a consideration equal to the price at which the late Brian and Jennifer Noon purchased the unit. 2 Alternatively a declaration that the Defendants are estopped from denying the existence of the Agreement for Sale of Land incorporating the terms of the Disclosure Statements annexed thereto. 2B Alternatively, a declaration that the Defendants are bound by the terms set out in the Disclosure Statements as to the rights of repurchase and the obligation to pay recurrent and deferred fees. 3 Alternatively, damages or equitable compensation. 4 An order in the nature of specific performance of the Agreement between the second plaintiff [CGM] or its nominee and the late Brian and Jennifer Noon requiring the defendants to sell and convey the title of the Unit to the first plaintiff [Astra] or its nominee for the price of $197,000. ...." (emphasis added) 17The FASOC did not contain a pleading that reflected the basis for the order sought in paragraph 4 and paragraph 1 as set out in [16] above insofar as it concerns CGM. 18The Court of Appeal's decision in the First Proceedings that the appeal should be allowed was unanimous. Giles JA, with whom MacFarlan JA concurred, noted that there were four issues on appeal and set out his findings at [3]: "(a) the cl 15 option was not exercisable by Maloney; (b) had it been exercisable, the cl 15 option was not exercised by Maloney; (c) the cl 15 option was not void pursuant to s 66ZG; I decline to decide whether it was void as a restraint on alienation; and (d) the respondents' estoppel case as put on appeal should not be permitted, and in any event would fail." 19So far as the first issue is concerned, Giles JA held that the Agreement did not give CGM the right to call for the sale of the Property to it, but rather, gave or purported to give it to Astra, which was not a party to the Agreement. The notice which was given was given by Astra, but since it was not a party to the Agreement, no rights were conferred on it upon giving such a notice. His Honour held at [70] that the Agreement was not a residence contract and that there was no other residence contract. As noted, Giles JA did not deal with the alienation point. Giles JA's reason for rejecting the estoppel claim by CGM and Astra was that the estoppel relied on was not that which had been pleaded. His Honour expressed the view at [124] that in any event, the new estoppel argument would inevitably fail. 20In his reasons, Giles JA did make some observations that are pertinent to the issues which now arise: "42 The respondents sought to uphold the judge's decision. They had not claimed rectification of the sale contract. They did not submit that, if the grantee was Astra, it could exercise the cl 15 option as third party beneficiary of a contractual promise or as offeree notwithstanding that it was not a party to the sale contract. As the appeal was conducted, and subject to the respondents' estoppel case to which I will come, the first sub-issue turned upon the identity of the grantee of the cl 15 option as a matter of construction of the sale contract. 43 It had been disputed at trial whether, for the triggering events listed at the commencement of cl 15(1) operative on the death of Mr Noon, it was necessary that he was a resident and so, by the imported definition, an occupier under a residence contract. The judge held that it was necessary, and there was no notice of contention. The judge held that the sale contract was (also) a residence contract. The appellants submitted that the judge was in error in holding that the sale contract was a residence contract. The respondents sought to uphold his decision. 44 The first step in the procedure initiated upon one of the triggering events was giving a month's notice to the Service Company. There could be deemed notice. The complexities of cl 15(1) in relation to giving notice were not raised. However, the cl 15 option arose or was exercisable upon the expiration of the notice period, and giving notice could be important: see [71] below. We were not referred to notice given by the appellants, and it seems unlikely that they gave notice. Nor were we referred to a deeming by the Service Company, whichever of Maloney or Astra that may have been. Subject to the grantee being Maloney and there being a residence contract, as the appeal was conducted the option was exercisable by Maloney. ... 53 The fact that Astra was not a party to the sale contract is not an indication that the cl 15 option was granted in favour of Maloney as the opposite party to the sale contract. Astra was plainly intended as the Service Company in a host of references to the Service Company in DSB, many purporting to impose obligations or confer benefits on the Service Company notwithstanding that it was not a party to the sale contract. There was fine disregard of privity of contract, and if that was a mistake it was not one to be remedied by construction of the sale contract. 54 Against the reference to Astra as the seller of the unit in para (j) of DSA is the comprehensive use of the defined term "the Service Company". The term "the vendor" or Maloney's name was not used in relation to the option in cl 15 and its consequences in para 16 of DSB. There is no commercial incongruity in an option in favour of Astra, see Mr Jaeger's brochure. The more likely mistake is in para (j) of DSA, uncorrected from a pro-forma used in the mid 1990's after Astra had acquired and was reselling units so as to refer to Maloney. In my opinion, on the proper construction of the sale contract the Service Company in the cl 15 option should be understood as Astra, according to the defined meaning. (b) A residence contract? 