Campbell v Turner & Ors

SUPREME COURT OF QUEENSLAND

CITATION: Campbell v Turner & Ors [2008] QCA 126

PARTIES: WAYNE ALEXANDER CAMPBELL and MARY-ANNE MONICA CAMPBELL (plaintiffs/appellants) v LIONEL JOSEPH JAMES TURNER and ELSIE EDITH TURNER (first defendants/first respondents) BOHLE GRAZING PTY LTD ACN 010 552 762 (second defendant/second respondent) HERBERT SAMUEL TURNER (third defendant/third respondent) LYNDEL ISABEL OWENS (fourth defendant/fourth respondent)

FILE NO/S: Appeal No 11272 of 2007 / SC No 97 of 2004

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: Supreme Court at Brisbane

DELIVERED ON: 30 May 2008

DELIVERED AT: Brisbane

HEARING DATE: 8 May 2008

JUDGES: de Jersey CJ, Fraser JA and Douglas J / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS: That the appeal be allowed and that the orders made by the trial judge be set aside.In lieu thereof order that: The first defendants pay the plaintiffs $145,759.81The fourth defendant pay the plaintiffs $111,743.10The claim against the second and third defendants be dismissed.That the parties make written submissions as to costs within ten days and in accordance with paragraph 37A of Practice Direction No. 1 of 2005.

CATCHWORDS: PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – PLEADING – GENERALLY – where the plaintiff asserted an entitlement to an equitable interest on the basis of an alleged expectation created by the defendant – where the expectation was based on a deed as well as conduct and statements made before the deed was executed – where the deed was found to be void by operation of s 8 of the Land Sales Act 1984 (Qld) – where the trial judge accepted the arguments advanced on behalf of the defendants that contended that the deed could not be a source of any expectation giving rise to any equity in the plaintiffs – where the trial judge found that the plaintiffs did not plead a case which excluded reliance upon the deed – whether the plaintiff’s pleadings pleaded a case which excluded reliance upon the deed – whether the plaintiff’s case necessarily relied upon the Land Sales Act 1984 (Qld) as conferring any status upon them / ESTOPPEL – ESTOPPEL IN PAIS – MATTERS AGAINST WHICH ESTOPPEL DOES NOT PREVAIL – STATUTORY PROVISIONS – where s 8 of the Land Sales Act 1984 (Qld) rendered invalid a deed assigning an interest in land – where the plaintiffs attempted to use the deed as a source of an equitable interest in the land – where the defendants argued that the plaintiffs were precluded from raising the estoppel to overcome the effect of the statute – whether the nature of the provision was such as to preclude the existence of the equity for which the plaintiffs contended / APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – POINTS AND OBJECTIONS NOT TAKEN BELOW – WHEN NOT ALLOWED TO BE RAISED ON APPEAL – QUESTIONS NOT RAISED ON PLEADINGS OR IN ARGUMENT – GENERALLY – where the plaintiffs mounted an argument in the appeal that the defendant’s failure to inform the plaintiffs that a subdivision could not take place was productive of substantial loss – where the defendants objected on the basis that that case was not run at trial – whether the plaintiffs were allowed to run that argument on appeal / INTEREST – WHERE EQUITABLE RELIEF OR FIDUCIARY RELATIONSHIP – where the plaintiff was granted equitable relief – where the relief was for breach of trust – whether compound interest should be granted in the circumstances / Land Sales Act 1984 (Qld), s 8 / Ash Street Properties Pty Ltd v Pollnow (1987) 9 NSWLR 80, cited / Brooks v Burns Philp Trustee Co Ltd (1969) 121 CLR 432; [1969] HCA 4, cited / Campbell v Turner & Ors [2007] QSC 331, varied / Chan v Cresdon Pty Ltd (1989) 168 CLR 242; [1989] HCA 63, cited / Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33, cited / Daejan Properties Ltd v Mahoney [1995] 45 EG 128, distinguished / Day Ford Pty Ltd v Sciacca [1990] 2 Qd R 209, distinguished / Dent v Moore (1919) 26 CLR 316; [1919] HCA 11, cited / Francis v NPD Property Development Pty Ltd [2005] 1 Qd R 240; [2004] QCA 343, cited / Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10, cited / Grundt v Great Boulder Pty Gold Mines Limited (1937) 59 CLR 641; [1937] HCA 58, cited / Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, cited / Meehan v Fuller [1999] QCA 37, cited / Ramsden v Dyson (1866) LR 1 HL 129, cited / Riches v Hogben [1985] 2 Qd R 292, applied / Roach v Bickle (1915) 20 CLR 663; [1915] HCA 80, distinguished / Thwaites v Ryan [1984] VR 65, cited / Timber Top Realty Pty Ltd v Mullens [1974] VR 312, cited / Wallersteiner v Moir (No 2) [1975] QB 373, cited

COUNSEL: S S W Couper QC, and M A Jonsson, for the appellants / J C Bell QC, and S R R Cooper, for the respondents

SOLICITORS: MacDonnells Law for the appellants / Ruddy Tomlins & Baxter for the respondents

de JERSEY CJ: I have had the advantage of reading the reasons for judgment of Fraser JA. I agree with the orders proposed by His Honour, and with his reasons.

FRASER JA: The plaintiffs appeal against the trial judge's rejection of their claims for equitable compensation, an account of profits, and other equitable relief.

Factual background

There was no challenge to the comprehensive findings of primary fact made by the trial judge. I will summarise the findings so far as that is necessary to address the issues agitated in the appeal.

