Clancy & Anor v Salienta Pty Ltd & Ors

COUNSEL : T G R Parker & S R Burns (Solr) - Appellants I G Harrison SC & A J McInerney - Respondents SOLICITORS : Greaves Wannan & Williams - Appellants Hunt & Hunt - Respondents CATCHWORDS : Proprietary estoppel - Baumgartner equity - Restitution - Relief against forfeiture LEGISLATION CITED : Agricultural Holdings Act 1941 (NSW) Agricultural Tenancies Act 1990 (NSW) Ramsden v Dyson (1866) LR 1 HL 129 Rawson v Hobbs (1961) 107 CLR 466 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Crabb v Arun District Council [1976] Ch 179 Commonwealth v Verwayen (1990) 170 CLR 394 Lim v Ang [1992] 1 WLR 113 Beaton v McDevitt (1987) 13 NSWLR 162 Dillwyn v Llewellyn (1862) 4 De GF & J 517 Ward v Kirkland [1967] CH 194 Olsson v Dyson (1969) 120 CLR 365 Cameron v Murdoch (1986) 63 ALR 575 Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 Vindin v Vindin [1982] 1 NSWLR 618 Baumgartner v Baumgartner (1987) 164 CLR 137 Muschinski v Dodds (1985) 160 CLR 583 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 Stern v McArthur (1988) 165 CLR 489 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 CASES CITED: Makreth v Marlar (1786) 1 Cox 259 Sandeman v Wilson [1880] 1 NSWR Eq 1 Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615 Laird v Pim (1841) 7 M & W 474 Sumpter v Hedges [1989] 1 QB 673 T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (in liq) [1991] VR 610 Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214 Legione v Hateley (1983) 152 CLR 406 Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 Nepean District Tennis Association v Penrith City Council (1988) 66 LGRA 440 Scandinavian Trading Tanker Co AB v Flote Petrolera Ecuatoriana [1983] 2 AC 694 Pitt v Curotta (1931) SR (NSW) 477 Baltic Shipping Co v Dillon (1992) 176 CLR 344 Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 Alati v Kruger (1955) 94 CLR 216 Berry v Mahoney (1933) VLR 314 Carson v Wood (1994) 34 NSWLR 9 Giumelli v Giumelli (1999) 196 CLR 101 DECISION : Appeal upheld in part; Appellant to pay the respondents' costs

Stephen William CLANCY & Anor V SALIENTA PTY LTD & Ors

The appellants claimed an equity in or compensation for work done and improvements made to a farming property, 'Yarrawah'. They based their claim on proprietary estoppel, 'Baumgartner' equity, restitution and relief against forfeiture.

The appellants occupied and farmed the property pursuant to licence agreements entered into in 1992 and 1996. The first of these licence agreements contained an option to purchase that was never exercised.

They also entered into two contracts for sale of the property, the first in 1994 which was never performed or only partly performed, and the second in March 1995. The appellants made some payments of interest but did not complete the 1995 contract.

The appellants have carried out substantial improvements to the property, increasing its value two or threefold.

Salienta commenced proceedings for possession and claimed that any agreement between the parties was terminated by the appellants' failure to make the necessary payments.

The appellants contended that the 1995 contract was not binding and cross-claimed to seek the equitable relief outlined above.

The trial judge held that the contract was binding and rejected any claim for relief based on proprietary estoppel and 'Baumgartner equity'. His Honour did not deal with the claim based on restitution.

(i) per Beazley, Stein and Giles JJA: The appellants had not made out any entitlement to relief based on proprietary estoppel and 'Baumgartner equity'.

(ii) per Beazley, Stein and Giles JJA: The appellants were not entitled to relief against forfeiture.

(iii) per Stein and Giles JJA (Beazley JA dissenting): The appellants were not entitled to restitutionary relief

(1) Appeal upheld in part; (2) Vary the orders made by deleting "defendants" from order 4 and substituting "second defendant". (3) Otherwise appeal dismissed. (4) Appellants pay respondents' costs of the appeal. ******************* THE SUPREME COURT

Stephen William CLANCY & ANOR v SALIENTA PTY LIMITED & ORS

1 BEAZLEY JA: This appeal involves a claim by the appellants for the recognition of an equity in their favour in a farming property called Yarrawah located at Hay in south western New South Wales. The claim is formulated in terms of proprietary estoppel, 'Baumgartner' equity, restitution and for relief against forfeiture. 2 The first appellant (Clancy) is the principal of the second appellant (Rosefarms). The appellants had farmed in the Hay area for many years. It will not always be necessary to distinguish between the appellants for the purposes of these reasons and I will only do so where the issues require it. 3 The first respondent (Salienta) was the registered proprietor of Yarrawah, which it held on trust for the late Neil Forsyth (Forsyth), a well known Melbourne Queens Counsel. The second to fourth respondents are the executors of Forsyth's estate. 4 Forsyth and Clancy met in 1991. In 1992, the parties entered into a licence agreement to occupy and farm Yarrawah and to carry out capital improvements on the property. The appellants were also granted an option to purchase the property. There were subsequent contractual arrangements relating to the sale of the property to which I shall refer in more detail later. By the time Forsyth died in 1997 the appellants had carried out substantial works on the property but no sale had been completed. 5 The appellants' claim relates to improvements they made to Yarrawah in the expectation they would acquire the property by purchase. They allege that the circumstances which eventuated in relation to the proposed purchase and the improvements made in the meantime are such that they are entitled to an equity in the property. They claim the equity should be satisfied by the granting of a charge over the property in their favour or by ordering that the property be conveyed to them. They submitted that the amount to be secured by the charge, or the purchase price which should be paid for the conveyance of the property, should be based on either the cost of the improvements carried out by the appellants on Yarrawah or the increase in value of the property resulting from the improvements.

Factual Background 6 Prior to the appellants occupying and working the property, Yarrawah was dry sheep country comprising some 12,000 acres. By 1997, the appellants' farming efforts, brought about in part by Clancy's expertise in the use of technologically advanced farming equipment, resulted in the property being converted into a well irrigated farm, producing various crops including rice, soy beans, wheat, barley, oats and hay. Cattle continued to be grazed on unirrigated portions of the property or during intervals during cropping.

The Legal Arrangements Between the Parties: The First Licence and Option to Purchase 7 Initially, the appellants occupied and worked the property pursuant to a licence agreement coupled with an option to purchase. The agreement was contained in a letter from Forsyth dated 27 October 1992. Relevantly, it provided for a licence commencing on 1 November 1992 and ending on 30 June 1996. The licence fee was $1,770 per four weeks (approximately $23,000 per annum), payable in arrears. The appellants paid the monthly licence fee under this agreement. 8 Under the licence agreement, the appellants were to carry out capital improvements to the property, as agreed between the parties, and having a value of "not less than $1,000 per week multiplied by the term of the licence". 9 Clause 12 provided for an option to purchase exercisable at any time before 1 July 1996. 10 Clause 13 provided for a structured purchase price as follows: " Purchase Price : The base price will be $1,625,000. It will be increased by: (a) $1,000 for every week which elapses between 1 November 1992 and the date of settlement of the purchase; (b) a further $50,000 if the date of settlement is later than 1 November 1994; and a further $50,000 if the date of settlement is later than 1 November 1995; and (c) any further capital expenditure by the licensor (with the consent of the licensee) between 1 November 1992 and the date of exercise of the option (such as acquisition of further water licences.)" 11 The effect of the licence agreement was that, regardless of whether the option was exercised, the appellants were required to carry out and Salienta would receive the benefit of improvements, to a total value of $200,000. 12 To enable the appellants to fund the capital improvements, Forsyth organised a loan through another of his companies in the sum of $200,000 (the Headingly loan). The appellants utilised the entirety of these funds almost immediately, completing major irrigation works by March 1993 costing about $200,000. Strictly, that meant the appellants had complied with their obligations under the licence in relation to the capital works programme. Notwithstanding that, the appellants continued to carry out major works and purchases for the property.

1994 Contract for Sale 13 On 13 December 1994, Forsyth as vendor, entered into a "Contract for Sale of Yarrawah" (the 1994 contract) with Clancy "or nominee approved by vendor" as purchaser. The purchase price was $2,115,556 payable by four instalments. The "subject matter of sale" was stated to be "Property known as Yarrawah plus all incidental water rights, easements, agreements with neighbours and other associated rights": cl 11. Clause 10 provided that on settlement the vendor would transfer the "issued capital of Salienta" to the purchaser and at that time Salienta's only asset would be Yarrawah. I will refer to the apparent conflict between clauses in the same form as 10 and 11 later. There was a provision that if Rosefarms was not the purchaser, the purchaser would obtain a release of the option to purchase contained in the 1992 licence agreement from Rosefarms. 14 On 13 December 1994 Forsyth also extended the Headingly loan. A term of the extension was that if the principal was not repaid in full by 30 June 1997 Forsyth "may rescind [the 1994 Contract] as if default had been made under that Contract". 15 Apart from possibly the payment of some interest, neither party took any steps under this agreement. No instalments of the purchase price were paid. No transfers were effected.

