CBD Prestige Property Holdings No 3 Pty Ltd v Metropolitan Local Aboriginal Land Council

Supreme Court of NSW|2013-07-19|Before: Ball J

Introduction 1In 2003, the defendant, Metropolitan Local Aboriginal Land Council (MLALC), owned land situated in Stokes Avenue, Asquith (the Asquith Land) and Bantry Road, Frenchs Forest (the Frenchs Forest Land). 2On 4 August 2003, MLALC entered into a joint venture agreement (the JVA) with CBD Prestige Property Holdings Pty Ltd (CBD1) for the development of the Asquith Land. In accordance with the terms of the JVA, the agreement was subsequently extended to cover the Frenchs Forest Land. 3CBD1 incurred considerable expenses (the precise amount is in dispute) in obtaining a development approval (DA) in respect of the Frenchs Forest Land which involved subdivision of the land into 15 residential lots. Subsequently, it is said that CBD1 assigned to the plaintiff, CBD Prestige Property Holdings No 3 Pty Ltd (CBD3), its rights in connection with the JVA. CBD3 was at the time a wholly owned subsidiary of CBD1. 4On 20 November 2012 MLALC served a notice purporting to terminate the JVA and on 10 January 2013 it entered into a put and call option in respect of the Frenchs Forest Land with Vigor Master Pty Limited. CBD3 contends that in serving the notice and entering into the put and call option MLALC breached the JVA. It claims the money CBD1 incurred in obtaining the DA as damages in respect of those breaches and seeks other ancillary relief. In the alternative, it makes claims on the basis of an estoppel or restitution. In its further amended statement of claim (FASC), it also claims that MLALC engaged in misleading and deceptive conduct (presumably in contravention of what was then s 52 of the Trade Practices Act 1974 (Cth) (now the Competition & Consumer Act 2010 (Cth)) or s 42 of the Fair Trading Act 1987 (NSW)). However, no submissions were made in support of that claim and it seems that it was abandoned.

Background 5MLALC was established following the enactment of the Aboriginal Land Rights Act 1983 (NSW) (the Act). It owned, and continues to own, significant parcels of land in the northern metropolitan area of Sydney, which included the Asquith Land and the Frenchs Forest Land. 6Relevant provisions of the Act have been amended in minor respects since the Act was first enacted. Section 40 of the Act as it existed in 2003 provided that a Local Aboriginal Land Council (of which MLALC is one) may not sell, exchange, lease, dispose of, mortgage or otherwise deal with land vested in it except in accordance with Division 4 of Part 2 of the Act. Section 40B(2), which is included in that division, provided: A Local Aboriginal Land Council may, subject to the provisions of any other Act and with the approval of the New South Wales Aboriginal Land Council: (a) lease land vested in it for a period of 3 or more years (including any option to renew the lease), and (a1) change the use of land vested in it, and (b) grant an easement over land vested in it, and (c) release an easement benefiting land vested in it, but only if the lease, change of use or the grant or release of the easement has been approved at a meeting of the Local Aboriginal Land Council specifically called for that purpose at which a quorum was present. 7Section 40D of the Act, which is also included in Division 4 of Part 2, provided: (1) A Local Aboriginal Land Council may, subject to the provisions of any other Act, sell, exchange, mortgage or otherwise dispose of land vested in it if: (a) at a meeting of the Council specifically called for the purpose (being a meeting at which a quorum was present) not less than 80 per cent of the members of the Council present and voting have determined that the land is not of cultural significance to Aborigines of the area and should be disposed of, and (b) the New South Wales Aboriginal Land Council has approved of the proposed disposal, and (c) (Repealed) (d) in the case of the disposal of land transferred to an Aboriginal Land Council under section 36, both the Crown Lands Minister referred to in that section and the Minister have been notified of the proposed disposal. (2) A certificate in the prescribed form (if any), purporting to be signed by the Secretary of the Local Aboriginal Land Council and certifying that the disposal by the Council of land specified in the certificate does not contravene this section, is conclusive evidence of that fact in favour of any person (whether or not the person is the person to whom the certificate was issued) except a person who had notice, when the certificate was issued, that the disposal of the land did contravene this section. (3) For the purposes of this section, land is of cultural significance to Aborigines if the land is significant in terms of the traditions, observances, customs, beliefs or history of Aborigines. 8On 19 March 2003 the members of MLALC passed a resolution approving the disposal of the Asquith Land and the Frenchs Forest Land by way of public auction at prices not less than those to be determined by a formal valuation. On 13 June 2003, the NSW Aboriginal Land Council (NSWALC) issued approvals under s 40D of the Act for the sale of the Frenchs Forest Land and Asquith Land by way of public auction for prices equal to or above $5.5 million and $3 million respectively. Those amounts had been determined to be the value of the land by the State Valuation Office. 9During 2003, Mr Clark, who was at the time Managing Director of CBD1, met with Mr Welsh, who was the Chairman of MLALC between 2000 until his disqualification from holding office in 2010 following his conviction for a drink driving offence, and Mr Madden, a director of MLALC. Neither Mr Welsh nor Mr Madden gave evidence in the case. The discussions concerned the possibility of forming a joint venture to obtain development approval and carry out a residential development on the Asquith Land. 10Mr Clark says that Mr Welsh told him that the members of MLALC and the NSWALC had approved the development and sale of the Asquith Land and asked Mr Clark to arrange for an appropriate joint venture agreement to be prepared. 11On 4 August 2003, CBD1 and MLALC entered into the JVA. 12Clause 2.1 of the JVA provides: Establishment of Joint Venture As from the date of this Agreement there is established an unincorporated joint venture between the Venturers to be known as the "CBD Metro Joint Venture" with each Venturer holding a 50% Percentage Interest as at the date hereof. The Joint Venture shall continue until it is terminated in accordance with this Agreement. 13Clause 2.2 of the JVA set out the objects of the Joint Venture. Those objects included determination of the scope and the carrying out of the "Development", including the sale of "Residential Lots". 