Bardside Pty Ltd, as trustee of a discretionary trust of which the plaintiffs, Mr and Mrs Campbell, were two of the beneficiaries, operated a bus business known as "Campbell's Coaches" at Townsville.¹ In about late 1988 Mr and Mrs Campbell became aware that the rented premises from which the bus business was being operated might be sold.²

At that time the first defendants owned land on Burdell Road near its intersection with the Bruce Highway in the Thuringowa Shire: Burdell Road provided the only access to the land.³ The first defendants contemplated subdividing that land.⁴ On 15 March 1989 the local council approved the first defendants' subdivisional applications, subject to conditions. One condition required the upgrading of the intersection of the Bruce Highway with Burdell Road.⁵

Mr Campbell (who engaged in the relevant dealings also on behalf of his wife) told the third defendant that he and his wife were considering buying some land to establish a new depot and workshop for the business.⁶ The third defendant said his family was planning an industrial subdivision and he showed Mr Campbell the plan of subdivision comprising 42 general industry lots.⁷

On a number of occasions between late 1988 and March 1990 Mr Campbell and the third defendant discussed a proposal that the plaintiffs establish the bus depot on one of the proposed lots ("proposed Lot 4"). The third defendant discussed that proposal with his father (one of the first defendants) and his sister (the fourth defendant), as the third defendant did not have authority to deal with the land on the first defendants' behalf. The third defendant said that his family "would sell Lot 4 to the plaintiffs for $30,000, that the plaintiffs would obtain their own deed once the subdivision had been completed, and that they could start occupying the site once they had paid the purchase price."⁸

Between February 1989 and March 1990 the plaintiffs organised for the construction of a shed and other improvements on proposed Lot 4. A building permit was issued by the council on 11 May 1989 in response to an application for approval that had been signed by the first defendants and the third defendant representing themselves as owners.⁹ Surveyors organised by one of the defendants pegged out the proposed Lot 4 in about July 1989, and the third defendant assisted Mr Campbell in preparing a site for foundations and in shifting a gate between proposed Lot 4 and Burdell Road.¹⁰ Mr and Mrs Campbell spent about $30,000 on improvements to the lot in this period and more was spent by companies with which they were associated. ¹¹

By early March 1990 the plaintiffs were ready to move on to proposed Lot 4¹². Mr Campbell then attended at the office of the fourth defendant's husband, who is a solicitor, and presented him with a cheque for $30,000. Because the solicitor had no instructions about the matter, he refused to accept the cheque and said that he would obtain instructions about the form of any agreement.¹³

Subsequently, on 21 March 1990, the first defendants (as "owner"), the second defendant (as "vendor"), and the plaintiffs (as "purchaser"), executed a deed in the following terms:¹⁴

"WHEREAS

A.Lionel Jospeh [sic] James Turner and Elsie Edith Turner are the owners of certain property described as Lots 1 and 2 on R.P. 740905 being the whole of the land contained in Certificate of Title Volume N1271 Folio 92 and Volume N1271 Folio 93 respectively Parish of Bohle County of Elphinstone delineated in red on annexure 'A' (plan number 6246/2) attached hereto.

B.The owners of the land propose to transfer the aforementioned property to the Vendor Bohle Grazing Pty. Ltd. so as to allow an industrial subdivision to be developed upon the subject property.

C.The property delineated in red on annexure 'A' is zoned general industry and the Vendor has obtained formal Council approval to a proposed industrial subdivision and the owner and Vendor have consented to allow the Purchasers to erect an industrial shed upon Lot 4 on the proposed subdivision and to use the said Lot 4 (hereinafter referred to as the subject Lot and delineated in blue on annexure 'B' hereto – plan number 6246/1) to conduct the business of a bus company, prior to the issue of a separate freehold title to the subject Lot.

D.The owners and the Vendor have agreed that upon the issue of a separate Certificate of Title the subject Lot will be transferred to the Purchaser free from encumbrances.

NOW THIS DEED WITNESSETH AS FOLLOWS:

In consideration of the payment by the Purchaser to the Vendor of the sum of THIRTY THOUSAND DOLLARS ($30,000.00), receipt of which is hereby acknowledged, the Vendor undertakes and agrees to transfer the subject Lot to the Purchasers immediately upon issue of the separate Certificates of Title in respect to the subject land.

The owner and the Vendor acknowledges [sic] the Purchasers' beneficial and equitable rights with respect to the subject Lot and undertake that they will neither themselves nor in association with others do or perform any act, matter or thing which will in any way whatsoever endanger, lessen or derogate the Purchaser's rights in respect of the subject Lot.

The owner and the Vendor will take all steps in their power to ensure the protection of the Purchasers' rights herein and shall further take all such steps and execute all such documentation necessary to effect registration of the Purchaser's interest herein PROVIDED HOWEVER the Vendor shall not be bound to accept any unreasonable conditions imposed by the Thuringowa City Council to the proposed industrial subdivision.

In the event that the separate Certificates of Title are unable to issue in respect to the subject Lot, the Vendor shall immediately reimburse the Purchaser for any monies payable hereunder.

Upon any sale of the industrial subdivision prior to issue of the separate Certificate of Title to the Purchaser, the owner and the Vendor shall as a condition of such sale obtain from the proposed transferee an undertaking that it recognises the Purchaser's prior equitable rights in respect to the subject Lot and the proposed transferee shall further transfer the subject Lot to the Purchaser upon the issue of a separate Certificate of Title from the Department of Freehold Land Titles.

The Vendor shall immediately upon the execution of this Deed of Agreement arrange for the provision of articulated town water supply to the subject Lot.

Any monies payable to the Vendor hereunder shall be paid into the Trust Account of Messrs. Wilson Ryan & Grose, Solicitors of Townsville, pending the formal execution of the deed by all of the parties hereto.

Immediately upon the execution of this deed, Messrs. Wilson Ryan & Grose are hereby authorised to release any monies held in their Trust Account directly to the Vendor. Receipt of the properly executed deed by Messrs. Wilson Ryan & Grose will be sufficient authority of that firm to release the monies held in their Trust Account.

The Vendor shall be responsible for the costs of and incidental to the preparation of this deed (including stamp duty) and the Purchaser shall be liable for any stamp duty assessed upon the actual transfer of the subject Lot, PROVIDED HOWEVER that the parties hereto shall each be otherwise responsible for the payment of their own legal costs of and incidental to this matter.

The owner shall, if requested by the Purchaser, execute a consent caveat in favour of the Purchaser to protect the Purchaser's equitable rights in respect of the subject Lot pending the issue of a separate Certificate of Title and the Purchaser's interest becoming registered in the Department of Freehold Land Titles. The Purchaser shall at that time execute such documentation as is deemed necessary to withdraw the said consent caveat so as to allow the registration of a transfer in the Purchaser's favour.