March 1995 Contract for Sale 16 In March 1995, the parties entered into another "Contract for the Sale of Yarrawah" (the March 1995 contract). Forsyth and Clancy were named as vendor and purchaser respectively. The purchase price had increased from that payable under the 1994 contract to $2,327,111, payable in four twelve month instalments, the first three of $250,000 and the final payment to be the balance between the instalments paid and the purchase price. Interest in specified amounts was payable on specified dates up to the date of the last payment on 30 June 1999. The "property sold" was again stated to be "Yarrawah": cl 11, although cl 13 postulated the same transfer of shares in Salienta as was proposed under the 1994 sale agreement, with Salienta's only asset as at the date of transfer to be Yarrawah. Provision was made for default and rescission. In the case of default of any payment of principal or interest, interest on the unpaid amount accrued at 18 per cent per annum. If the contract was rescinded for default by the purchaser, the vendor was entitled "in any event to 10% of the purchase price as a notional deposit". Clauses 11 and 13 were in substantially the same terms as cls 11 and 10 respectively of the 1994 contract. 17 The trial judge explained the intended operation of clauses 11 and 13 as follows: "The Contract dated March 1995 is quite clear in expressions which establish that Mr Forsyth as beneficial owner was the vendor, the purchaser was Mr Clancy and the subject of sale was the land Yarrawah, together with incidental rights. Clause 13 provided for transfer of the whole of the issued capital of Salienta to the purchaser. On a reading of the whole terms of the document it is clear that Salienta was registered owner of the land and that the transfer of the shares in Salienta was incidental to the main subject matter. It could I suppose have been thought that transfer of control of Salienta while Salienta was still the registered owner was a means of effecting transfer of the land which the parties could adopt; the contract did not provide that they had to adopt those means."

The 1996 Licence Agreement 18 The March 1995 contract itself did not give the appellant a right to occupy the land, and the term of the 1992 licence expired on 30 June 1996. In August 1996 the respondents and Rosefarms entered into a further licence by way of Deed. The license fee payable was one dollar. The licence was directly linked to the March 1995 contract in that the right to occupy was specified to commence on 1 March 1995 and the licence was to terminate upon the earlier of the completion of the March 1995 contract, the date of rescission of the March 1995 contract, or the date of notification of breach of either the licence agreement or the March 1995 contract.

Events Post March 1995 19 The March 1995 contract required that interest in specified sums and on specified dates be paid. The amounts and required dates for payment were:

30 September 1996 $11,635 20 The amounts actually paid were:

September 1997 $11,000 21 Following the signing of the March 1995 contract, both parties engaged their solicitors to draft formal contracts. Negotiations as to the form of contract were protracted and covered numerous issues, including whether the sale would be structured as a sale of land or as a sale of shares in Salienta, and whether the sale would be a terms contract or by way of mortgage back. This process continued for about two years, but no agreed form of contract was finalised. 22 In a letter to Clancy from his solicitor written on 26 June 1995, shortly after the March 1995 contract was entered into, the solicitor observed:

(i) that the interest price specified in the contract was "for the first two years, at least, … very attractive" ;

(ii) that it would be preferable for Clancy to enter into a usual purchase contract with a mortgage back as "[a]t least, in this way, you would gain the benefit of your labours, during the term of the mortgage, in improving the property and any capital appreciation in its value" ;

(iii) that there were significant disadvantages to a purchase on terms contract - in particular, if there was default in payment of the instalments, the payments made were forfeited and the vendor would gain the benefit of any appreciation in value, including the value of any improvements carried out by the purchaser;

(iv) there were disadvantages to Clancy in entering into a contract at a price above fair market value - whether by way of an instalment contract or by way of direct purchase. 23 Clancy's solicitor also queried whether the purchase price had been inflated because of the attractive interest rate. 24 Having referred to these and other issues arising out of the proposed sale in detail, Clancy's solicitor set out the interest rates he had calculated were payable under the terms of the loan and then stated: "I can only assume that you have satisfied yourself that this is a 'good deal' taking into account the effective rate of interest you are paying with the inflated price. If you have not already done so, you should run the figures past your accountant." 25 It appears Clancy communicated with Forsyth sometime after this letter was written, as Forsyth wrote to Clancy on 7 August 1995. It is convenient to reproduce a substantial portion of this letter as it sets out relevant information in relation to the development of the financial arrangements between the parties. The letter stated: "This letter is written in response to your suggestion that it would be desirable to have a record as to how the purchase price for Yarrawah, of $2,327,111, had been arrived at. From the inception of the arrangements between us (originally a licence with option) we had agreed that the price would escalate each year according to when you purchased if (sic): see para. 13 of my letter of 27 October 1992. Early in 1994, when it was apparent that your first substantial rice crop was going to be a success, we began discussing the replacement of the licence/option arrangement with a terms contract of sale. The initial contemplation was that contracts should be exchanged on 1 July 1994 and the balance of the purchase price would be paid on 30 June 1997. On this footing it was agreed that the base price would be $1,888,890 escalated by 4% per annum for the three years, making $2,115,556 in all. … The question has been raised whether it would be appropriate for the amount payable by you to be reduced to some extent if the balance of the purchase price was paid early. I agree that would be so. It does not, however, necessarily follow that any such 'discount' would automatically extend to the full amount of the 4% or 5% as the case might be. Something would necessarily depend upon the circumstances. Already I perceive two factors that should have some weight. One is that I am liable for capital gains tax in respect of the gain upon a 25% interest in the property, and this crystallises upon a sale. Another matter is that the arrangements between us have been formulated as a package so as to provide you with maximum flexibility, and it would seem appropriate that this factor be recognised in the event of any early repayment. I therefore suggest that we leave the matter to be resolved, if ever the occasion arises, in the same spirit of goodwill and fairness that has prevailed between us in the past; and you may be assured that, if it were necessary, any representatives of mine would approach the matter in the same way. … If the sale proceeds upon the basis of a terms contract, and is rescinded upon default, then it would appear to be entirely reasonable in principle that you as purchaser should have the benefit of any growing crop (with an ancillary right to complete the growing …)"

26 The appellant continued to carry out substantial work on the property. This included water storage works carried out from 1996 to 1998. The appellants' expert estimated the cost of these works to be in excess of $700,000. Seven hundred acres on the mid south section of Yarrawah were lasered in 1996 at a cost estimated at $182,158. The laser layout of another three hundred acres was undertaken, at a cost estimated at around $58,000 and a further six hundred acres at a cost estimated at $102,000. Recycling and drainage systems, at a cost estimated at approximately $194,000, and infield channels at an estimated cost of approximately $311,000 were constructed and other substantial works were also carried out. 27 During his lifetime, Forsyth was aware of the nature and extent of the works. He commented on them both orally and in writing from time to time. The oral comments included: "I am very pleased with the way the property is developing." … "I want you to reap the rewards for all of your efforts on Yarrawah." … "I am pleased with the way you are developing the property into a productive enterprise." … "A permanent river pump is obviously essential to the development of Yarrawah." … "It looks very impressive Steve. It should provide more than adequate water supply." … "Are you happy to keep doing all this work? I know we have a clear agreement in principle about the sale and I don't expect to receive the value of the improvements which you are carrying out." 28 In his letters to Clancy and others covering approximately a three year period, both predating and postdating the March 1995 agreement, Forsyth wrote: "18.4.94 [to Clancy's solicitors] I am obtaining a very advantageous price for Yarrawah; the Clancys have provided and will further provide equity in the form of very substantial improvements … there is a high level of trust between us … I am confident that we can negotiate a reasonable solution to any particular problem or unexpected turn of events … I am sending a copy of this letter to Steve. …" … "5.10.95 Forsyth encouraged Clancy to plant belts of Tasmanian Blue Gum trees on Yarrawah, which Clancy did. IS THIS A QUOTE?? … "4.3.96 [to Forsyth's solicitors after the adjoining owner had fenced off part of Yarrawah] I am willing to help Steve do what can reasonably be done to reclaim 'his' land. …" … "10.9.96 [to Edwin Kennon, solicitor for the proposed mortgagee] Steve … has been able to develop the property … Obviously I could not expect to receive the value of all the improvements which he has himself effected." … "28.1.97 [to Clancy] I do very much want you to reap the financial benefits from Yarrawah which your enterprise and industry deserve." … "10.4.97 [to Clancy and his wife] The way in which Yarrawah has been developed has been a great satisfaction to me. … It was a delight to see so much productivity from what was once barren land. I am particularly concerned that both of you should reap the full rewards to which you are entitled for the enormous initiative, perseverance, ingenuity and hard work that you have put into the venture." … "29.5.97 [to Forsyth's solicitors] Steve never gave me any details of the improvements he was contemplating or had completed. However, I did see them whenever I went up, and it is only fair to say that I implicitly, and perhaps even explicitly, gave him carte blanche." … "3.6.97 [to Forsyth's solicitors] I have deleted the reference to giving notice to obtain possession as this is the last thing I would want to do (as I am sure Steve knows very well)."