14"Development" is defined in cl 1.1 in these terms: (a) the rezoning (if required) of the Joint Venture Site by the Council to permit residential development of the Joint Venture Site; (b) the application for and the obtaining of the approvals for the subdivision of the Joint Venture Site into residential lots; (c) the carrying out of the Works; (d) the registration of a plan of subdivision at the Land Titles Office resulting in the creation of the Residential Lots in respect of such of the Scheduled Land as is not yet subdivided; (e) the marketing and sale of the Residential Lots; ... 15"Residential Lots" was defined to mean: ... the unimproved residential lots which will result from the completion of the Works and the registration of the plans of subdivision at the Land Titles Office in respect of the Scheduled Land and any Additional Land. 16"Works" is defined to mean the subdivision works required to comply with any Development Consent issued by the relevant Council - that is, Warringah Council. The "Scheduled Land" is the Asquith Land. "Additional Land" was defined in cl 1.1 to mean: ... any real property owned by [MLALC] contributed to the Joint Venture by [MLALC] in its absolute discretion and accepted as Joint Venture land by CBD which is intended to be developed by way of subdivision together with the Scheduled Land as it exists at the date of this Agreement. 17Clause 4 provides: 4.1Condition Precedent (a) This Agreement is conditional on the New South Wales Aboriginal Land Council having approved the terms and conditions of this Agreement in accordance with Section 40D of the Aboriginal Land Rights Act 1983. (b) [MLALC] will prepare and lodge all necessary documentation with the [NSWALC] and use its best endeavors to obtain the approval of the [NSWALC] as soon as possible after the date of this Agreement. (c) If [MLALC] has not been able to obtain the approval of the [NSWALC] within 6 months after the date of this Agreement, [MLALC] may terminate this Agreement at any time prior to [MLALC] issuing a certificate under Section 40D(2) of the Aboriginal Land Rights Act 1983. (d) If [NSWALC] has not approved the terms and conditions of this Agreement within 6 months after the date of this Agreement and [MLALC] has used its best endeavors to obtain that approval and promptly issue a certificate under clause 40D(2) of the Aboriginal Land Rights Act 1983 following receipt of that approval, [MLALC] may terminate this Agreement. 18Clause 5.1 provides: Upon satisfaction of the condition precedent referred to in clause 4.1, [MLALC] shall make the Scheduled Land and, subject to clause 5.5, any Additional Land available to the Joint Venture for the purposes of the Development in accordance with this Agreement. The value of the Scheduled Land and the Additional Land (if any) shall be determined in accordance with clause 5.3. 19Clause 6.1(a) provides: CBD will, within 90 days after the day on which the condition precedent in clause 4.1 is satisfied, prepare a development proposal with respect to the Joint Venture Site ("Development Proposal") and provide it to [MLALC] for approval. The clause goes on to set out the requirements of the Development Proposal. 20Clause 6.5 of the JVA provides: CBD agrees to: (a) provide the Development Services; (b) seek funding for the Development from recognised, reputable and experienced project financiers approved by [MLALC] acting reasonably including preparation of all applications, information memorandums and supporting documents required and negotiating the finance facility offered by a project financier which the Management Committee agrees to accept in accordance with clause 11.1; and (c) carry out and complete the Development as soon as practicable, but in any event not more than 2 years from the day on which the Development Proposal is approved. "Development Services" are the services set out in Schedule 2 of the JVA, which includes a long list of services directed at achieving subdivision of joint venture land, the preparation of its sale as residential lots and the sale of those lots. 21Under cl 6.8, CBD1 was to be paid a fee equal to 12 percent of the total Project Costs (as defined in the agreement). 22Clause 11.3(a) provides: Provided that the Development Consent has been obtained, [MLALC] must grant, at the request of the Management Committee, the Mortgage over the Joint Venture Site securing repayment of the funding for the Development. 23Clause 12.1 provides: Liabilities The net amount of any Project Costs or any other expenditures, disbursements or other liabilities incurred in relation to the Development Assets or the Development shall be initially contributed by CBD. 24Clause 12.3 relevantly provides: It is acknowledged that it is the intention of the Venturers that: (a) [MLALC]'s obligation to make contributions to the Joint Venture be limited to the obligation to make the Scheduled Land and any Additional Land available to the Joint Venture for the purpose of the Development and not to make any contribution by way of cash payment to fund the Development; (b) [MLALC]'s obligations to make contributions to the Joint Venture does not include an obligation to grant or permit the Mortgage or any other Security Interest over the Joint Venture Site prior to the grant of the Development Consent ... 25Clause 19.1 provides: The Joint Venture shall continue until the completion of the Development and the sale of all the Development Assets by the Venturers to a third party or parties or the sale by one Venturer to the other Venturer of all that first mentioned Venturer's Percentage Interest, unless sooner terminated by mutual agreement in writing by the Venturers or in accordance with the terms of this Agreement. 26Clause 21.1 provides: Priority for Disbursement of Proceeds The Venturers agree that upon the sale, conveyance or other disposition of the Development Assets or any sale, conveyance or other disposition of part of the Development Assets the Net Proceeds of that disposal, or upon any net surplus from the Joint Venture being available for distribution to the Venturers such proceeds, shall be disbursed from the Joint Venture Account in the following manner: (a) first, to repayment of all advances, interest and other amounts due or payable to financiers of the Joint Venture pursuant to facilities entered into in the manner contemplated by clause 11; (b) second, to repayment to all unsecured creditors (other than the Venturers) of the Joint Venture pari passu; (c) third, to payment of the Development Management Fee to CBD; (d) fourth, to payment of [MLALC]'s Contribution and CBD's Contribution, but not including any interest accrued on either, pari passu between [MLALC] and CBD; (e) fifth, to payment of interest accrued on [MLALC]'s Contribution as calculated under clause 13 and interest accrued on CBD's Contribution as calculated under clause 13 pari passu between [MLALC] and CBD; (f) sixth, any remaining Project Surplus will be disbursed to the Venturers in accordance with their then Percentage Interest. 