The Purchasers acknowledge that they are aware that the owners of the property are the shareholders of the Vendor which is the company used by the owners for the development of the property and that the Purchasers will raise no objection to the existence of a prior unregistered transfer between the owners and the Vendor company with respect to the land delineated in red on annexure 'A' hereto."

The plaintiffs paid the $30,000 to the solicitors on the same day; a trust account receipt established that the money was received by the solicitor on behalf of the first defendants, rather than their company, the second defendant, as the deed contemplated.¹⁵

The $30,000 was used by the first defendants in advancing the subdivision which they proposed, by paying expenses incurred in installing water pipes under the Bruce Highway to connect the site to the town water supply.¹⁶

A delay in connecting the water delayed the plaintiffs' commencement of the bus depot on the site until September 1990. The plaintiffs remained in occupation until they were eventually forced to vacate by a new owner in 2003. The plaintiffs were never asked to pay rent, rates or other outgoings in respect to the land.¹⁷

By October 1990 it had become clear that the Main Roads Department would not agree to abandon its insistence upon very expensive requirements for the proposed intersection of the Bruce Highway with Burdell Road. The first defendants did not have the resources to comply with those requirements.¹⁸ The first defendants' subsequent attempt to seek approval for an interim application for six general industry lots on the basis that the first defendants were not required to commit to the expensive construction of a new access to the highway also failed.¹⁹

The council's conditional approval of the first defendants' original application for the 42 lot subdivision expired on 15 March 1991. After some further dealings between the council and the first defendants, the first defendants finally concluded that the subdivision was not achievable and the fourth defendant informed the council that the subdivision had been abandoned on 16 September 1991.²⁰

The first defendants then contemplated a broader subdivision, including residential, commercial, industrial and public spaces as a way of absorbing the costs necessary to construct an appropriate intersection to enable development to proceed. After discussions, the first defendants entered into a deed with the Main Roads Department in June 1994, a clause of which recognised and sought to protect the part of the land already "contracted to and used by Campbell's Coaches".²¹ The defendants later, on 1 October 1997, entered into a commercial arrangement with a different company for a proposed subdivision. That company withdrew from the proposed commercial arrangements in December 1997, after which the defendants’ attempts to secure another co‑venturer were unsuccessful.²²

The trial judge rejected evidence adduced for the defendants to the effect that Mr Campbell had been clearly and promptly informed of the first defendants’ abandonment of the subdivision which was to create proposed Lot 4. Her Honour resolved the contradictory versions about various events and conversations between one or other of the defendants and Mr Campbell by finding that:

Sometime in the year or so after late August 1992 the fourth defendant spoke to Mr Campbell about the price of proposed railway signals at a level crossing parallel to the Bruce Highway and what the Main Roads Department wanted the fourth defendant's family to pay for them (that being related to the question whether the subdivision could go ahead); but her Honour was not satisfied that the fourth defendant told Mr Campbell that the subdivision was at an end or that all that the defendants could do would be to give Mr Campbell his money back.²³

One of the proposed ventures would have involved a form of intersection which, when constructed, would have impinged upon the land occupied by the plaintiffs.²⁴ After a flood in the region in January 1998, there was a conversation between the fourth defendant and Mr Campbell in which the fourth defendant told Mr Campbell that "if the land were to be subdivided, the Campbells will have to move because access to the estate would have to be via an overpass constructed through the middle of their shed." Mr Campbell said that they would move provided the defendants paid for it.²⁵

Ultimately, under pressure from the defendants' bank, it became necessary for the first defendants to sell their land, including the part occupied by the plaintiffs.²⁶

The ultimate buyer ("Stockland") first expressed interest in the whole of the relevant site in 1999. The defendants rejected an offer Stockland then made, but the negotiations recommenced in 2001 and culminated in a contract of sale dated 10 September 2001. By that contract Stockland purchased a large tract of land, which included the part occupied by the plaintiffs as well as other land owned by the first, third and fourth defendants, for $3.25 million.²⁷

During the negotiations for that sale, the fourth defendant unsuccessfully endeavoured to persuade Stockland to agree to create a separate block of land for the plaintiffs' bus depot.²⁸ The executed contract obliged the first, third and fourth defendants (the sellers) to do all things reasonably required of them to have "Campbell's Coaches" (described as a "tenant at will") give up occupation of the land no later than 18 months from the settlement date.²⁹ Settlement occurred on or about 18 October 2001.³⁰

The trial judge rejected the defendants’ claim that Mr Campbell was kept informed about the proposed sale. In or about early 2002, Mr Campbell heard a rumour of the sale. He asked the third defendant whether the land had been sold, to which the third defendant responded that there were people interested but he didn't think it was going to happen because they hadn't come up with the money.³¹ Mr Campbell first obtained confirmation of the rumour when he received a fax from Stockland on 4 March 2002 which advised Mr Campbell that his company was obliged to vacate the land 18 months from the date of settlement and would be a tenant at will during that period; Stockland added that it wished to enter into discussions regarding rental of the land during the tenancy and about Mr Campbell's or his company's obligations under the Contaminated Land Act with respect to the continued use of the site. (This was a reference to Stockland’s concern about part of the land having been entered on the Environmental Management Register because of potential contamination related to the plaintiffs' installation of a 15,000 litre underground tank for distillate storage).³²

Between execution of the deed in March 1990 and when Mr and Mrs Campbell ultimately learned of that sale they and their companies spent substantial sums of money improving proposed Lot 4.³³

After various discussions between Mr Campbell and Stockland, and fruitless negotiations between Mr Campbell and the defendants, the bus business was relocated to a different site towards the end of 2003. Mr and Mrs Campbell removed almost all of the improvements they and their associated companies had made to proposed Lot 4. They spent about $59,000 (of the total sum of $290,000 spent by them and their companies) in the acquisition of and relocation to the new site.³⁴

The plaintiffs’ claims at trial

The plaintiffs claimed that the first defendants held proposed Lot 4 on an express or constructive trust for the plaintiffs. They contended that the first defendants’ subsequent sale of the land to Stockland, which took free of the plaintiffs' claimed proprietary interest, involved a breach of that trust in which the third and fourth defendants participated. The plaintiffs claimed to be entitled to an account of the profit referable to proposed Lot 4 made by the first defendants on that sale or equitable compensation commensurate with their former proprietary interest. The plaintiffs sought the following orders in their statement of claim:

$511,197.53, as the cost incurred by the plaintiffs or companies associated with them of acquiring the alternative site and building a bus depot upon it.