As a result of the improvements, Rosefarms was able to earn significant income. 29 His Honour found (and there is no dispute) that the improvements were permanent, transformed the nature of Yarrawah and very greatly enhanced its value. His Honour did not however, accept the appellant's expert evidence as to the costs of the improvements, or the extent to which it had increased the value of the property had been increased. Rather, his Honour's finding was: "I do not regard the evidence as enabling me to make a finding more precise than that the improvements have very greatly enhanced the value of Yarrawah, doubling and perhaps trebling its value, and that the cost of the works has probably exceeded the large advantages which have flowed to Mr Clancy and Rosefarms from occupation."

The Legal Proceedings 30 After Forsyth's death, Salienta commenced proceedings for possession of the property, claiming that the licence, under either the March 1995 contract, the 1996 Licence Agreement or deriving from any other source, was terminated. The right to possession was claimed to have arisen from the appellants' breach of the March 1995 contract by their failure to make payments of principal and interest after September 1997 or the repudiation of the contract by letter dated 25 August 1997 from Clancy's solicitor to Forsyth's solicitor. 31 The appellants defended the claim for possession by claiming that the March 1995 contract was not, and was never intended to be, a binding contract. They contended it was incomplete and legally uncertain and that, in any event, it was signed in circumstances where it ought to be set aside. Other technical defences to the validity and enforceability of the contract were raised. The appellants also contended that the agreement was for the sale of shares in Salienta, although I have concluded that nothing turns on that. They cross-claimed against the respondents seeking the equitable relief to which I have earlier referred. They acknowledge that if they do not establish their entitlement to relief they cannot otherwise defend the claim for possession.

Was the March 1995 Contract Legally Binding on the Parties? 32 The appellants contended before the trial judge that the March 1995 contract was not legally binding. They submitted that it should be inferred that this was so because of the later dealings between the parties, especially the protracted negotiations as to the need for, and the form of, a more formal contract. In addition, Clancy asserted in evidence that he did not consider the contract binding "bearing in mind the relationship [he] had with [Forsyth]". 33 In his written submissions to this Court, counsel for the appellants contended that the March 1995 contract lacked the essential elements of a valid contract and was not intended by the parties to be legally binding. Counsel also submitted that the respondents' counsel had, during the course of the trial, expressly conceded that the document was of no legal effect. 34 The trial judge considered that the fact the appellants had made payments under the March 1995 contract "supports the view that that document was then regarded as effective to create an obligation to pay money, and effective to override the previous arrangements". He concluded: "It would have been prudent to enter into a more formal document, and the drafts provided by solicitors illustrate that many subjects had not been addressed with which it is prudent for a contract about such an elaborate matter as the sale of a property of 12,000 acres to deal. … what was under consideration until August1997, through three drafts and much solicitors' correspondence, was putting an established agreement into a more suitable form; however the established agreement remained a binding contract." 35 I agree. The March 1995 agreement had the necessary indicia of a binding contract, even though it was scant on detail. The parties, property and price were clearly specified. It was, on its face, a terms contract. The amount of instalment payments of capital, the amount of interest payments and the respective dates of payment of each were specified. Provision was made regarding default and rescission. 36 The appellants also contended before the trial judge that the contract was a contract for the sale of shares. I have already referred to the trial judge's construction of the apparently inconsistent cls 11 and 13. I agree with that construction. It makes business sense and achieves the object of the transaction, namely the transfer of Yarrawah to the appellants.

Proprietary Estoppel 37 The appellants contend that their claim falls into what might be described as "third category proprietary estoppel" which operates where a party "knows that he is not the owner of the property, but carries out the work on the faith of acquiescence or encouragement by the owner, which leads [the party] to believe that he will receive an interest in the property". It was submitted that the relevant principle supporting the third category was stated by Lord Kingsdown in Ramsden v Dyson (1866) LR 1 HL 129 at 170: "If a man, … under an expectation created or encouraged by the landlord, that he shall have a certain interest [in land], 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." 38 It was submitted that the appellants satisfied these requirements in that:

(i) Rosefarms undertook extensive work and laid out substantial moneys on Yarrawah;

(ii) It did so in the expectation that Yarrawah would come to belong to it; and

(iii) Salienta, through Forsyth, created, encouraged and acquiesced in that expectation. 39 The trial judge held that there was: : "… no room for Proprietary Estoppel when all relevant conduct happened in the context of legally binding contracts under which Mr Clancy and his nominee had rights to take title if they complied with the obligations. …" 40 This passage must be read in context. Earlier, his Honour had stated (jment #79): "At all times there was before Mr Clancy a document which described in clear detail the terms upon which Mr Forsyth was prepared to sell the property; several different documents from time to time, but the proposal before Mr Clancy was always clearly stated in writing. At no time was it reasonable for Mr Clancy to expect that Mr Forsyth would transfer Yarrawah to Rosefarms at any less price than the price stipulated … but in no way was it ever held out to Mr Clancy that Rosefarms could obtain the property for a lower price than Mr Forsyth currently stipulated in writing, or that he could get benefit from his improvements except by buying the property (except, of course, for what he was earning by his operations on Yarrawah)." 41 His Honour found however: "If the facts had been that the Contract dated March 1995 was not legally binding but Mr Clancy wished to complete a transaction to the same effect including its provisions as to price, and Mr Forsyth or his successors had resisted, Mr Clancy and Rosefarms would have had a strong claim for remedies based on Proprietary Estoppel. However the facts are very different." 42 His Honour continued: "From 13 December 1994 onwards and again from June 1995 onwards, the only expectation on which it would be reasonable for Mr Clancy to act in incurring expenditure for improvements, and the only expectation which it could be said was created or contributed to by Mr Forsyth, was an expectation that Rosefarms would own the property and have the benefit of the improvements if the terms in the documents of those dates were carried out, Rosefarms met the obligations expressed in them and did so within the times referred to; all the obligations, including as to the price. This is true whether or not the Contract dated March 1995 was intended to be or was a legally binding contract; I am of the view that it was, but if it were not, it could not reasonably give rise to any expectation which differed from its terms." 43 He concluded: "The only reasonable expectations of advantage to flow from improvements which Mr Clancy could hold related to completing the Contract and taking title under it, and it must then have been obvious that if those things were not done no long-term value would be gained from the improvements. I see no room for the operation of the law relating to Proprietary Estoppel where the rights of parties are established contractually, no matter what acquiescence or encouragement there was." 44 His Honour also rejected the availability of equitable relief even if the March 1995 contract was not binding, stating that the purpose of the document, for the purpose of proprietary estoppel: "…could only be to create expectations according to its terms, including to the term relating to price, a subject of central importance and explicit statement on which Mr Forsyth did not after June 1995 show any flexibility, and was not asked to." 45 The appellants contend that his Honour's finding that the existence of a contract precluded the availability of equitable relief by the application of the principles of proprietary estoppel is wrong as a matter of law. 46 The principles of proprietary estoppel stated in Ramsden v Dyson have been long established. In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (Waltons Stores), Mason CJ and Wilson J stated at 404: "Under that principle a person whose conduct creates or lends force to an assumption by another that he will obtain an interest in the first person's land and on the basis of that expectation the other person alters his position or acts to his detriment, may bring into existence an equity in favour of that other person, the nature and extent of the equity depending on the circumstances. And it should be noted that in Crabb, as in Ramsden v Dyson, although equity acted by way of recognising a proprietary interest in the plaintiff, that proprietary interest came into existence as the only appropriate means by which the defendants could be effectively estopped from exercising their existing legal rights. One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt; see also Thompson. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption." 47 Mason CJ and Wilson J considered that Crabb v Arun District Council [1976] Ch 179 (Crabb) was consistent with the principles of proprietary estoppel applied in Ramsden v Dyson. Crabb was itself a case of promissory estoppel. Relevantly for present purposes their Honours, in Waltons Stores, considered that it lent assistance to the proposition that promissory estoppel "may … extend to the enforcement of a right not previously in existence where the defendant has encouraged in the plaintiff the belief that [the right] will be granted and has acquiesced in action taken by the plaintiff in that belief". (Emphasis added). 48 In The Commonwealth v Verwayen (1990) 170 CLR 394 (Verwayen), Mason CJ said at 413: "… it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness. A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid."