27Following entry into the JVA, it became apparent that there would be substantial difficulties and delay in obtaining approvals for the development of the Asquith Land. Mr Welsh expressed concerns to Mr Clark about those delays and, as a result, it was agreed that the Frenchs Forest Land would be included in the joint venture. Mr Clark says he asked Mr Welsh whether MLALC had approval for the development and sale of the Frenchs Forest Land. According to Mr Clark, Mr Welsh replied "Yes, we have approval for both of them". 28On 2 December 2003, Mr Welsh wrote to CBD1. That letter, in part, said: In accordance with clause 5 of the Joint Venture Agreement, [MLALC] hereby advises that it offers to make available [the Frenchs Forest Land] as Additional Land for the purposes of Development. The disposal of [the Frenchs Forest Land] has been approved in accordance with Section 40D of the Aboriginal Land Rights Act 1983. 29Mr Murray of CBD1 replied to that letter on 4 December 2003 giving notice of CBD1's acceptance of the contribution of the Frenchs Forest Land. 30On 4 December 2003, Mr Welsh gave Mr Clark two letters dated 13 June 2003 from NSWALC. The letter in relation to the Frenchs Forest Land was in the following terms: I refer to the above and wish to advise that NSWALC at its 202nd Meeting resolved the following: "That NSW Aboriginal Land Council approves [MLALC] disposal of [the Frenchs Forest Land] by way of public auction for a sale price equal to or above the market valuation of $5,500,000.00 pursuant to s40D of the ALRA, 1983. [NSWACL] approves under Regulation No. 6 of the ALRR 2002, the Signing and Sealing of the s40D(2) Certificate for the aforementioned". Upon NSWALC's receipt and confirmation of the sale price equal to or above $5,500,000.00 the [MLALC] will be issued a copy of the above NSWALC Motion together with the NSWALC Certificate (pursuant to Regulation 6 of Aboriginal Land Rights Regulation 2002). (emphasis in original) The letter in relation to the Asquith Land was in similar terms, with a market valuation of $3,000,000. 31During the following year, CBD1 worked on the development applications in respect of the Asquith Land and the Frenchs Forest Land. 32On 19 November 2004, MLALC passed various unanimous resolutions at an extraordinary general meeting under ss 40B and 40D of the Act. The resolutions determined that the Asquith Land and the Frenchs Forest Land were not of cultural significance, that MLALC enter into the JVA in respect of them, that MLALC mortgage the Asquith Land and the Frenchs Forest Land to secure funding for their development under the JVA, that MLALC change the use of and subdivide the Asquith Land and the Frenchs Forest Land by lodging a development application and plan of subdivision and that MLALC sell the Asquith Land and the Frenchs Forest Land in accordance with the JVA. 33On 30 November 2004, MLALC gave its consent to the lodgment of the development application in respect of the Frenchs Forest Land for a 15 lot community title subdivision and associated works. The development application was lodged on 30 December 2004. CBD1's architect was the applicant. 34On 2 December 2004, MLALC wrote to NSWALC requesting its approval to the JVA. NSWALC replied to that letter on 20 December 2004. That letter said in part: [NSWALC] approved the sale of these two parcels by way of auction in June 2003. As you are currently proposing a joint venture arrangement, including subdivision and mortgage, these approvals are no longer valid. As you are aware from previous discussions in relation to these and other properties, Interim Policies for determining applications for the disposal of land, under s40D of the Aboriginal Land Rights Act 1983 ("ALRA"), were introduced by NSWALC in April 2004. The information provided with your letter does not comply with the requirements of the Interim Policy. NSWALC will not be able to consider the application until the information required under the policy has been provided. Mr Welsh gave Mr Clark a copy of the letter at about the time that he received it. According to Mr Clark, he asked Mr Welsh what the problem was and pointed out that Mr Welsh had told him previously that MLALC had the necessary approvals. Mr Welsh replied that he would sort it out with the NSWALC and that "that won't be a problem, keep going with the development". 35Representatives of MLALC and NSWALC met on 1 February 2005 to discuss the applications for approval. During the meeting, NSWALC agreed to provide its comments on the JVA. Those comments were set out in a letter dated 7 February 2005 from NSWALC to MLALC. The letter sets out various concerns NSWALC had with the JVA. The letter in part said: The CBD Joint Venture Deed provided to NSWALC in January 2005 appears to have a less favourable risk and return profile for MLALC than the Clayton Utz model used previously. A s 40D application to the NSWALC based upon this Deed would be unlikely to obtain approval, particularly given that key elements to the arrangement will not be agreed by MLALC and CBD until after NSWALC approval is given. These elements include staging plans, budgets and feasibilities and the determination of the agreed land value. The lack of this information limits the ability of NSWALC to determine if the arrangement is in the best interest of the members. As suggested at the February meeting, three of the options available to MLALC are: 1, To renegotiate with CBD using the Belrose Project Delivery Agreement as a starting point; 2. To renegotiate with CBD using the current Joint Venture Deed as a starting point; or 3. To ask NSWALC to consider the application in its current form. If the Administrator of NSWALC rejects the application, the failure to meet a condition precedent under the Deed means the agreement is terminated, with both parties meeting their own costs. MLALC will then be ale to start the process of selecting a partner to develop the site from the beginning. Mr Welsh gave Mr Clark a copy of the letter at about the same time he received it and suggested that they meet with Clayton Utz, MLALC's solicitors at the time. That meeting occurred on 16 February 2005. During it, the parties discussed possible changes to the JVA to address NSWALC's concerns. They also discussed a draft "project delivery agreement" (PDA) which included terms that were considered appropriate by NSWALC for property development projects being undertaken jointly with local Aboriginal land councils. 