$355,000, as the fair market value of proposed Lot 4 lost by the plaintiffs.

$1,190,000, as the profit referable to proposed Lot 4 made by the first defendants in the Stockland sale.

Compound interest on any amount found to be due upon the taking of accounts sought by the plaintiffs or upon any equitable compensation or any other amount awarded.

The allegations pleaded by the plaintiffs to justify those equitable remedies may be summarised as follows:³⁵

A contract between the plaintiffs and the first and second defendants constituted by statements made in discussions between Mr Campbell and the third defendant in early 1989, the third defendant's signing of the application for building approval for the shed, and the deed executed in March 2000;

Alternatively, the plaintiffs paid and the second defendant retained the price of $30,000³⁶ and the plaintiffs entered into and remained in possession of and made expensive improvements on proposed Lot 4 on the faith of that contract and in the expectation or assumption that the Lot would be transferred to them once a separate title issued and that in the meantime the plaintiffs had an interest in the land that would be recognised and protected by the first and second defendants.

The first of those two bases of claim involved the proposition that a trust arose directly out of the alleged contract. The second claim advanced an equity of the character described by Lord Kingsdown in Ramsden v Dyson:³⁷

"If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation."

The trial judge's conclusions

The trial judge rejected the plaintiffs' version of the contract.³⁸ Her Honour found that the early discussions were not intended to create legal relations, the third defendant did not have authority to deal with the land on the first defendants' behalf (at least in the initial discussions³⁹), and by reducing the agreement to writing the parties were presumed to have intended that the deed represented their entire agreement.⁴⁰ The parties’ contract was therefore comprehensively contained in the deed.

Her Honour then found that the deed was invalidated by s 8 of the Land Sales Act 1984 (Qld), which prohibits the sale or purchase of proposed subdivisional portions of freehold land unless the subdivisional plan of survey has been approved by the appropriate local authority under its common seal before the purchase.⁴¹ It followed that the alleged trust was not created by the deed itself.

The trial judge rejected the alternative basis of the plaintiffs' equitable claim on the ground that because the deed was void it could not be a source of a proprietary interest nor of any expectation justifying equitable relief.⁴² Her Honour then rejected an argument that the plaintiffs were entitled to equitable remedies on the basis of their alleged expectation arising independently of the contents of the deed.⁴³ The trial judge accepted that s 8 of the Land Sales Act 1984 (Qld) did not prevent an equity arising independently of the deed,⁴⁴ but construed the plaintiffs' pleadings as confining their case to a claim based on an expectation arising from a combination of the pre-deed discussions and the deed.⁴⁵

The trial judge nevertheless went on to make findings about the expectation which arose independently of the contents of the deed and as to what, if any, relief the plaintiffs would be entitled for its non-fulfilment if, contrary to her Honour's view of the pleadings, such relief could be granted in the proceeding. Her Honour found that the defendants, or some of them, encouraged the plaintiffs to act on an expectation that in exchange for $30,000 they would obtain title to proposed Lot 4.⁴⁶ Her Honour then found that the plaintiffs also anticipated the possibility that the subdivision might not be completed⁴⁷ and held that in the circumstances the plaintiffs' equity of expectation would be satisfied by an order for repayment of $30,000 plus interest from 16 September 1991.⁴⁸ Her Honour would have found the fourth defendant, but not the third defendant, liable as an accessory.⁴⁹

The trial judge therefore rejected the plaintiffs’ claims for equitable relief. Her Honour ordered the first defendants to pay the plaintiffs $30,000 plus simple interest from 21 March 1990, when the plaintiffs had paid that sum to the first defendants, as was required by s 8(2) of the Land Sales Act 1984 (Qld). The claims against the second, third and fourth defendants were dismissed.

Could the deed be a source of an expectation justifying equitable relief?

The plaintiffs contend that the trial judge erred in concluding that the deed could not be a source of an expectation justifying the equitable relief they claimed. It is convenient to deal with that issue before turning to the plaintiffs’ further contention that the trial judge erred further in finding that their expectation was qualified with reference to the possibility that it might prove impractical to complete the subdivision.

Section 8 of the Land Sales Act 1984 (Qld) ⁵⁰ relevantly provided:

"8(1)A person shall not sell or purchase relevant land unless-

(a) in the case of relevant freehold land,⁵¹ the subdivisional plan of survey relating to it has been approved by the appropriate Local Authority under its common seal before the event that marks the entry of a person upon the purchase;

…

and that approval or permission subsists at the time of such event.

…

(2)An instrument made in contravention of this section is void and any person who had paid money thereunder shall be entitled to recover the amount thereof, together with the amount of interest (if any) that had accrued in respect of that amount since the money was so paid, by action as for a debt due and owing to him by the person to whom the money was paid.

(3)A person who contravenes this section by reason of a purchase by him of relevant land is not guilty of an offence by virtue of this section or section 32."

"Sell" and "purchase" were broadly defined in the Act:

"6(1)In this Act, unless the contrary intention appears-

…

'purchase' includes-

(a)agree to purchase,

(b)acquire an option to purchase,

(c)enter upon a transaction that has as its object the acquisition of a right (not immediately exercisable) to purchase or to be given an option to purchase,

…

'sale' or 'sell' includes-

(a)agree to sell;

(b)grant an option to purchase;

(c)enter upon a transaction that has as its object the grant of a right (not immediately exercisable) to purchase or to be given an option to purchase; and

(d)procure a person to enter upon a purchase;"

The trial judge accepted three arguments advanced on behalf of the defendants in support of their contention that because the deed was void it could not be a source of any proprietary interest in the land or any expectation giving rise to any equity in the plaintiffs. The defendants' senior counsel advanced the same arguments in the appeal.

The first argument is that a plaintiff's entitlement to an equitable interest in land exists only to the extent that the agreement from which that interest is said to arise can be specifically performed.⁵² It follows, so it is argued, that no equitable interest in the land arose in the plaintiffs’ favour because s 8 rendered the deed void and precluded specific performance of it.