See also Brennan J at 431-2. 49 It is well accepted that in order to found proprietary estoppel it is not essential that the representor should have been guilty of unconscionable conduct in permitting the representee to assume he could act as he did. It is enough if in all the circumstances it is unconscionable for the representor to go back on the assumption which he permitted the representee to make: see Lim v Ang [1992] 1 WLR 113; Verwayen per Deane J. 50 Heydon and Loughlan in their Cases and Materials on Equity and Trusts 1997 (5th Ed) say at 394-395: "Until Waltons Stores … the law appeared to be a collocation of two lines of cases. The first, typified by Dillwyn v Llewellyn (1862) 4 De GF & J 517; [1861-73] All ER Rep 384, related to expenditure on the representor's property encouraged by some representation of benefit. The second line related to expenditure with passive acquiesence by the 'representor'; Lord Kingsdown's summary of the principle in Ramsden v Dyson … is usually cited, though that case was not on its facts an application of the rule … Cases of acquiescence with knowledge will be harder to prove than active encouragement, and will often be less reprehensible. In cases of acquiescence with knowledge there will be no liability unless the improver has made a mistake about his legal rights (Willmott v Barber (1880) 15 Ch D 96 at 105 per Fry J), while in cases like Dillwyn v Llewellyn the representee cannot be said to have made a mistake, except in the sense that was 'mistaken' to rely on the representor's statements of intention." 51 In Beaton v McDivitt (1987) 13 NSWLR 162 McHugh JA observed that the jurisprudential basis of cases such as Dillwyn v Llewellyn is that "[e]quity will not allow a person to insist upon his strict rights when it is unconscionable to do so" and referred to the foundation of the principle as formulated by Ungoed-Thomas J in Ward v Kirkland [1967] Ch 194 at 235 that "it would be unconscionable in the circumstances for a legal owner to fully exercise his rights": see also Kitto J in Olsson v Dyson (1969) 120 CLR 365 at 379. In Finn, Essays in Equity, 1985 at 73 the principle was characterised (more appropriately according to McHugh JA in Beaton v McDevitt) as an "insistence upon rights" being unconscionable in certain circumstances. 52 Counsel for the appellants submitted that his clients were entitled to appropriate relief under these principles because there was "an interest which was promised [by Forsyth] or understood [by the appellants as having been promised]". He contended that in cases of proprietary estoppel, the Court's initial and primary focus is on whether there is "the promise of an interest followed by the doing of the work which generates the equity". The mechanism whereby the interest was to be conveyed to the promisee was, on this submission, subsidiary or secondary. It was apparent from the submission that the mechanism of the conveyance had its primary relevance in the nature and extent of the relief which ought to be granted. 53 Counsel relied on Cameron v Murdoch (1986) 63 ALR 575 and Lim v Ang. 54 Cameron v Murdoch involved, relevantly, an interest in a large farming property owned in partnership with other family members. The plaintiff had farmed and improved the property over a long period of time. Late in the dealings between the parties the plaintiff was granted a lease of the land with an option to purchase. The option was held to be invalid. 55 The trial judge found that representations had been made to the plaintiff (as reported in ((1986) 63 ALR 575 at 595): "that he would in some way be enabled to acquire the … lands and that he acted and abstained from acting upon that footing ie he improved the lands and did not establish himself and family on other lands and that his estate and his beneficiaries thereof would suffer a detriment if the estate is not allowed to purchase the lands at a discount." 56 On appeal to the Privy Council it was accepted by the respondents that the plaintiff had an interest in the land. The matter which remained in issue on the appeal was how that equity was appropriately satisfied. The Committee held at 596: "This is not a case in which it was possible for Brinsden J to quantify the discount on any precise mathematical basis. The 1975 leases are no doubt evidence of the best terms which Alex could then obtain from Dougald by agreement. It does not, however, follow from this that the terms agreed were sufficiently favourable to Alex to satisfy the equity which he had in those lands. … Brinsden J was right to look at all the relevant circumstances in the round and to arrive at a figure for the discount which, in the light of those circumstances, appeared to him to be fair and just." 57 It was submitted that that principle should be applied to the present case, so that, although the March 1995 agreement "might be evidence of the best terms which Mr Clancy could obtain from Mr Forsyth by agreement, … it doesn't follow that it defines the scope of the equity arising from his occupation of the property". 58 The statement in Cameron v Murdoch set out above was made in the context of the equity, arising by application of the principle of proprietary estoppel, having been established. The statement was directed to the appropriate relief necessary to satisfy the equity so established. Here the appellants have to first establish they have an equity which needs to be satisfied. Relevant to the determination of that question is the existence of a valid contract which the appellants repudiated. 59 The appellant's reliance on Lim v Ang can be disposed of briefly. The case involved contracts which were held to be invalid. I have agreed with the trial judge that the 1995 contract was valid. 60 In Cadorange Pty Limited v Tanga Holdings Pty Limited (1990) 20 NSWLR 26 the plaintiff, a company in a group, was held entitled to an equitable lien over a property which it had improved in the expectation that its contract to purchase the land from another company in the group would be completed. The vendor company went into liquidation before completion. 61 In the course of his judgment Young J said at 35: "it must be a rare case in which the court can impose a liability where there was no request or adoption, and where, had the person benefited had any say in the matter, he or she might very well have rejected the offer of benefit. 62 I accept this statement, although obiter, as being correct. As it applies to the present case, the evidence is clear that Forsyth never had it in contemplation that he would be required to grant an interest in the land to the appellants. Rather, the position was the converse. Although Forsyth knew about the work being carried out by the appellants and, it appears, encouraged it, and he was concerned that the appellants got the benefit of it, it is clear that that concern, expressed within the framework of the parties being in a contractual relationship, was that if the appellants did not comply with the contractual obligation to purchase Yarrawah they would lose the value of their work on and improvements to the property. A number of letters from Forsyth made this conclusion inevitable. 63 In my opinion therefore, the appellants have not made out any necessary representation or acquiescence sufficient to ground a proprietary estoppel. 64 Even if I am wrong and there was sufficient acquiescence or encouragement or adequate representation to otherwise ground an estoppel the appellants are immediately confronted by the principle that a party will not be granted relief under the principles of proprietary estoppel whilst the party is in default: see Vindin v Vindin [1982] 1 NSWLR 618; Beaton v McDivitt (1987) 13 NSWLR 162 per Kirby P at 172 and Mahoney JA at 178. 65 Here the appellants failed to complete the contract and continue to fail to do so. In my opinion they have not made out their case for relief under the principles of proprietary estoppel.

The 'Baumgartner' Equity 66 The appellants claim alternatively that they are entitled to equitable relief on the basis of the principles stated by the High Court in Baumgartner v Baumgartner (Baumgartner) (1987) 164 CLR 137. In that case, Mason CJ, Wilson and Deane JJ at 148 referred to: "the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them." 67 Their Honours also referred to the earlier statement of Deane J (with whom Mason J agreed) in Muschinski v Dodds (1985) 160 CLR 583 at 620 that: "… the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do." 68 The appellants contended that the circumstances of the present case satisfy the principle. In particular, they assert that:

(i) there was a joint endeavour for the development of Yarrawah and its purchase by Rosefarms;

(iii) it was never intended that Salienta would retain the benefit of the developments (other than the $200,000 in improvements that Rosefarms was required to undertake under the 1992 licence). 69 In my opinion, the relationship between Clancy and Forsyth and the work carried out by the appellants on Yarrawah cannot be characterised as a joint enterprise or endeavour of the type referred to in Baumgartner or Muschinski v Dodds. Rather, the relationship between the parties was always based in contract. Admittedly, a strong bond of friendship developed between Clancy and Forsyth. But the underlying basis of the relationship always remained in contract and the appellants failed to comply with or fulfil their contractual obligations. 70 In my opinion, the essential bases necessary for the application of the Baumgartner principle have not been made out.

Relief Against Forfeiture 71 The appellants also argued they were entitled to relief against forfeiture, both in respect of the interest payments and in respect of the improvements they carried out. The claim based on relief against forfeiture had not been made before the trial judge, but was argued before this Court. 72 This claim can be dealt with briefly as the availability of such relief depends upon whether there is a provision for forfeiture in the contract. Here, there was no such provision (except in relation to a deemed deposit of ten percent, in respect of which there is no issue). Accordingly, there is no basis for the grant of relief under this head.