36Following that meeting, on 22 February 2005, CBD1 wrote to MLALC. The letter in part said: While we appreciate the outlay by CBD of the costs associated with obtaining DA consent on these two sites through the above processes, represents a highly speculative exercise, we have continued to act in good faith on the basis of our JVA, knowing that MLALC is vigorously pursuing approval of the agreement from NSWALC under the ALRA. As Asquith is now in court, we are naturally hesitant to continue expenditures of a further $200,000 estimated for Asquith alone, without some resolution of the Section 40D approval from NSWALC. 37The letter included two attachments. The first set out draft notes of the meeting. The notes record that various matters were agreed including that separate agreements would be entered for each site, that each agreement would take the form of a PDA and that once they had been prepared and signed they would be submitted to NSWALC for approval. The second attachment set out detailed comments on the draft PDA. 38On 1 April 2005, Clayton Utz on behalf of MLALC sent NSWALC a draft PDA in respect of the Asquith Land for comment and approval. Representatives of MLALC and NSWALC met on 26 April and 4 May 2005 to negotiate the terms of that draft. 39It appears that a draft of the PDA in respect of the Asquith Land was also sent to NSWALC and, on 27 May 2005, NSWALC wrote to MLALC setting out its comments on that draft. The letter set out concerns of NSWALC about CBD1. In particular, the letter observed that CBD1 did not have a strong balance sheet to support its responsibilities under the agreement and had not demonstrated that it had the necessary skills and experience to undertake the project. The letter also commented that: The importance of this proposal is also magnified as it is assumed that [MLALC] intend to enter a similar agreement for the proposed Project Delivery Agreement with CBD at Frenchs Forest. MLALC provided CBD1 with a copy of the letter at about the time it was received and Mr Clark referred it to Holman Webb, who were one of the firms of solicitors used by CBD1. 40On 9 June 2005, Holman Webb wrote on behalf of CBD1 to Clayton Utz. The letter sets out CBD1's response to the issues raised by NSWALC's letter dated 27 May 2005. It sought an urgent reply because CBD1 expected shortly to incur in excess of $50,000 in consultant's fees for the appeal to the Land and Environment Court against the refusal of development consent in respect of the Asquith Land. 41The letter from Holman Webb concluded: We confirm that CBD reserves its rights in relation to the JVA. We also confirm that CBD does not intend to be bound by any agreement to vary the JVA unless it executes a document in terms acceptable to it. 42In November 2005, CBD1 prepared a feasibility report for the proposed subdivision of the Frenchs Forest Land. 43On 15 March 2006, MLALC passed resolutions under ss 40B and 40D of the Act to enter into a PDA in respect of the Asquith Land. MLALC passed similar resolutions in respect of the Frenchs Forest Land. 44On 26 April 2006, NSWALC approved MLALC entering into the PDA in respect of the Asquith Land pursuant to ss 40B and 40D of the Act. At the same time, it approved the mortgage of the land to secure financing, the subdivision of the land and the disposal of the land in accordance with the PDA. 45On 10 July 2006, NSWALC wrote to MLALC setting out its concerns in relation to the draft PDA for the Frenchs Forest Land. Mr Clark was given a copy of that letter and gave it to Webster O'Halloran, who were also acting for CBD1, to deal with. 46On 20 July 2006, Webster O'Halloran wrote to Clayton Utz concerning NSWALC's letter. Webster O'Halloran complained that the letter from NSWALC largely raised the same issues that had previously been raised with respect of the Asquith development and observed that those issues had been resolved satisfactorily and ss 40B and 40D certificates had been issued for that development. 47On 14 September 2006, CBD1 and MLALC entered into the PDA for the Asquith Land. Clause 2.4 of that agreement provided: The Developer [MLALC] and the Contractor [CBD 1] acknowledge and agree that on the Commencement Date the Joint Venture Agreement will be terminated and each party shall be released from all further obligations and liabilities (whether arising before or after the date of termination). "Commencement Date" is defined in cl 1.1 to mean the later of the date of the PDA and the date of satisfaction of the conditions precedent set out in cl 4.2 (that is, approval by the NSWALC). Since NSWALC had approved the PDA on 26 April 2006, the Commencement Date was 14 September 2006. The "Joint Venture Agreement" is defined to mean the JVA. 48On 11 October 2006, CBD1 sent Clayton Utz a chronology together with a number of documents to assist MLALC to obtain approval in respect of the Frenchs Forest PDA. 49In the meantime, CBD1 proceeded with the work required to secure an appropriate development approval in respect of the Frenchs Forest Land. Mr Clark said in evidence that he always thought that if he obtained the DA then he would get NSWALC's approval to the PDA in respect of it and the sale of the land in accordance with that PDA. 50On 14 December 2006, MLALC passed a number of resolutions including a resolution permitting it to sell the Frenchs Forest Land by private treaty to CBD1. Mr Clark gave evidence that Mr Madden had told him that MLALC was having financial difficulties and was going to ask NSWALC to approve a sale to CBD1 and asked whether CBD1 could afford to buy the land. Mr Clark responded that it would depend on the conditions. 51On 1 December 2006, CBD1 obtained a valuation report in relation to the Frenchs Forest Land. There is a dispute concerning the purposes of that report. MLALC submits that the report was prepared for the purpose of determining whether CBD1 would acquire the Frenchs Forest Land. Mr Clark said in evidence that it was obtained in connection with the proposed redevelopment of the land in accordance with the JVA. 52On 29 January 2007, MLALC sent NSWALC a letter seeking approval to the sale of the Frenchs Forest Land in accordance with its resolution of 14 December 2006. NSWALC responded to that letter on 2 February 2007 seeking further information including a copy of the contract for sale and how MLALC proposed to spend the proceeds of sale. 53On 22 February 2007, representatives of NSWALC and MLALC attended a conciliation conference concerning the disposal of the Frenchs Forest Land. An agreement was reached at that conference that NSWALC would approve the sale of the land to CBD1. 