That principle does not apply here. The plaintiffs claimed an equity sourced in their detrimental reliance upon their alleged expectation that they would acquire title to proposed Lot 4. Had the plaintiffs formed such an expectation merely on the faith of the deed, detrimental reliance upon it might have been insufficient to create an equity that survived s 8,⁵³ but the plaintiffs’ case was not limited in that way.

The findings I have summarised establish both that the plaintiffs spent a substantial sum of money before execution of the deed in improving the land in reliance on an expectation formed with reference to conduct and statements before the deed and that, after the deed was executed, the plaintiffs spent further substantial sums (in addition to the $30,000) in reliance upon a combination of the same early conduct and statements, the first defendants’ later conduct in retaining the $30,000 and leaving the plaintiffs in possession for 12 years, and the first defendants’ failure until years after the event to tell the plaintiffs that the subdivision had proved impractical. The plaintiffs must also have relied upon the terms of the deed in relation to post-deed expenditure, although the trial judge did not find as much because of her Honour’s rejection of the deed as a permissible source of the claimed equity. But the deed was only one of a number of sources of the alleged expectation.

I interpolate here that I would accept the plaintiffs' contention that the case I have just summarised was pleaded in the plaintiffs’ statement of claim. The trial judge did not find to the contrary: the point made by her Honour was that the plaintiffs did not plead a case which excluded reliance on the deed.⁵⁴ The plaintiffs did plead a case that involved reliance on the defendants’ statements and conduct before and after the deed as well as the terms of the deed. That case was litigated. The characterisation in the pleading of the deed and the discussions and conduct before the deed as contractual may be disregarded.

The joint judgment in Giumelli v Giumelli⁵⁵ establishes that if, to a defendant’s knowledge, a plaintiff alters position in the expectation encouraged by the defendant that the plaintiff will acquire a legal interest in the defendant’s real property then, depending upon the circumstances, the appropriate remedial response might extend to the imposition of a constructive trust of the property and orders for its conveyance to the plaintiff. It would be wrong in principle to regard such orders as dependent upon any agreement to convey being specifically enforceable. To the contrary, enforcement of the equity is premised upon the absence of any enforceable contractual obligation. In Riches v Hogben⁵⁶, in a passage quoted with approval in Giumelli v Giumelli at 121-122, McPherson J said:

"What distinguishes the equitable principle from the enforcement of contractual obligations is, in the first place, that there is no legally binding promise. If there is such a promise, then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law not to replace it. The second distinguishing feature is that what attracts the principle is not the promise itself but the expectation which it creates … Finally the equitable principle has no application where the transaction remains wholly executory on the plaintiff's part. It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise. …"

In my opinion the mere fact that s 8 precluded specific performance of the deed does not deny the plaintiffs' claim.

The defendants' second argument is that, by the constructive trust claim, the plaintiffs sought to estop the defendants from relying on the invalidity of the deed produced by s 8 of the Land Sales Act 1984 (Qld). It was contended that the plaintiffs are precluded from raising an estoppel to overcome the effect of that statute, based as it is on public policy considerations in the protection of interests of consumers in dealing with property developments. The argument invokes the principle described, for example, by Viscount Radcliffe in Kok Hoong v Leong Cheong Kweng Mines Ltd⁵⁷:

"… there is, in most cases, no estoppel against a defendant who wishes to set up the statutory invalidity of some contract or transaction upon which he is being sued, despite the fact that by conduct or other means he would otherwise be bound by estoppel."

This argument is premised upon the assumption that the plaintiffs sue upon the deed and seek to estop the defendants from relying on its invalidity. As I have indicated, that is not the basis of the plaintiffs' equity. The claimed "estoppel" assumes that the deed is invalid but would preclude the defendants from denying their equitable obligation to fulfil the plaintiffs' expectations.

Daejan Properties Ltd v Mahoney [1995] 45 EG 128 was cited for the proposition that if a statute prohibits a certain type of express agreement or contract, estoppel cannot be used to achieve the same effect indirectly. The question there was whether the appellant had become a "statutory tenant" within the meaning of a particular statute, a status which carried particular rights. The appellant did not fall within the relevant statutory definition but relied upon an estoppel said to be derived from the appellant’s reliance on a statement by the landlords' agent to the effect that she was a "statutory tenant". It was held that "Parliament having clearly prescribed the way in which a statutory tenancy can arise or be transmitted, a statutory tenancy cannot arise or be transferred in any other way", so that an estoppel "cannot have the effect of giving rise to a state of affairs which would indirectly confer on the court a jurisdiction denied by parliament."⁵⁸ The principle is described as being that "a party cannot be estopped from denying something to which, on the proper construction of a statute, he could not have agreed in the first place."⁵⁹

That principle has no application here for the reasons I have given: the plaintiffs do not rely upon the Land Sales Act 1984 (Qld) as conferring any status upon them and they do not seek to deny the effect of s 8 as invalidating the deed.

The real question is whether s 8 precludes the existence of the equity for which the plaintiffs contended. I can detect nothing in the statutory policy or the text of s 8 that indicates that it was intended to have such a far reaching effect. The policy underlying the section is to protect purchasers,⁶⁰ not to excuse inequitable conduct by sellers. That is reflected in s 8(3): it is not an offence for a purchaser to make a contract proscribed by s 8(1). The claimed equity would not be inimical to that policy.⁶¹ As Nelson J observed in Timber Top Realty Pty Ltd v Mullens⁶² in relation to the application of similar Victorian legislation to a different equitable claim, in a passage cited with approval by McPherson JA in Francis v NPD Property Development Pty Ltd ⁶³:

"It would, of course, be a somewhat startling consequence of legislation which is clearly designed to protect an intended purchaser of part of unsubdivided land if its effect were held to be to deprive him of a protection that equity would otherwise have afforded him. However, I do not find, either in the terms or in the intendment of such legislation, anything which leads to the conclusion that a constructive trust in the terms which I have found it would contravene the provisions of the Acts."