Restitution 73 The appellants submitted they were entitled to relief on restitutionary principles whether or not the March 1995 contract was a binding agreement between the parties. They submitted that if the March 1995 contract was of no legal effect, it was an "ineffective contract" (to use the characterisation of Mason & Carter, Restitution Law in Australia (1995) (Mason & Carter)) and Rosefarms was entitled to reasonable remuneration for carrying out the improvements: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221. Alternatively, if the March 1995 contract was of legal effect but "had accordingly been validly terminated", Rosefarms would still be entitled to compensation to the extent to which its improvements had enhanced the value of the land: Lexane Pty Ltd v Highfern Pty Ltd (Lexane) [1985] 1 Qd R 446 at 455-456; Stern v McArthur (1988) 165 CLR 489 at 509. I have reached the conclusion that the contract was of legal effect and had been validly terminated. Accordingly, it is the alternative basis of claimed entitlement which is relevant. 74 It is convenient, for the purposes of providing context to the principles upon which the appellant relies to understand the rights of the parties to a contract which goes off due to the default of one of them. Leaving aside the position of the deposit, where there is no forfeiture provision in the contract the law requires the vendor to repay any instalments paid by the purchaser if, upon its proper construction, the instalments are part payment of the purchase price. Dixon J, in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 explained the operation of this rule at 478: "It is now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract: Mayson v Clouet ([1924] AC 980)." 75 His Honour at 479 referred to this right as being "legal not equitable … [arising] out of the nature of the contract itself". 76 Earlier at 478-479 his Honour explained the manner in which the rights of the purchaser and vendor are adjusted as follows: …where there is no express agreement excluding the implication made at law, by which the instalments become repayable upon the discharge of the obligation to convey and the purchaser has a legal right to the return of the purchase money already paid which makes it needless to resort to equity and submit to equity as a condition of obtaining relief, the vendor appears to be unable to deduct from the amount of the instalments the amount of his loss occasioned by the purchaser's abandonment of the contract. A vendor may, of course, counter-claim for damages in the action in which the purchaser seeks to recover the instalments." 77 Starke J at 470 also characterised as the right to recover instalments of the purchase price where there was no forfeiture provision as a legal right but added: "…and, if it be not a legal remedy, still the equitable remedy is clear and well established". 78 In Williams on Vendor and Purchaser, 3rd Ed, the authors state at 1012 that if a vendor elects to rescind due to a purchaser's breach "he is entitled to take active proceedings in equity to assert his right and to secure entire restitution". They cite Makreth v Marlar 1 Cox 259 as authority for the proposition that a party with a right to rescind may sue in equity to enforce that right "but must make entire restitution" (fn page 1012). 79 The basis upon which part payments of the purchase price were recoverable was also considered by McPherson J in Lexane at 454-455: "The fundamental principle applicable to a vendor who rescinds for breach after receiving payment, wholly or in part, on account of the price is that 'he cannot have the land and its value too': Laird v Pim (1841) 7 M & W 474, 478 … per Parke B. Hence money so paid by the purchaser is recoverable from the vendor. At law it is recoverable as money had and received upon a total failure of consideration where the consideration for which it was paid is the conveyance or transfer that has not taken place: McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457, 477-8, per Dixon J; in equity it is recoverable by proceedings for restitution: … see also 48 CLR 457, 470, per Starke J. … "With [the] exception [of the deposit] money paid on account of the purchase price is repayable if the sale goes off. That includes not only instalments of price (other than deposit) but also interest thereon paid pending completion: McDonald v Dennys Lascelles Ltd (supra); Berry v Mahoney [1933] VLR 314, 317, 323… However, interest in arrears at the date of rescission is regarded as an element in the vendor's damages for breach: Real Estate Securities Ltd v Kew Gold Links Estate Pty Ltd." 80 There is no issue here as to the recovery of instalment payments as the appellants made none, despite the contractual requirement to do so. The question at issue is restricted to whether the appellants are entitled to relief in respect of the improvements which they affected to the property during their period of occupation. It should be noted that on the appeal, the recoverability of interest payments was not argued, although that had been an issue at trial.

Relief in Respect of Improvements 81 I have already referred to McPherson J's statement in Lexane as to the principles relating to the adjustment of the rights between the parties upon discharge of a contract for sale. In relation to improvements his Honour stated at 455: "In addition, the purchaser is entitled to restitution in respect of permanent improvements made to the land while in his possession to be measured by the extent to which the value of that land has been enhanced: Sandeman v Wilson (supra); Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd … ; cf however, Rawson v Hobbs. …" 82 In Stern v McArthur (1988) 165 CLR 489 at 509, Brennan J (obiter) said: "Before Waddell J. the vendors accepted that, if successful, they were bound to allow the purchasers the value of the improvements they had made and they accept that, if successful in this Court, the up-to-date value of those improvements must be allowed. The vendors' acceptance of that obligation reflects a purchaser's entitlement in equity to compensation for the permanent improvements he has made with the vendor's consent while the purchaser was in possession if the vendor should rescind the contract for sale: see Lexane … [at 455] and cases there cited. I respectfully agree with McPherson J. that the measure of that compensation is 'the extent to which the value of that land has been enhanced'." 83 There are a number of cases where a defaulting purchaser has been compensated for the value of improvements, or where the availability of such a claim has been recognised, although, the basis upon which relief has been granted has not always been articulated. 84 In Sandeman v Wilson [1880] 1 NSWR Eq 1 the parties had entered into an instalment contract for the purchase of land and livestock. The purchasers paid the first instalment and went into possession and dealt with the property, selling stock and so on. The second instalment payment was not made and the vendors retook possession of the land and resold it. There was no forfeiture provision relating either to instalment payments or improvements which might have been carried out on the land. The purchasers sought the repayment of the instalment paid together with monies representing the value of improvements they erected on the land. It was held that the vendors had demonstrated that they intended "to keep the purchase money and the property as well. Such a course of proceeding could not be allowed if there was any mode by which the Court of Equity could interfere". The court declared that after appropriate adjustments, the purchasers were entitled to the return of the first instalment of purchase price, "and also the value of all permanent improvements erected by [the purchasers]… whilst in possession". 85 In Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 the plaintiff had entered into an instalment contract to purchase land. The contract provided that upon breach, the deposit and instalments paid were to be forfeited to the vendors. The purchaser paid some instalments and made certain improvements to the land. There was no provision in the contract in relation to the improvements should the contract go off. The purchasers sought relief against forfeiture. The vendors counter-claimed for damages for breach. In granting to the purchasers relief against forfeiture in respect of the instalments paid, Lowe J recognised the distinction in McDonald v Dennys Lascelles in respect of a defaulting purchaser's right at law to be repaid instalments and the entitlement to relief against forfeiture. In formulating the relief including that relating to the vendor's claim for damages, he stated at 123-124: "No point has been made by the parties that an occupation rent should be charged against the plaintiff, since it is conceded that that item is balanced by the interest on outstanding moneys provided for in the contract…There are then broadly, two matters to be brought into account - on the plaintiff's side the amount which it has paid and which the defendants claim to forfeit; and on the other, the damages which the defendants have sustained by the loss of their contract, …. In ascertaining the defendants' damage, improvements made by the plaintiff which increased the value of the land repossessed by the defendants at the time of [acceptance of the plaintiff's breach] should be taken into account ." (emphasis added). 