54At some time, a draft contract was prepared for the sale of the Frenchs Forest Land to CBD1 for a price of $5,544,000. By cl 50.2 of the draft, MLALC was entitled to rescind the contract if it could not comply with s 40D(1) of the Act within 42 days of the contract. By cl 51, completion of the contract was conditional on approval of the development application in respect of the Frenchs Forest Land being granted. If that approval was not granted within 6 months by the Council or within 12 months by the Land and Environment Court in the event of an appeal, either party was entitled to rescind it. 55It appears that MLALC provided NSWALC with a copy of the contract. NSWALC wrote to MLALC on 23 March 2007 in relation to the draft contract. In that letter, NSWALC said: I understand that the amendment sought by CBD is to the effect that a clause be inserted into the Contract making it conditional on development approval being given in respect of [Frenchs Forest Land]. As Ms Whelan informed Mr FitzSimons on 20 March 2007, NSWALC considers that this represents a significant matter of which NSWALC was obviously not on notice at the conciliation. Accordingly, NSWALC no longer considers itself bound to recommend approval of a Contract for Sale containing such a condition. Nevertheless, NSWALC is still willing to consider giving that approval on the terms set out further below. The letter goes on to indicate that NSWALC was willing to approve the contract with the additional condition, but only on the basis that MLALC recognised that there may be a delay in satisfying the condition and that NSWALC was unlikely to approve any further land sales by it in the near future to permit MLALC to meet its pressing financial commitments. 56On 5 April 2007, NSWALC approved the sale of the Frenchs Forest Land to CBD1 for $5.04 million plus GST. The approval was subject to a condition that development approval be obtained from the Council within 6 months or from the Land and Environment Court within 12 months of the resolution. NSWALC wrote to MLALC on 13 April 2007 notifying it of its approval. The approval given by NSWALC also noted an undertaking by MLALC that it would invest $2.5 million of the sale of proceeds. The covering letter also referred to MLALC's agreement to pay its outstanding creditors from the proceeds of sale and to use the remainder for operational expenses. 57On 17 April 2007, CBD wrote to MLALC stating that "Our respective solicitors are finalising the necessary paper work which should be available for signature at an early date". 58A dispute arose concerning the certificate to be issued by NSWALC under s 40D of the Act. NSWALC had indicated it would not issue a certificate until the DA in respect of the Frenchs Forest Land had been granted. CBD, on the other hand, wanted the certificate issued before exchange of contracts. That issue was discussed at a meeting on 5 June 2007 between representatives of MLALC and CBD1. The meeting was left on the basis that CBD1 would consider its position and get back to NSWALC. According to Mr Clark, contracts were not exchanged because NSWALC refused to produce a s 40D certificate as evidence of its approval. 59The Council refused approval of the DA and on 5 October 2007 CBD lodged an appeal with the Land and Environment Court. The Court handed down its decision on 3 June 2008 upholding CBD's appeal. 60On 4 June 2008, Websters (formerly Webster O'Halloran) wrote to Clayton Utz stating that the DA had been granted and that its client was anxious to exchange contracts. The letter concluded: My client seeks to purchase in the name of a Company specifically formed for that purpose being [CBD3]. Websters sent a second letter to Clayton Utz on 6 June 2008 pressing for an exchange of contracts. 61Clayton Utz responded to Websters letters on 13 June 2008. The letter observed that the DA had not been obtained from the Land and Environment Court within 12 months of NSWALC's resolution and that consequently the approval had, in accordance with its terms, lapsed. In addition, the letter said: Further, on 26 May 2008, a notice under section 223B of the Aboriginal Land Rights Act 1983 (NSW) was issued by the Minister for Aboriginal Affairs to the MLALC. That notice prohibits the MLALC from: 1. Selling, exchanging, leasing, disposing of, mortgaging or otherwise dealing with the land vested in it; and 2. Destroying, removing or altering any documents in the possession of the MLALC except with the prior approval of the Minister, for a period of two months from the date of that notice. The MLALC is currently seeking permission from the Minister to enable it to dispose of the Land and is requesting that mediation take place between the Department of Aboriginal Affairs, the NSWALC and the MLALC in respect of the Land. The MLALC is very keen to be in a position to exchange contracts, however as is clear from the above, it is presently not permitted to do so. 62On 1 July 2008, Websters wrote to the Minister for Aboriginal Affairs and sent a copy of their letter to Clayton Utz. The letter requested that the Minister vary the notice to allow exchange of contracts for the Frenchs Forest Land. 63On 3 July 2008, CBD1 and CBD3 entered into a deed entitled "Deed of Transfer" which was in the following terms: Recital: The purpose of this Transfer being to allow the purchase of the French's [sic] Forest Property in a separate identity to assist an orderly transaction. Transfer Where as the property to be transferred being the rights to develop [the Frenchs Forest Land] in accordance with the Court Decision, case number 10997 of 2007 dated 3rd June 2008, along with the intellectual property incorporating all relevant documents, approvals, reports and studies. Attached thereto a copy of the Court Decision. The rights to be assigned as DA No 2004/1615 with Warringah Council. The consideration of the transfer to be $1.00. CBD1 notified MLALC of the transfer on the same day. 64On 4 August 2008, Mr Lombe was appointed administrator of MLALC pursuant to s 222 of the Act. Following his appointment, there were further negotiations between MLALC and CBD regarding the sale of the Frenchs Forest Land. Despite those negotiations, no contract was exchanged. 65On 13 October 2009, a liquidator was appointed to CBD1. That company was subsequently deregistered as an Australian company on 23 January 2011. As a result of de-registration, CBD1's property vested in the Australian Securities and Investments Commission: Corporations Act 2001 s 601AD(2). 