The text of s 8 points in the same direction. What s 8(1) prohibits is "sale" and "purchase". In addition, s 8(2) renders the instrument "void" and confers a right of action as for debt in favour of any person who paid money under the instrument. That provision does not expressly exclude the conventional role of equity in supplementing legal remedies. Nor does s 8(1) expressly prohibit or render void any form of dealing with or alienation of the land other than a "purchase" or "sale". Notwithstanding the breadth of the definitions in s 5(2), those terms do not necessarily comprehend the creation in the plaintiffs of an equity of the character I have described or the imposition of a constructive trust as a remedial response to that equity.

The legislature did not here adopt the well known stamp duty provision that denies to an unstamped instrument both admissibility in evidence and any effect at law or in equity.⁶⁴ A statute in that form is effective to preclude an equity arising from the void instrument,⁶⁵ but s 8 is open to a narrower construction. In the context of the underlying statutory policy beneficial to purchasers, whilst s 8(2) plainly has the effect that the deed is devoid of its intended effect as an agreement for a sale and purchase,⁶⁶ I would not construe s 8 as rendering the deed inadmissible in evidence or ineffectual as one of the sources of an equity of expectation of the character claimed here.

A related issue concerning s 8 of the Land Sales Act 1984 (Qld) arose in Francis v NPD Property Development Pty Ltd.⁶⁷ The buyer had contracted with sellers for the purchase of their allotments on terms that, upon the recording of a separate instrument of title for a defined portion of each allotment, that portion ("the Seller’s Block") would be retransferred by the buyer to each seller. It was held that the performance by the buyer of its obligations to retransfer the Seller’s Block would fulfil the buyer's equitable obligation to carry out the terms of express or constructive trusts created by the contracts. The re-transfer by the buyer to each seller amounted merely to the carrying out of obligations imposed on the buyer by the trusts and therefore did not come within the term "sell".⁶⁸ McPherson JA also expressed the conclusion that s 8 did not invalidate the transaction in another way:

"…the proprietary right of the seller as beneficiary under the trust of the whole of the land was…to be carried into effect by the buyer’s act of transferring to the seller title to the Seller’s Block once it became available upon registration of the plan of survey incorporating the approved subdivision. On this view of the transaction, it would not matter that the contract was rendered void by the operation of s 8(2) of the Act. The trust of the whole area and the seller’s beneficial proprietary interest in the land would remain and continue until discharged by retransferring title to the Seller’s Block."⁶⁹

Although the nature of that trust differed markedly from that claimed by the plaintiffs here, McPherson JA’s judgment (with which Williams JA agreed in this respect) supports the view that s 8 is not an impediment to the enforcement of an equity of expectation even though it arises in part from reliance upon a void instrument.

It was submitted that this Court's decision in Day Ford Pty Ltd v Sciacca⁷⁰ decided that a plaintiff could not rely upon an estoppel contrary to s 8. In that case a purchaser's claim for specific performance of a contract made in contravention of s 8 was refused. The purchaser claimed that it had incurred loss and expense and otherwise acted to its detriment in reliance upon a representation by the seller that the agreement for sale was on foot and would be performed. It was contended that it would be unconscionable to allow the seller to deny its liability to transfer the land to the purchaser. Macrossan CJ (with whose reasons Kelly SPJ and Ambrose J agreed) referred to the rule that a party cannot set up an estoppel in the face of a statute. His Honour's conclusion was that s 8 "imposed an unconditional prohibition upon the very type of sale which the written contract of May 1988 provided for. The plaintiffs' claim so far as they rely upon estoppel should be rejected."

So far as the report reveals, the purchaser's expectation was sourced in the contract and the purchaser sought to set up an estoppel directly preventing the sellers from denying its validity. By that means the purchaser sought to enforce the contract by a specific performance order in the teeth of the prohibition and avoidance of the contract effected by s 8. It will be apparent that I regard the plaintiffs’ claim in this case as being very different from the claim rejected in Day Ford Pty Ltd v Sciacca.

The third basis upon which the defendants contended that the plaintiffs could not rely upon an expectation arising in part from the deed was that "equity will not aid a party to enforce an unlawful agreement". What I have already said is sufficient to explain why I do not accept this argument. The plaintiffs did not commit any offence by executing the deed, they do not seek to enforce it, and the claimed equity does not infringe the statutory policy. The authorities cited by the defendants are distinguishable for those reasons.⁷¹

For these reasons I respectfully disagree with the trial judge's conclusion that an expectation justifying equitable relief could not arise from the plaintiffs' reliance upon a combination of matters which included the deed.

The plaintiffs' expectation

Whether or not any and if so what equitable relief should be granted, however, depends on different considerations. In this case the most important consideration is the nature of the plaintiffs' expectation encouraged by the defendants.

The trial judge found that the conduct of the first and third defendants prior to entry into the deed gave rise to an expectation on the part of the plaintiffs that in exchange for $30,000 they would obtain title to Lot 4 in the proposed industrial subdivision and they could conduct their bus business on it in the meantime.⁷² Immediately following that finding her Honour found:

"[121]After the execution of the deed the first defendants further encouraged the plaintiffs to act on the representations by receiving and retaining the $30,000, having the water supply connected, and allowing them to conduct their bus depot there.

[122]The first defendants had the carriage of the subdivision. The conduct giving rise to the expectation on the part of the plaintiffs that they would acquire lot 4 in the proposed industrial subdivision in exchange for $30,000 also gave rise to two other expectations –

(a)that the first defendants would act in good faith and take all steps reasonably necessary to complete the subdivision; and

(b)that if the subdivision could not be completed and they could not acquire title to lot 4, the first defendants would immediately repay the $30,000."

It seems clear, contrary to an argument for the plaintiffs in the appeal, that those findings were intended to qualify her Honour’s earlier findings as to the nature of the plaintiffs' expectation arising from the dealings between the parties. So much is required also by the deed, especially clauses 3 and 4. The repayment of the money was the plaintiffs' only remedy if, despite compliance by the first defendants with their duties described in paragraph [122](a), the subdivision could not proceed. In effect, when the plaintiffs incurred expenses in improving the land they took the risk that the subdivision ultimately might not be approved.