86 In PC Developments Pty Ltd v Revell (1991) 22 NSWLR 615, the Court was dealing with a claim to recover the value of improvements to land in circumstances where there was a clause forfeiting the right to the value, or cost, of improvements. Clarke JA (at 648) was of the opinion that, provided that such a clause was penal in nature, the same principles would apply in the case of a clause forfeiting instalments of purchase money. In an obiter comment at 648, his Honour accepted as correct the proposition put to the Court in argument that: "In the absence of any contractual provision [as to forfeiture] the vendor would be bound, upon the termination of the contract, to compensate the purchaser for the permanent improvements made on the land" 87 In accepting the correctness of this proposition his Honour relied upon the statement of Brennan J in Stern v McArthur at 519: "When a vendor rescinds in exercise of his general law rights, it is not unconscionable for him to take the benefit of the forfeiture which is thereby effected: there is no penalty, for the vendor is bound to refund what the purchaser has paid (other than a genuine deposit) and he is obliged to compensate the purchaser for the permanent improvements made on the land with the vendor's consent to the extent that the value of the land is thereby enhanced . True it is that the vendor is entitled to recover his beneficial interest in the land and, if there be any natural increase in the value of the land, he takes the benefit of the increase. But that benefit goes with the land, whether the ownership of the land passes absolutely to the purchaser or reverts to the vendor. I respectfully agree with Mahoney JA who, in his dissenting judgment, said that there is 'no inequity in such an increase in the value of the land accruing to the vendor rather than to a defaulting purchaser. And this, I think, does not depend on whether the purchaser's rights in land contracted to be purchased is measured by whether specific performance or some other form of relief be seen as appropriate or at what time it is so seen'." (emphasis added) 88 Mason & Carter recognise that a claim may be available to a defaulting purchaser for the value of improvements made to the land. Having discussed the principles relating to restitutionary claims to recover reasonable remuneration (paras 1154 ff), they state at para 1170: "A restitutionary claim analogous to reasonable remuneration may arise through equitable principles. Where a contract for the sale of land is discharged, restitution may be claimed in respect of permanent improvements made to the land while the purchaser was in possession with the consent of the vendor, as a matter to be dealt with by way of adjustment on discharge." 89 The authors refer amongst other decisions to Real Estate Securities Ltd at 123-4; Lexane at 455; Stern v McArthur at 509. 90 The respondents assert that none of these statements provide a basis for the appellants to claim relief. In particular they submit that the obiter statement of Brennan J in Stern v McArthur at 509 and the statement of McPherson J in Lexane are properly characterised within a line of legal authority which deals with relief from forfeiture of part payments. They further submit that in any event, those decisions are distinguishable, as each contained a clause akin to a forfeiture clause and the court will be loath to permit reliance on such a clause where the defaulting purchaser's conduct has not been egregious. Here, it was submitted, the appellants had bluntly refused to perform their obligations, and thus should not be entitled to relief. 91 I do not consider that the respondents have made good either of these submissions. Admittedly, McPherson J does not, in the passage at 455 cited above, expressly draw a distinction between the entitlement to recover the value of improvements where there was a forfeiture provision relating to improvements and the situation where there was no forfeiture provision. It is possible that his Honour's reference to an "entitle[ment] to restitution" relates back to his earlier reference to the equitable entitlement to relief against forfeiture, which he characterises as restitutionary in nature. However, in Lexane itself, the contract did not contain a forfeiture clause in relation to the value of improvements. Further, the authorities upon which his Honour relied were not forfeiture cases. Accordingly, I consider that a proper reading of this passage from his Honour's judgment is that a purchaser who, with a vendor's consent, improves property is entitled to restitutionary relief upon discharge of the contract, regardless whether the discharge is caused by default on the purchaser's part. This reading of the passage in McPhersons J's judgment is consistent with Brennan J's statement at 519 (set out above). Brennan J clearly draws a distinction between the nature of the relief available where there is a forfeiture clause and where there is not. It is also consistent with the rationale which underlies the principles governing the entitlements of parties to a contract which goes off due to the default of one of the parties: see Laird v Pimm; Williams on Vendor and Purchaser. 92 The appellant's conduct cannot be categorised as egregious, nor did they bluntly refuse to perform. There were nearly two years of negotiation before they accepted their inability to find the financial resources to complete. 93 The respondents further submitted that in any event, relief on restitutionary grounds was precluded by the principle in Sumpter v Hedges [1898] 1 QB 673. That case related to a claim by a party in breach as on a quantum meruit in respect of work done and material supplied under a lump sum contract. It was held that a party in breach was not entitled to restitutionary relief as the obligation to pay had not arisen, and, as Chitty LJ noted, there was "… no evidence from which the inference can be drawn that he entered into a fresh contract to pay for the work done by the plaintiff". The rule in Sumpter v Hedges has been criticised and there are suggestions it was wrongly decided (see Mason & Carter at para 1160) but in any event, it does not apply to the claim here. This case involves a claim in respect of improvements carried out outside the contract. In Sumpter v Hedges the claim was in respect of work done under the contract. 94 In my opinion, the appellants were entitled to relief based on the restitutionary principles discussed in Lexane, Stern v McArthur and PC Developments Pty Limited v Revell. Relief 95 The appellants accept that if they are not entitled to equitable proprietary relief, the respondents will have been entitled to possession of Yarrawah since 26 October 19998 and that his Honour's order for a writ of possession should not be disturbed. This is correct, and the appellants' success, on my judgment, on restitutionary grounds does not alter that. They submit however that in grating relief, his Honour made two errors: first in ordering mesne profits against Clancy personally and secondly in ordering an inquiry as to damages. 96 As to the first of these submissions, I agree. Clancy was and is not personally in possession and there was no basis for making an order against him. 97 I do not agree however that his Honour erred in directing that there be an inquiry. That is the usual order in the case of a claim for damages for mesne profits. Further, although the appellants called extensive evidence as to the cost of improvements, that is not the basis upon which they are entitled to relief. The general approach in relation to allowances for improvements has been to value the claim by reference to the enhancement of the value of the land: see Real Estate Securities Ltd at 123-4; Lexane at 455; McArthur at 509; P C Developments at 648. In Rawson v Hobbs (1961) 107 CLR 466 Dixon CJ at 485 held that where the purchaser is not in default the cost of improvements will be the appropriate measure. However, that case was a forfeiture case and does not apply here. In accordance with the principles discussed above, the inquiry should be limited to improvements carried out prior to termination. 98 I would accordingly propose the following orders:

(ii) Orders 4 and 5 of Bryson J be varied so as to provide -

(iii) a declaration that the respondents are entitled to: (a) damages for breach of contract;

(b) mesne profits for the use and occupation by the appellants of the property Rosefarms from March 1995 until the date the appellants vacate the property.

(iv) Order that the matter be referred to a Master to inquire and determine or assess: (a) the amount of damages suffered by the respondents for breach of contract, deducting therefrom the amount referred to in (iv)(b);

(b) the value of improvements carried out upon the property by the appellants up to the date of termination of the March 1995 contract;

(c) the amount payable by the appellants to the respondents for a reasonable occupation fee for the period March 1995 until the appellants left the said premises, making due allowance in favour of the respondents for interest paid under the March 1995 contract, and for the payment of rates, taxes and other proper outgoings.

(v) Direct the appellants to file written submissions in respect of the costs of the appeal and of the hearing in the court below within fourteen days of today.

(vi) The respondents to file any written submissions in reply fourteen days after that date. 99 STEIN JA: I have had the benefit of reading the draft judgments of Beazley JA and Giles JA. This will allow me to express my conclusions in brief form without the necessity to set out any of the essential facts, which are fully discussed in their Honours' judgments. 100 I conclude, as have Beazley and Giles JJA, that his Honour the trial judge was correct to find that the March 1995 agreement was and remained a binding agreement. 101 Likewise, I agree with their Honours that the appellant failed to make out its case reliant on the principles of proprietary estoppel. 102 As to the case of the appellants based on Baumgartner v Baumgartner (1987) 164 CLR 137 and Muschinski v Dodds (1985) 160 CLR 583, I agree that there was no such joint endeavour, venture or relationship as required. The so-called Baumgartner equity claim must fail. 103 That leaves the question of restitutionary relief with respect to the improvements made to the Yarrawah property by the appellants. This claim must, of course, be approached on the basis of the enforceability of the March 1995 contract, given the earlier finding. The contract was repudiated by Mr Clancy and validly terminated by Salienta. The contract contained no provision for forfeiture. 104 With regard to the appellants' claim for recovery of interest payments, I agree with Giles JA that they should be confined to their claim to recover the increased value attributable to the improvements. 105 The case for the appellants on restitution relies heavily on Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446 and to its approval by Brennan J in Stern v McArthur (1987 - 1988) 165 CLR 489 at 509. In Lexane (at 455) McPherson J said that 'the purchaser is entitled to restitution in respect of permanent improvements made' while he is in possession measured by the enhancement in value of the land by reason of the improvements. Brennan J dissented and his remarks regarding a purchaser's entitlement in equity to compensation for improvements are obiter. They do not find support in the other judgments in Stern, save perhaps that of Gaudron J at 533. However, a fair reading of her Honour's judgment leads to the conclusion that she is not endorsing a purchaser's entitlement or right to receive the benefit of any improvements as a matter of principle, and absent an offer to compensate by the vendor. It must be kept in mind that in Stern the vendors offered to allow the purchasers the benefit of any improvements. It was this offer to compensate for the value of the improvements which was taken into account in considering whether there should be relief against forfeiture. See, for example, Mason CJ at 505 and Deane and Dawson JJ at 529. 106 In making reference to Lexane, Brennan J also noted the cases cited by McPherson J therein. I agree with the analysis of those authorities by Giles JA. In Sandeman v Wilson (1880) 1 LR (NSW) Eq 1, it does not appear that the question here in issue was the subject of a judgment by the Court. In Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 consideration of improvements made by the purchasers was in the context of ascertaining the amount of damages to which the vendor was entitled. Rawson v Hobbs (1961) 107 CLR 466 does not appear to provide any particular guidance for the principle argued for on behalf of the appellants. 107 Moreover, in Stern, Brennan J himself does no more than endorse the approach of McPherson J in Lexane and does not examine the basis for the entitlement. Nor for that matter does McPherson J in Lexane. 108 Later cases seem to find a basis in unconscionability (as did Mason CJ in Stern at 505) rather than in any automatic right. For example, T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (In Liq) [1991] 1 VR 610 at 620 - 621. If this is correct, then there is no automatic entitlement in a purchaser to recover from the vendor the expenditure on improvements or the increase in the value of land so brought about. It has to be found to be unconscionable for the vendor to retain the benefits of the improvements without compensating the purchaser. 109 The judgments of Mahoney JA and of Clarke JA in P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615 also speak in terms of unconscionable conduct. As Clarke JA observed at 649, the receipt of a very large windfall by the vendors, partly as a consequence of the improvements, can bespeak unconscionability if they insist on their contract rights. The approach in Revell is also indicative that there is no automatic right or entitlement in the purchaser, as submitted by the appellants. 110 Derrington J took a different approach in Sunstar Fruit Pty Ltd v Cosmo [1995] 2 Qd R 214. His Honour reasoned that there had to be circumstances of unjust entitlement by the vendor. Again, this is contrary to the existence of an automatic right or entitlement in the purchaser for compensation in respect of improvements. 111 I agree with Giles JA that for Salienta to pay Rosefarms the increased value of Yarrawah which is attributable to the improvements, it must be either on the basis of granting relief against unconscionable conduct (Legione v Hateley (1983) 152 CLR 406) or by reason of the doctrine of unjust entitlement. I am unpersuaded that the purchaser has an automatic entitlement to recovery from the vendor of the moneys expended on improvements or the added value to the land. 112 Salienta knew of the improvements made by Mr Clancy. Mr Forsyth encouraged and acquiesced in the improvements being made. However, there is in the circumstances of the present case no unconscionability in Salienta receiving the benefit of the improvements without compensating Rosefarms for the increased value of Yarrawah. The alternative claim of unjust enrichment must also fail on the facts. 113 In the result, I agree with the reasons of Giles JA and with the orders which he proposes. 114 GILES JA: The essential facts are set out in the judgment of Beazley JA, which I have had the advantage of reading in draft. I draw upon those facts, without repeating them, in what follows. 115 It is desirable, in my view, to understand in a little more detail the claims in the proceedings. The pleadings were amended more than once, and I refer to their final forms. 116 The respondents proceeded on the basis that the appellants' rights in relation to Yarrawah were contractual rights as purchaser under the March 1995 contract and as licensee under the 1996 licence agreement. Mr Forsyth was the vendor under the March 1995 contract and Salienta was the licensor under the 1996 licence agreement. Mr Clancy was the purchaser under the March 1995 contract and Rosefarms was the licensee under the 1996 licence agreement. By their letter dated 25 August 1997 Mr Clancy's solicitors had asserted that the March 1995 contract was not binding and enforceable because Mr Clancy and Mr Forsyth were still negotiating to a formal contract, and from September 1997 no payments had been made under that contract. Treating this as a repudiation of the March 1995 contract, by notices dated 22 December 1997 addressed globally to Mr Clancy and Rosefarms the respondents terminated the March 1995 contract and Salienta terminated the 1996 licence agreement. 117 Salienta then brought the proceedings against Mr Clancy and Rosefarms, contending that the March 1995 contract and in consequence the 1996 licence agreement had been validly terminated. The pleadings later included, apparently as a fall back position, that Mr Clancy and Rosefarms had been in possession of Yarrawah with Salienta's leave and licence terminable on reasonable notice, and that there had been termination of this possession by the notices of 23 December 1997. (A later notice was also relied on, but for present purposes it can be ignored.) It was alleged that Salienta had suffered loss because Mr Clancy and Rosefarms had refused to give up possession. Salienta claimed declarations as to valid termination and entitlement to possession, an order for possession of Yarrawah, and damages. The claims were framed as claims against Mr Clancy and Rosefarms without distinguishing between them. 118 By their separately pleaded defences the appellants both said that for a number of reasons, including that the parties had been still negotiating to a formal contract, the March 1995 contract was not a binding and enforceable contract, alternatively that it was liable to be set aside. In Rosefarm's defence it was said that the purported termination of the 1996 licence agreement was therefore of no effect. The appellants both said that in any event the contract was a contract for the sale of the shares in Salienta, so that Salienta could not sue for its breach. In Mr Clancy's defence it was said that he had validly terminated the March 1995 contract on a technical ground under conveyancing legislation, but this was not taken up in Rosefarms' defence. In Rosefarms' defence it was said that provisions of the Agricultural Tenancies Act 1990 rendered the notice of 23 December 1997 ineffective to terminate its possession because Yarrawah was being used for share farming. 119 The reasoning underlying these defences appears to have been to answer on Mr Clancy's part Salienta's claim for damages so far as there was a claim for damages for breach of contract, and to contend on Rosefarms' part that, either because there had not been the triggering event of termination of the March 1995 contract or because of the Agricultural Holdings Act, the 1996 licence agreement remained on foot and Rosefarms was still entitled to possession of Yarrawah. 120 In its defence Rosefarms also relied on proprietary estoppel, in the terms - "14. In further answer to the whole of the Statement of Claim so far as it concerns Rosefarms, Rosefarms says: (a) At all material times from December 1992 onwards, Salienta led the Second Cross-Claimant [sic] ('Rosefarms') to expect that: (i) Rosefarms would not be evicted from 'Yarrawah'; and (ii) Rosefarms would be permitted to purchase 'Yarrawah' at fair value (having regard to the improvements effected by Rosefarms). (b) In reliance on that expectation Rosefarms carried out certain improvements to 'Yarrawah' and thereby increased its value. (c) At all material times, Salienta encouraged, or was aware of and did not prevent, the carrying out of those improvements. (d) By reason of the above matters: (i) the Plaintiff is estopped (by representation or alternatively by convention) from claiming possession of 'Yarrawah'; and/or (ii) Rosefarms is entitled to a charge over, and a conveyance of, 'Yarrawah' and consequently the Plaintiff is not entitled to possession of 'Yarrawah'."

121 By their joint cross-claim against the respondents the appellants repeated the contentions that the March 1995 contract was not a binding and enforceable contract or was liable to be set aside and that Mr Clancy had validly terminated it. The pleading of this last contention included that by force of the conveyancing legislation Mr Clancy was entitled to the refund of all payments made pursuant to the contract, notwithstanding that in para 4 of the cross-claim it was alleged that Rosefarms had made payments as provided for in the contract. The relief claimed relevant to these matters was a declaration that the March 1995 contract was of no legal effect, an order that it be set aside, or a declaration that it had been validly terminated by Mr Clancy; a declaration that the December 1997 termination of the March 1995 contract was of no effect; "Damages, or alternatively equitable compensation"; and an order that the respondents "reimburse to Rosefarms the payments made by Rosefarms as provided for in the March 1995 document". (The payments were in fact not as provided for in the contract, but clearly enough under it; I will continue to refer to them in the appellants' words.) The relief claimed did not include a claim by Mr Clancy for the refund of payments made pursuant to contract. 122 The appellants' cross-claim also raised under the heading "Proprietary Estoppel" - "14. At all material times from December 1992 onwards Salienta led Rosefarms to expect that: (a) Rosefarms would not be evicted from Yarrawah; and

(b) Rosefarms would be permitted to purchase "Yarrawah" at fair value (having regard to the improvements effected by Rosefarms). 15. In reliance on that expectation, Rosefarms carried out certain improvements to "Yarrawah" and thereby increased its value. 16. At all material times, Salienta encouraged, or was aware of and did not prevent the carrying out of those improvements. 17. By reason of the above it would be contrary to equity and good conscience for Salienta to refuse: (a) to grant to Rosefarms a charge over Yarrawah to the extent of: (i) its expenditure on the improvements referred to in paragraph 15; or PARTICULARS Rosefarms has expended in excess of $2M in improving and developing Yarrawah including labour costs and costs associated with the use of its capital equipment to carrying out the improvements.

Further particulars will be provided upon completion of Rosefarms' evidence as to its expenditures by 15 October 1998 as directed by Hodgson CJ in Eq on 1 October 1998. (ii) the increase in value of Yarrawah attributable to those improvements: PARTICULARS Value of Yarrawah as improved by Rosefarms $3,400,00.00

Value of Yarrawah if no improvements had been carried out by Rosefarms $ 724,810

$2,675,190.00 (b) to convey Yarrawah to Rosefarms on payment of the difference between the fair market value of Yarrawah and the amount the subject of the charge. PARTICULARS (i) Particulars will be provided upon completion of the evidence of expenditures presently being compiled. 18. Rosefarms consents to the imposition of the following terms on any order for the conveyance of it to Yarrawah; (a) Rosefarms will pay to Salienta the difference between the fair value of Yarrawah and the amount secured by the charge referred to in sub-paragraph 17(a) ('the conveyance price'); (b) Salienta may set any obligation to repay the sums referred to in paragraph 4 off against the conveyance price; (c) Rosefarms will pay such interest on the conveyance price for the period prior to the payment of such price as the Court considers just; (d) should Rosefarms fail to pay the balance of the conveyance price and any interest thereon with [sic] 90 days of the delivery of judgment (or such further time as it granted by the Court), its entitlement to a conveyance of Yarrawah will cease."