66No contract has been exchanged between CBD3 and MLALC for the sale of the Frenchs Forest Land. On 8 August 2010, CBD3 wrote to MLALC stating that the DA in respect of the Frenchs Forest Land had become a matter of extreme urgency "with only 9 months left to run". The letter asserted that MLALC had agreed to sell the land for $3.5 million plus GST. 67On 21 August 2012, NSWALC approved the sale of the Frenchs Forest Land for a price of no less than $2,970,000 or for no less than $4,365,000 if sold with three additional lots. 68On 14 November 2012, CBD3 commenced this proceeding. 69On 20 November 2012, MLALC served a notice on ASIC terminating the JVA for non-fulfilment of the condition in cl 4.1. 70On 10 January 2013, MLALC entered into a deed of put and call option in respect of the Frenchs Forest Land with Vigor Master Pty Ltd. Under the deed, Vigor Master may require MLALC to sell the property by exercising a call option any time up to 4.30 pm on 1 December 2014. Mr Lyons, the current chairman of MLALC, gave evidence that he expects Vigor Master to exercise that option in August 2013. 71Clause 45.1 of the contract of sale attached to the put and call option provides: The Vendor has disclosed to the Purchaser that: (a) the subject land benefits from an approval of an Development Application No. 2004-1615 in accordance with the determination of the Land and Environment Court of NSW in CBD Prestige Property v Warringah Council [2008] NSWLEC 1207 on 3 June 2008 ("The Consent") obtained by CBD Prestige Property Holdings Pty Limited ("the applicant to The Consent"); (b) the subject land is being sold reflective of the subject land not benefiting from any development consent; (c) that it may suffer damages by reason of a claim against it by The Applicant (including its successors, assignees, trustees or nominees) to The Consent if there is any positive action by any party to act on The Consent including any action by the Vendor or Purchaser their assignees, trustees or nominees if the consent is acted upon. Such damages include a claim for unjust enrichment at the value of The Consent. 72Notwithstanding that clause, on 23 May 2013 Vigor Master lodged an application for subdivision construction certificate apparently relying on the development approval obtained by CBD1.

CBD3's claim for breach of the JVA 73CBD3's primary claim is that the JVA remains on foot, that CBD1's rights under it were assigned to it and that MLALC breached the JVA either by purporting to serve a notice terminating the contract or by entering into the put and call option with Vigor Master. It seeks a declaration that the JVA remains on foot and seeks damages in respect of MLALC's breaches. In para 23 of the FASC it gives the following particulars of those damages: (a) Loss of the benefit of all preliminary expenditures by [CBD1]; (b) Loss of the interest reserved by the CBD METRO JOINT VENTURE; (c) Loss of the remuneration reserved to the developer by the said agreement; (d) Loss of the opportunity to share in the division of profits from the completion of the said CBD METRO JOINT VENTURE. However, in submissions it only asserted an entitlement to the money that it says CBD1 spent on seeking development approval. 74In submissions, a considerable amount of attention was devoted to the question whether the conditions precedent set out in cl 4.1 of the JVA had been satisfied and, if they had not, whether MLALC had successfully terminated the JVA for the reason that they had not been. In my opinion, however, it is not necessary to address that issue. CBD3's claim based on the JVA must fail for two other reasons. First, the JVA was terminated by agreement between CBD1 and MLALC on 14 September 2006, when the parties entered into the Asquith PDA. Second, CBD1 did not assign its rights under the JVA to CBD3 and could not have done so without the agreement of MLALC. 75Clause 2.4 of the Asquith PDA specifically states the JVA would be terminated and that each party would be released from its obligations under that agreement on the Commencement Date (as defined in the agreement). That date was 14 September 2006. CBD3 submits that that clause does not have the effect of terminating the JVA because the Asquith PDA was only concerned with the Asquith Land whereas the JVA was concerned with the Frenchs Forest Land as well. It also submits that, by Holman Webb's letter dated 9 June 2005, CBD1 specifically reserved its rights in relation to the JVA. 76There is no merit in either of these submissions. The subject matter of the JVA was the Asquith Land and any other land the parties agreed should be included in it. It was necessary to terminate the JVA to permit the parties to enter into another agreement in respect of the Asquith Land. That is what the parties did in clear terms by cl 2.4 of the Asquith PDA. It was open to them to preserve the operation of the JVA in respect of the Frenchs Forest land. They chose not to follow that course, no doubt expecting to enter into a separate agreement in respect of that land in the future. It is clear from the terms of Holman Webb's letter that CBD1 intended to reserve its rights under the JVA until the parties entered into a new agreement. That is what they did by the Asquith PDA. 77The Deed of Transfer purports to assign CBD1's rights "to develop [the Frenchs Forest Land] in accordance with the Court Decision". Even if that expression is broad enough to cover any rights CBD1 had under the JVA, the "rights" to develop the land are not simply rights but are a bundle of correlative rights and obligations created by the agreement. Moreover, CBD1 has ceased to exist and there is no entity other than CBD3 to perform CBD1's obligations under that agreement. Consequently, to make any sense of the submission that CBD1 assigned its rights under the JVA to CBD3, it is necessary to treat that assignment as an assignment of CBD1's rights and obligations. However, that could only have occurred if the JVA had been novated to CBD3. As Lord Browne-Wilkinson explained in Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 at 103: It is trite law that it is, in any event, impossible to assign ``the contract'' as a whole, ie including both burden and benefit. The burden of a contract can never be assigned without the consent of the other party to the contract in which event such consent will give rise to a novation. It is clear, however, that MLALC never consented to the substitution of CBD3 for CBD1 under the JVA. CBD1 or CBD3 sent a copy of the Deed of Transfer to MLALC. However, the fact that it did so is not a sufficient basis for saying that MLALC consented to the rights and obligations under the JVA being novated to CBD3.