There was no challenge to the trial judge's finding that the first defendants acted in good faith and took all reasonable steps to procure the industrial subdivision in their dealings with the council and the Main Roads Department up until 16 September 1991, when the fourth defendant told the council of the abandonment of the subdivision.⁷³

It follows from those findings that, as the trial judge also found, as at September 1991, the plaintiffs' expectation would have been satisfied by repayment of the $30,000, allowing them to remove whatever improvements they could and wished to remove, and not requiring them to restore the land to its previous condition.⁷⁴

The appellants challenge those findings. They contend that their expectation was relevantly unqualified, so that they should be compensated on the basis that, but for the first defendants' sale of the land to Stockland, proposed Lot 4 would have been held by the first defendants upon a constructive trust for the plaintiffs.

It was submitted for the plaintiffs that the deed included representations to the effect that they held a proprietary interest in proposed Lot 4 even before the issue of a separate certificate of title. That is so, most notably in clause 2, but clauses 3 and 4 of the deed nevertheless made it clear that whatever interest the plaintiffs held was subject to defeasance if the proposed subdivision proved impracticable.

The plaintiffs contend that as the trial judge concluded that the deed could not be a source of valid expectations then it could not be a source of limitations upon those expectations. By that contention the plaintiffs sought to displace the qualifications expressed in clauses 3 and 4 of the deed upon their retention of an interest in and an entitlement to a transfer of proposed Lot 4. This argument falls away as a result of my conclusion that the deed is one of the sources of the expectation upon which the plaintiffs may rely. Furthermore, the plaintiffs did not run a case at trial that the first defendants’ conduct gave rise to any expectation that differed from that to be derived from the deed. Rather, the plaintiffs' pleaded case was that the oral agreement which they alleged was made before the deed was later reflected in the terms of the deed which, the plaintiffs contended, were relevant and admissible considerations in determining whether a constructive trust arose as they alleged.⁷⁵

The plaintiffs' senior counsel argued that at least by the time of the Stockland sale the plaintiffs' expectation that they would obtain a legal title to proposed Lot 4 was not subject to the conditions expressed in paragraph [122](b) of the judgment. This was said to follow from the first defendants' retention of the $30,000 and their failure to inform the plaintiffs that the subdivision had been abandoned at any time in the 12 years after the deed was executed. It was submitted that the qualification upon the plaintiffs' expectations expressed in paragraph [122](b) of the judgment overlooked the trial judge's unchallenged findings to the effect that the defendants did not inform the appellants that the subdivision had been abandoned by the defendants by September 1991,⁷⁶ that the "first defendants treated the plaintiffs shabbily in retaining the $30,000 and not telling them that they could not create Lot 4 at least until 1998",⁷⁷ and that this was "unconscionable".⁷⁸

There is, however, no reason for thinking that her Honour did overlook those findings. The critical difficulty for the plaintiffs is that they did not secure a finding that the conduct of the defendants gave rise to an expectation that was unqualified by the first defendants' entitlement to reject unreasonable conditions imposed by the council, in which event the plaintiffs would be repaid the purchase price instead of obtaining title. Any such unqualified expectation would have been inconsistent with the terms of the deed.

Mr Campbell swore that as far as he was aware the subdivision had been approved.⁷⁹ The trial judge was not bound to accept that evidence and evidently did not do so. The view is open that the plaintiffs probably believed throughout (if they thought about it at all) that the condition of approval of the subdivision had not yet been satisfied. They knew that they had not received the transfer of the lot which the deed required to occur immediately upon issue of the separate certificates of title. Mr Campbell agreed in cross-examination that he understood over the 13 years or so between 1989 when he was first shown the plan identifying proposed Lot 4 and when he received the letter from Stockland confirming the sale of the land that the defendants "were trying to get a subdivision through by their dealing with the council and the other service providers like railways and so on".

In my respectful opinion there was no error in the trial judge’s conclusion that the plaintiffs' expectation that they would acquire title to proposed Lot 4 was qualified by the condition that if, as the first and fourth defendants learned by 16 September 1991, the industrial subdivision could not be completed and the plaintiffs could not acquire title to Lot 4, the first defendants would immediately repay the $30,000.⁸⁰

Equitable Relief

Whatever else might be said about the appropriate form of any equitable relief, it should not exceed that which is necessary to require the defendants to make good the expectation they encouraged.⁸¹ Any equitable remedy should be limited to the vindication of the plaintiffs' expectation that the $30,000 would be repaid to them immediately it became clear that the proposed subdivision was impractical. Subsection 8(2) of the Land Sales Act 1984 (Qld) entitled the plaintiffs to recover the $30,000 as a debt together with simple interest, but the plaintiffs seek the aid of equity to supplement the legal remedy.

The plaintiffs' senior counsel mounted an argument in the appeal that the defendants' failure to inform the plaintiffs that the subdivision could not take place was productive of substantial loss. It was argued that, whereas $30,000 originally was sufficient to buy the land which the plaintiffs required for the operation of the bus business, it cost the plaintiffs (as trustees of their superannuation fund) about $220,000 to buy a new site when ultimately they were required to relocate.

I would uphold the defendants’ objection to this argument. The plaintiffs did not run that case at trial. There is no such claim in the plaintiffs' pleadings or particulars and no finding on the topic. In particular, there is no finding, and there was no allegation, that in September 1991, when the defendants should have told the plaintiffs that the proposed subdivision was at an end, the plaintiffs would have or could have acquired an alternative site, either for $30,000 or for any other sum. The factual issues inherent in such a claim were not investigated at trial. It is too late to raise it for the first time on appeal.⁸²

On the other hand, I would accept the plaintiffs' alternative contention that the order for the return of the $30,000 with simple interest was an inadequate reflection of the defendants' unconscientious conduct.

The plaintiffs claimed compound interest in their statement of claim and they pursued that relief in the appeal. The power of a court of equity to award compound interest is enlivened in the case of a breach of trust or fiduciary duty by a trustee, agent or other person occupying a fiduciary position.⁸³ The defendants did not contend that there was no jurisdiction to make such an order. I consider that this form of equitable relief is available on the footing that the first defendants should be treated as having held their land subject to a constructive trust to subdivide it and transfer proposed Lot 4 to the plaintiffs, permitting the plaintiffs to remain in occupation in the meantime,⁸⁴ subject to the condition that if, as occurred, the subdivision became impractical it was their duty forthwith to inform the plaintiffs and repay the $30,000.