55 The defined terms "resident" and "residence contract" are wide, and encompass more than a formal contract or a separate contract in the nature of a lease. It is important, however, that for a residence contract the contract etc must be one "by which a person obtains the right to occupy residential premises in a retirement village". It is not enough that it regulates the occupation of residential premises in a retirement village." (emphasis added) 21In his judgement at [71], [81] and [124], Young JA agreed with the conclusions of Giles JA on the first two matters and on the fourth as set out in [18] above, but his Honour also expressed a view on the alienation point, holding that Clause 15 did not infringe the principle that there should be no restraint on the alienation of land. 22In the current proceedings, CGM seeks to enforce the promise given to it (on its case) for the benefit of Astra. It contends that the case fits within the style of case recognised by Beswick v Beswick [1968] AC 58 and Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 , namely that when B promises A that it will confer a benefit on C, A can enforce that promise (given to A) by obtaining a decree of specific performance against B. Mr Coles, in his submissions, argued that CGM cannot at present seek an order for specific performance because, he submits, the conditions for specific performance have not yet arisen. Rather, he submits, what is sought is an injunction to prevent the erosion or removal of rights that would lead in due course to an order for specific performance. In Coulls, Barwick CJ said: "I would myself, with great respect, agree with the conclusion that where A promises B for a consideration supplied by B to pay C then B may obtain specific performance of A's promise, at least where the nature of the consideration given would have allowed the debtor to have obtained specific performance. I can see no reason whatever why A in those circumstances should not be bound to perform his promise. That C provided no part of the consideration seems to me irrelevant." 23On CGM's case, as now propounded, the Executors, on becoming the registered proprietors of the Property, will be required to give to CGM one month's notice of intention to sell the Property, which notice would then permit Astra to have the option to buy the Property from the Executors. The Executors have not yet become the registered proprietors and no notice of the kind described has been given, and hence on CGM's argument it is not yet in a position to require the Executors to specifically perform the Agreement. 24The defendant's response to CGM's claims are: (1)The principles enunciated by the High Court in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 preclude the claims from being brought. (2)Clause 15 does not confer any rights upon CGM but rather purports to confer rights on Astra, which is not a party to the Agreement. (3)Clause 15 depends, for its proper construction, on the existence of a "residence contract" but there is no such contract as found by the Court of Appeal in the First Proceedings. (4)The interest asserted is a mere contractual right and does not give CGM a caveatable interest. (5)Clause 15, if it does confer on CGM an interest, is void and against public policy because it constitutes a restraint on alienation. Reliance in this regard is placed on Bondi Beach Astra Retirement Village Pty Ltd v Gora [2010] NSWSC 81 per Bryson AJ. 25In oral submissions, it was accepted by Dr Bell that even if the Court were to conclude that the caveat lodged by CGM was not well founded (because CGM had no interest in the Property), that would not resolve the claim advanced by CGM in this proceeding so that point has fallen to the wayside. 26I have already set out Clause 15(1)(a) of the Agreement. I set out some other relevant or potentially relevant clauses of the Agreement: " Definitions ... 'Purchaser' means and includes:- i) the purchaser named in this Agreement her/his executors, administrators and successors in title to the Unit; ii) where the purchaser is to be the resident the word 'purchaser' shall be taken to incorporate the words 'the purchaser (as defined in i)) and resident'. ... Termination of Residence Contract by the Resident/Sale of the Unit by the Purchaser 15. (1) If:- ... the following procedure shall apply: ... (b) upon the expiration of the period of one (1) month referred to in paragraph (a), the purchaser or the Service Company shall have the option by notice in writing (the "Buyback Notice") served upon the other no later than a further twenty eight (28) days thereafter to require the transfer by the purchaser of the unit to the Service Company or its nominee for the price at which the purchaser bought the unit and the following conditions shall apply; ..." 27In his judgment at [34], Giles JA noted: "'Resident' was not directly defined, but cl 1 included that terms defined or used in the Act or the Code "shall have the same meanings when used herein except to the extent that the context otherwise requires", and the definitions so imported included- '"resident" in relation to a retirement village, means a person who occupies residential premises in a retirement village under a residence contract, and includes a person who occupies such premises and who is or was the spouse or de facto partner [in the Code but not Act, (within the meaning of the De Facto Relationships Act 1984)] of such a person. (Act, s 3(1); Code, cl 2) "residence contract" means a contract, agreement, scheme or arrangement by which a person obtains the right to occupy residential premises in a retirement village, and may take the form of a lease or licence.' (Act, s 3(1); Code, cl 2)'" 28I should note that Mr Coles' argument is based on reading Clause 15(1)(a) as: "if the purchaser wishes to sell, the following procedures shall apply: the purchaser or his/her legal personal representative shall give to the Service Company one month's notice of their intention to sell or dispose of the Property". This is a filleted form of the clause and deletes all references to "resident", "death of resident" and "deemed notice". 