CBD3's claim based on an estoppel 78CBD3 pleads two claims which are said to be based on an estoppel. 79The first has the following elements: MLALC represented to CBD1 and "it officers and privies" that "it would proceed with the development in respect of the Frenches [sic] Forest land in accordance with the [JVA]" and that "it was prepared to proceed with the development in accordance with the terms of the [JVA]". The representations are said to be implied from various conduct, including entry into the JVA, correspondence and dealings between the parties and MLALC's "encouragement to proceed with development"; CBD1 and CBD3 relied on the representations "to order their respective affairs in the belief and expectation that that the terms of the [JVA] could be fulfilled and the remuneration reserved therein would be paid"; By reason of those matters, "MLALC is estopped from denying that [CBD3] is entitled to the remuneration reserved by the [JVA]". 80Leaving aside difficulties with the way in which the claim is pleaded, in my opinion it must fail at a factual level. 81The JVA was conditional on the approval of its terms by NSWALC in accordance with s 40D of the Act. Section 40D of the Act says nothing about approval of agreements. However, it seems plain that what the parties intended was that the JVA would be conditional on NSWALC's approval of the sale of the land in accordance with the agreement. Both parties agree that the relevant condition was a condition precedent to performance of the agreement and not a condition precedent to the agreement coming into existence: see Perri v Coolangatta Investments Pty Ltd [1982] HCA 29; (1992) 149 CLR 537 at 551 per Mason J. 82It appears that Mr Welsh told Mr Clark that MLALC had approval from NSWALC for the sale of both the Asquith Land and the Frenchs Forest Land, and it may be inferred from the context that what he intended to convey was that MLALC had approval for the sale of both parcels of land in accordance with the JVA. That representation was false. However, the Frenchs Forest Land was not included in the joint venture until 4 December 2003, when CBD1 wrote to MLALC giving notice of its acceptance of the Frenchs Forest Land. On the same day, Mr Welsh gave Mr Clark a copy of the approvals that MLALC had obtained. It was apparent from those approvals that MLALC did not have approval for the sale of the Frenchs Forest Land in accordance with the JVA. It only had approval for the sale of the land by way of public auction for a price equal to or above $5,500,000. Despite that, CBD1 proceeded to work on the development applications. It did so knowing the true position; and in my opinion it could not have relied on anything said by Mr Welsh concerning the approval that had been given by NSWALC in doing so. 83Mr Clark says that on or about 20 December 2004, after NSWALC pointed out that MLALC did not have approval to sell the land in accordance with the JVA, Mr Welsh said to him that he would sort the problem out and that "that won't be a problem, keep going with the development". Accepting that Mr Welsh made those statements, it is difficult to see how Mr Clark could have relied on them. Mr Clark admitted that he understood that NSWALC and MLALC were separate entities. Having regard to what NSWALC had said in its letter dated 20 December 2004, it is difficult to see how he could have thought that it could easily be persuaded to give its approval to the JVA. Subsequent events suggest the opposite. The letter dated 7 February 2005 from NSWALC said that NSWALC was unlikely to give its approval. At the meeting with Clayton Utz on 16 February 2005 it was agreed that CBD1 and MLALC would enter into two separate agreements. Mr Clark appreciated that MLALC would have to get NSWALC's approval to those agreements. In his letter dated 22 February 2005 to MLALC he recognised that "MLALC is vigorously pursuing approval of the agreement from NSWALC" and he said "we are naturally hestitant to continue expenditures of a further $200,000 estimated for Asquith alone, without some resolution of the Section 40D approval from NSWALC". That letter is inconsistent with the propsition that Mr Clark was relying on representations made to him concerning approval in incurring further expenses in pursuing the development applications. He recognised that those approvals could not be guaranteed. 84CBD3 does not allege that MLALC made any further representations concerning the prospects of obtaining approval from NSWALC. Mr Clark said in evidence that he always thought that if he got the development approval then he would get NSWALC's approval to the PDA in respect of the Frenchs Forest Land. It is clear from that evidence that, in causing CBD1 to press ahead with the development application, Mr Clark did not rely on anything said to him by MLALC but relied on his own assessment of the position. 85In any event, it is difficult to see how any of this is relevant to an estoppel claim by CBD3. It is not alleged that CBD1's claim based on an estoppel was assigned to CBD3; and it is difficult to see how such an assignment could be effective. It is pleaded that CBD3 itself relied on the pleaded representations to order its affairs. But how that could be the case and what it did is not explained. CBD3 had nothing to do with the Frenchs Forest Land until it purported to take an assignment of rights in relation to it in July 2008. Mr Clark was CBD3's general manager. But the fact that representations were made to Mr Clark as the managing director of CBD1 does not mean that CBD3 is entitled to rely on those representations. Moreover, it is not clear how it is said CBD3 acted to its detriment in reliance on the representations said to be made to Mr Clark. 