The object of such an order is not to punish, but rather turns upon a perception of the use that has been made of a claimant's money.⁸⁵ Compound rather than simple interest may be awarded on the basis of a presumption that the plaintiff, had it not been deprived of the money, would have made the most beneficial use of it open to it.⁸⁶

The defendants’ senior counsel relied upon the absence of any finding of fraud but in my view an order for compound interest is appropriate in light of the trial judge’s findings that the first defendants’ conduct in retaining the $30,000 and not telling the plaintiffs that Lot 4 could not be created was shabby and unconscionable and that the first defendants used the $30,000 to improve their land. The Court’s attention was drawn to the statement by the fourth defendant that there was no benefit to the Turner family interests in connecting the water supply "until the land was to be subdivided".⁸⁷ That does not displace the presumption that this improvement in the land was reflected in the price of the sale to Stockland.

At the hearing of the appeal, the plaintiffs tendered a schedule of the Reserve Bank of Australia records of indicator lending rates in the relevant period from September 1991. The defendants did not object to this fresh evidence. Overdraft rates varied over that period. I would accept the submission on behalf of the plaintiffs that overall the rates support a figure of 9 per cent per annum and that it is not overly generous to compound the interest on yearly rests. Under the judgment of the trial judge simple interest runs, as s 8(2) requires, from the date the $30,000 was paid, namely 21 March 1990. Compound interest should accrue from 16 September 1991, the date when the first defendants finally abandoned the subdivision.⁸⁸

Accessorial liability

The trial judge found that, had the pleadings comprehended the expectation found by her Honour, the fourth defendant would have been liable as an accessory.⁸⁹ The defendants’ arguments did not challenge that view or the findings upon which it was based, including that the fourth defendant had the conduct of the first defendants’ affairs in relation to the subdivision, she had knowledge of the arrangement under which the plaintiffs occupied proposed Lot 4, and she did not inform the plaintiffs of the abandonment of the subdivision in conversation with Mr Campbell after September 1991.⁹⁰ As I have concluded that the pleadings do comprehend equitable relief in the form of compound interest on the $30,000, orders to that effect should be made against both the first and fourth defendants. In the fourth defendant’s case the order should not extend to the repayment of the $30,000 or the interest due before the subdivision was abandoned on 16 September 1991. The $30,000 was received by the first defendants, not by the fourth defendant. Its receipt on 21 March 1990 and its retention until 16 September 1991 did not involve any breach of trust or other unconscionable conduct by the fourth defendant (or, indeed, any of the defendants). The trial judge’s order against the first defendants for payment of the $30,000 and interest before 16 September 1991 was not made in equity but pursuant to the statute. The first defendants’ unconscionable conduct after that date justifies the order for compound interest against them, supplementing the statutory obligation to pay simple interest. The fourth defendant should be found liable as an accessory only to pay the amount of the compound interest also payable by the first defendants.

No order was sought in this appeal against the second defendant and, contrary to the plaintiffs’ contention, none should be made against the third defendant. The trial judge found that the third defendant took no part in the first defendants’ business affairs.⁹¹ Although the plaintiffs contended that the evidence showed that the third defendant made relevant representations and was kept aware of the progress of the subdivision, the evidence did not establish that the third defendant was in a position to influence the first defendants’ decision not to repay the $30,000 to the plaintiffs.

Disposition

I would allow the appeal, set aside the orders made by the trial judge, and in lieu thereof order that:

The first defendants pay the plaintiffs $145,759.81, being $30,000 plus interest thereon at 9 per cent per annum from 21 March 1990 until 15 September 1991 (namely $34,016.71) plus interest on that total sum of $34,016.71 from 16 September 1991 until judgment (13 November 2007) at 9 per cent per annum compounding on yearly rests.

The fourth defendant pay the plaintiffs $111,743.10, being interest on the said total sum of $34,016.71 from 16 September 1991 until judgment (13 November 2007) at 9 per cent per annum compounding on yearly rests.

The claim against the second and third defendants be dismissed.

At the hearing of the appeal the Court was informed that the parties wish to make submissions after judgment about the appropriate orders that should be made concerning costs. It is relevant to observe in that respect that the eleven volumes of the appeal record far exceeded what was required for the disposition of the appeal. I would order that the parties make written submissions as to costs within ten days and in accordance with paragraph 37A of Practice Direction No. 1 of 2005.

DOUGLAS J: I have had the advantage of reading Fraser JA’s reasons and agree with them.

Even if the plaintiffs had conducted their case on the basis that they suffered loss because they were not told at an early stage that the subdivision would not proceed, there is a good argument that the purpose of estoppel in circumstances such as these is “to avoid or prevent detriment to a representee … by a preclusionary remedy … which holds the representor to the relevant assumption, and which necessarily prevents any detriment being suffered by the representee.”⁹²

Although we may be entitled to adopt the remedy most appropriate to prevent unconscionable conduct and not be obliged to adopt such a preclusionary remedy: “Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs”.⁹³

Here the assumed state of affairs was that the plaintiffs would be repaid their $30,000 if the subdivision did not proceed and that, with interest, is the appropriate minimum equity needed to avoid the relevant detriment and designed to vindicate the plaintiffs’ expectation.

I also agree with the orders proposed by his Honour.

Footnotes

1. Campbell v Turner & Ors [2007] QSC 331 at [16]-[18]. ↩

2. Campbell v Turner & Ors [2007] QSC 331 at [21]. ↩

3. Campbell v Turner & Ors [2007] QSC 331 at [3]–[5]. ↩

4. Campbell v Turner & Ors [2007] QSC 331 at [6]–[8]. ↩

5. Campbell v Turner & Ors [2007] QSC 331 at [9]–[10]. ↩

6. Campbell v Turner & Ors [2007] QSC 331 at [21]. ↩

7. Campbell v Turner & Ors [2007] QSC 331 at [25]. ↩

8. Campbell v Turner & Ors [2007] QSC 331 at [22]-[25]. ↩

9. Campbell v Turner & Ors [2007] QSC 331 at [26]. ↩

10. Campbell v Turner & Ors [2007] QSC 331 at [27]-[28]. ↩

11. Campbell v Turner & Ors [2007] QSC 331 at [133] (d) ↩

12. Campbell v Turner & Ors [2007] QSC 331 at [29]. ↩