29Only the Service Company is mentioned in Clause 15, and there is set out a procedure by which the Service Company (Astra) is to be notified and by which provision it has the right to require a sale to it. No right is given to CGM to compel a sale to it or to Astra. Further, Clause 15(2) provides that: "The purchaser acknowledges and agrees that the rights conferred on the Service Company or its nominee pursuant to sub-clause (1) entitle the Service Company to register a caveat against the folio of the Register in the Land Titles Office relating to the unit." (emphasis added) 30I have noted that the Court of Appeal in the First Proceedings held that no rights were conferred on Astra because it was not a party to the Agreement, but I have also set out what was said at [53] in the judgment of Giles JA. Giles JA was dealing in that paragraph with the argument that Clause 15 gave to CGM the right to exercise the option as opposed to its present argument which is that Clause 15 gave it the right to require the Noons to give an option to Astra, but his Honour's comments that Astra was intended as the Service Company and that numerous obligations and benefits were purportedly imposed or conferred on Astra in "fine disregard of privity of contract" are equally pertinent to the present issue and I respectfully adopt them. 31Mr Coles argued that since CGM was in fact the only other party to the Agreement, the promises contained in Clause 15 should be viewed as promises to CGM, but in my view the promises in Clause 15 were made to the Service Company and not to CGM, and the fact that Astra did not sign the Agreement does not lead to the conclusion that the promises should be construed as having been made to CGM. 32In my view, Clause 15 gave no rights to CGM and therefore its claim against the Executors must fail. 33There is another aspect, which is that Mr and Mrs Noon were the residents of the Property. Under the definition of "Purchaser" the word "purchaser" was taken to mean "purchaser and resident". Mr Noon, as the surviving resident as at October 2007, died, and by virtue of Clause 15(1)(ii), the Service Company was entitled to treat the death of the resident as having thereby served upon the Service Company the notice referred to in Clause 15(1)(a), namely, a notice of intention to sell or dispose of the Property. Astra did treat the death of Mr Noon as a notice: see Exhibit B. 34Mr Coles' argument proceeded on the basis that since the Court of Appeal in the First Proceedings had determined that the notice given by Astra was invalid and that the "residence contract" did not exist, Astra could start again. The Court of Appeal did not decide that the "trigger" event for the notice given by Astra had not occurred. Rather, it noted that there had been no point taken by the Executors as to that: see [44]. 35I think that there is a real difficulty with CGM's argument that it is now entitled to disregard the death of Mr Noon as a trigger event. However, in view of the conclusion I have come to on other matters, it is not necessary to determine this question. 36Dr Bell also argued that the preconditions for a Beswick v Beswick claim by CGM were not met, not only because rights were not conferred on CGM but only purportedly on Astra, but also because it is necessary, for such a claim to succeed, that there be a mutuality of burden and benefit imposed on the contracting party. The qualification was framed by Barwick CJ in Coulls as "at least where the nature of the consideration given would have allowed the debtor to have obtained specific performance." This aspect of mutuality is discussed in R Meagher, D Heydon & M Leeming , Meagher, Gummow & Lehane's Equity Doctrines & Remedies , 4 th ed (2002), LexisNexis Butterworths at [20-150]-[20-160]. The learned authors cite as "probably the most accurate statement" of the law on this point the words of I C F Spry in The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages, 6 th ed (2001), Law Book Co at 91: "The defence of lack of mutuality arises in proceedings for specific performance where, if the defendant were ordered to perform specifically his contractual obligations, he would not be himself sufficiently protected in view of such unperformed obligations of the plaintiff as might not be susceptible of subsequent specific enforcement and an order of specific performance would be unjust in all the circumstances." 37Dr Bell submitted that there are clauses of the Agreement which required Astra to take steps which cannot be enforced against CGM, for example, Clause (4)(a) by which the Service Company is to maintain true and proper books of account, Clause (9)(b) which requires the Service Company to provide a statement of expenses, and by Clause 13 the Service Company must convene residents committee meetings. Also relevant in this connection is Clause 12(b) which requires the Service Company to grant rights to the purchaser to use communal areas. The Court of Appeal's conclusion that no residence contract exists and the lack of reciprocal obligations placed on Astra and CGM lead me to conclude that an order compelling the Executors to comply with the obligations claimed by CGM would be unjust in all the circumstances, even if, contrary to the view I have taken, they otherwise had content, because a significant part of what was purportedly promised by the Agreement had no content as Astra was not a party to the Agreement and no residence contract existed.