86CBD3's second estoppel case is even more confused. It was added by the amendments included in the FASC. It has the following elements: Clause 21 of the JVA sets out how the proceeds of sale of Development Assets would be applied which included the payment of "[CBD3's] development management fee, and its contribution, with interest, thereon"; CBD3 has paid a total of $720,416.79 as its contribution and is entitled to a development management fee of $86,450; MLALC encouraged CBD3 to expend its contribution amount on the basis that the joint venture would proceed to completion; Therefore, "[MLALC] is estopped from denying that [CBD3] is entitled to receive an amount of $1,122,178.70 (including interest) from the proceeds of sale of the Development Assets calculated as at 5 March 2013". This claim is said to justify a declaration that CBD3 is entitled to be paid the amount of $1,122,178.70 together with interest and an order requiring MLALC upon the sale of the Frenchs Forest Land to secure the amount claimed. 87One difficulty with this claim is that it confuses CBD3 with CBD1. Another difficulty is that, for the reasons I have already given, it could not be said that MLALC encouraged CBD1 let alone CBD3 to expend amounts under the JVA after about 20 December 2004. As I have said, there is no evidence that Mr Welsh made any statements to Mr Clark after that date which inaccurately represented the position in relation to the need for approval from NSWALC or the likelihood that that would be given. Moreover, again for the reasons I have given, it could not be said that CBD3 relied on any encouragement given to Mr Clark. CBD3 did nothing until it executed the Deed of Transfer on 3 July 2008. By that stage, the parties were negotiating for the sale of the Frenchs Forest Land. There is no merit in those circumstances in the proposition that CBD3 spent money in the expectation that the joint venture would proceed to completion.

CBD3's claim based on restitution 88The single paragraph of the FASC that appears to be relevant to a claim for restitution is para 17 which pleads: In the alternative CBD [meaning CBD1] performed work and made expenditure at the request and with the encouragement of the defendant. CBD3's written submissions did not explain the basis of the claim. Mr Galitsky, who appeared for CBD3, said in oral submissions that CBD3 relied on a claim in restitution, although that submission was never developed. 89It is apparent, however, from para 17 of the FASC that CBD3 seeks to bring its claim within a well recognised category of case where the law provides a restitutionary remedy - namely, "the long-established and well-recognised category of cases constituted by claims of work and labour done or money paid at the request of another": Lumbers v W Cook Builders Pty Ltd (in liq) [2008] HCA 27; (2007) 232 CLR 635 at [86] per Gummow, Hayne, Crennan and Kiefel JJ. Relevantly, claims of that type have two important features. First, the work must be done or the money paid at the request of the person from whom recovery is sought to be made. Second, the risks associated with doing the work or paying the money cannot be regulated by a contract between the parties. Again, as the plurality in Lumbers remarked at [79]: It is essential to consider how the claim fits with contracts the parties have made because, as Lord Goff of Chieveley rightly warned in Pan Ocean Shipping Co Ltd v Creditcorp Ltd [1994] 1 WLR 161 at 166; [1994] 1 All ER 470 at 465, "serious difficulties arise if the law seeks to expand the law of restitution to redistribute risks for which provision has been made under an applicable contract". 90Prior to entry into the Asquith PDA on 14 September 2006, the risks associated with work necessary to obtain the DA were governed by the JVA. Clause 12.1 stated that all expenditures in relation to the Development Assets were to be contributed by CBD1. Clause 12.3 stated that MLALC had no obligations to make cash payments to fund the Development. CBD1 was to recover its contibutions to the development from the proceeds of sale. It is plain that it was intended that CBD was to bear the risks of the joint venture not proceeding so far as costs incurred by it were concerned. Clause 2.4 of the Asquith PDA also makes it clear that the parties released one another from all further obligations and liabilities in connection with the JVA. It follows that CBD1 was not entitled to make any claim against MLALC for work that it did in connection with the JVA prior to September 2006. 91Following September 2006, there was no agreement governing the Frenchs Forest Land. Notwithstanding that, CBD1 continued to expend money in seeking to obtain the DA. However, it did not spend that money at the request of MLALC. It spent that money first in the expectation that a PDA would be entered into in respect of the Frenchs Forest Land. Mr Clark's evidence was that he expected NSWALC to give its approval to that PDA if a DA was obtained. CBD1 spent the money in seeking to obtain that approval for its own benefit. It did not spend the money at the request of MLALC. Subsequently, CBD1 anticipated buying the Frenchs Forest Land. However, it was only prepared to do so if the DA was approved. It continued to spend money to enable that to happen. But again, it spent the money for its own benefit, not because of any request by MLALC.

CBD3's claim based on misleading and deceptive conduct 92As I have said, it appears that CBD3 abandoned this claim. 93In any event, the claim cannot succeed. The claim depends on an assignment of the right to bring a claim for misleading and deceptive conduct from CBD1 to CBD3. However, claims for damages for misleading and deceptive conduct are bare rights of action which generally cannot be assigned: Park v Allied Mortgage Corporation Limited (1993) ATPR (Digest) ¶46-105. None of the limited exceptions to that principle (such as assignment by a liquidator) apply in this case.

Orders 94It follows that the proceeding should be dismissed. The plaintiff should pay the defendant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 July 2013

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