123 The sums the subject of para 18(b) of the cross-claim were the payments made by Rosefarms as provided for in the March 1995 contract. The relief claimed relevant to these paragraphs of the cross-claim was - "GA. A declaration that Rosefarms is entitled to a charge over Yarrawah for: (a) its expenditure on improvements; or (b) alternatively, the increase in the value of Yarrawah attributable to improvements carried out by it. GB. A declaration that Rosefarms is entitled to a conveyance of Yarrawah on payment of the difference between the fair market value of Yarrawah and the amount the subject of the charge." 124 The trial judge said that there were two principal issues in the case, and described them thus (para [22]) - "The first revolves around the defendants' principal case based on Proprietary Estoppel. It is claimed that Salienta's conduct created an expectation that the defendants would not be evicted but would be permitted to purchase Yarrawah at a fair value having regard to the improvements they effected, that in that expectation the defendants carried out improvements, and that as a result Salienta is estopped from claiming possession and the defendants are entitled to purchase Yarrawah at a fair value having regard to the improvements which Rosefarms effected; or if not, is entitled to an equitable charge over the property. The other principal issue revolves around the defendant's contention that the Contract of March 1995 does not establish the rights of the parties; and that it was not intended to have legal effect, and that, if it had legal effect, the defendants should be relieved in equity against it." 125 His Honour concluded that the March 1995 contract was binding and enforceable, and was a contract for the sale of Yarrawah not for the sale of the shares in Salienta. He rejected the defence of termination by Mr Clancy, and held that Mr Clancy had repudiated the contract (at one point he referred to repudiation by Mr Clancy and Rosefarms) and that the respondents had terminated the contract and the 1996 licence agreement by the notices of 23 December 1997. He rejected the defence founded on the Agricultural Tenancies Act. As to proprietary estoppel, after a detailed consideration of the history of the parties' relationship his Honour concluded that it was not unconscionable for the respondents to rely on Salienta's legal title to and right to possession of Yarrawah and on the termination of the March 1995 contract. Although there was much more explanation of this, his Honour's reasons included (para [87]) - "I see no room for Proprietary Estoppel when all relevant conduct happened in the context of legally binding contracts under which Mr Clancy and his nominee had rights to take title if they complied with the obligations. If these were not binding they had much the same effect to define what expectations it would be reasonable to hold and act on about the interest which would be conferred and the circumstances in which it would be conferred." 126 His Honour noted that the claim against Mr Clancy personally for damages under the March 1995 contract was not pressed, but held that Salienta was entitled to damages for mesne profits against Mr Clancy and Rosefarms for the period from when the claim for possession was first made in the proceedings. He ordered an inquiry into the amount of those damages. He dismissed the appellants' cross-claim. 127 At the time of the appeal many of the issues at first instance had fallen away, but others had emerged or at least changed in nature. The issues on appeal went to - (a) whether the appellants could resist Salienta's claim to possession of Yarrawah on the basis of, or obtain orders against the respondents for, the so-called equitable relief described in the following paragraphs; and

(b) if the respondents were entitled to possession of Yarrawah, whether Salienta should have damages for mesne profits - (i) at all; or (ii) against Mr Clancy as well as Rosefarms.

128 The appellants said that there should be equitable relief pursuant to proprietary estoppel, under a Baumgartner equity (Baumgartner v Baumgartner (1987) 164 CLR 137), or by way of restitution. 129 The relief described pursuant to proprietary estoppel was a charge over Yarrawah for either Rosefarms' expenditure on improvements or the increased value of Yarrawah attributable to such improvements, less an allowance for Rosefarms' occupation of Yarrawah, and an order permitting Rosefarms to purchase Yarrawah for the difference between its current value and the amount of the charge. This relief had to be relief in favour of Rosefarms and against Salienta. 130 The relief described under the Baumgartner equity was a charge over Yarrawah for either Rosefarms' expenditure on improvements or the increased value of Yarrawah attributable such improvements, less an allowance for Rosefarms' occupation of Yarrawah. This also had to be relief in favour of Rosefarms and against Salienta. 131 As to restitution, the relief described depended on whether the March 1995 contract was a binding and enforceable contract. There was a degree of confusion in the appellants' position. 132 If the March 1995 contract was not binding and enforceable, in the appellants' written submissions it was said that Rosefarms was entitled to payment by Salienta of reasonable remuneration for carrying out the improvements; in the oral submissions this was described as in the nature of a quantum meruit, and also as an entitlement to be paid the amount spent on Yarrawah. However, in the written submissions it was also said, apparently as something separate from the other relief, that if the March 1995 contract was of no legal effect there should be a declaration to that effect and judgment in favour of Rosefarms for $173,198.57 being the payments made as provided for in that contract: this was referred to as restitution of the money paid as money had and received. In the oral submissions it was said that if there was restitution of this money it was accepted that an "allowance" would have to be made to Salienta for Rosefarms' occupation of Yarrawah for the period covered by these payments. All this relief was relief in favour of Rosefarms, in the case of the reasonable remuneration or amount spent against Salienta and in the case of the payments as provided for in the March 1995 contract against Mr Forsyth's executors. There was no question of a charge over Yarrawah. 133 If the March 1995 contract was binding and enforceable, it was said that there was an entitlement to recover the increased value of Yarrawah attributable to the improvements with an allowance in favour of the respondents for Rosefarms' occupation. The relief was relief in favour of Rosefarms and against Salienta, and again there was no question of a charge over Yarrawah. 134 The use of the equitable relief to resist Salienta's claim to possession of Yarrawah was indirect, in that no relief was proposed destructive of the claim but it was said that possession should not be given to Salienta until Rosefarms had been able to take advantage, if it wished, of the order permitting it to purchase Yarrawah pursuant to proprietary estoppel. It was not said that if the March 1995 contract was not binding and enforceable the basis for termination of the 1996 licence agreement was unavailable, and that for that reason alone Salienta's claim to possession of Yarrawah should fail. Unenforceability of the March 1995 contract came into the appellants' case because, as earlier noted, unenforceability of the contract was the ground for recovery by way of restitution of one or more of a reasonable remuneration for carrying out the improvements, the amount spent on the improvements, and the payments for which it provided. The only challenge to the March 1995 contract was that it was not intended to be binding and was uncertain. The appellants did not accept that, if the contract was binding and enforceable, that was fatal to the equitable relief pursuant to proprietary estoppel or under a Baumgartner equity. 135 The so-called equitable relief as described in the appeal can not all be readily seen in the appellants' cross-claim. In the cross-claim there was a claim to recovery of the payments made as provided for in the March 1995 contract, but perhaps only under the conveyancing legislation. Claims to recovery of a quantum meruit and, otherwise than by proprietary relief, for the amount spent on the improvements were at best obscure. Recovery of the increased value of Yarrawah attributable to the improvements was claimed only by proprietary relief, by way of the charge. The appellants' case on appeal ranged more widely. At the hearing of the appeal this was expressly without objection from the respondents. In supplementary submissions delivered with leave, the respondents said that the monetary relief originally claimed was limited to the payments as provided for in the March 1995 contract, and that the restitutionary claim in relation to the value of the improvements was outside that pleaded and the subject of evidence. This protest must defer to the respondents' stance at the hearing of the appeal. 136 The basis for the wider challenge to the order for damages for mesne profits was that Salienta had attempted to quantify its claim for mesne profits at the trial, had failed satisfactorily to establish the amount of its entitlement, and should not have been given a second chance by the ordering of an inquiry. The basis for the narrower challenge was that Rosefarms, not Mr Clancy, had been in possession of Yarrawah, so that any order should be made only against Rosefarms.

The March 1995 Contract 137 The trial judge said (paras [56]-[59]) - "56 The legal effect of the Contract dated March 1995. Preparation of the Contract dated March 1995 followed Mr Clancy's coming to the view that he could not make a payment of $250,000 on or before 30 June 1995, and it would seem telling Mr Forsyth that this was so. Mr Clancy's evidence shows that he relied on himself in deciding whether he could make payments. 57 It was contended that the intention that the Contract should not be binding should be inferred from later dealings, and from the openness of the parties to discussion of terms for a more formal arrangement. Further Mr Clancy has asserted in evidence that he did not consider it binding "... bearing in mind the relationship I had with Neil" (t126, l7). The behaviour of the parties to it shows that there was room in their intentions for negotiation and modification; and the contemplation was clear that a more formal document would be entered into. 58 Mr Clancy ceased to make weekly payments in accordance with the earlier arrangements in March 1995; from that date he made payments in accordance with the March 1995 document. The first interest payment of $61,635 was paid in July 1995. This supports the view that that document was then regarded as effective to create an obligation to pay money, and effective to override the previous arrangements. Payments broadly in accordance with that document continued until September 1997. One payment was made several weeks after Mr Forsyth's death; thereafter they stopped. Mr Clancy was unable to explain why the payments ceased and said he did not recall why that was. 59 Some things which well ought to have been attended to were not attended to. On the purchaser's part stamp duty should have been paid but was not. The Contract dated March 1995 generally speaks at an imprudently simple level and does not deal appropriately with complexities such as the water rights and the transfer of shares in Salienta. It would have been prudent to enter into a more formal document, and the drafts produced by solicitors illustrate that many subjects had not been addressed with which it is prudent for a contract about such an elaborate matter as the sale of a property of 12,000 acres to deal. In my view what was under consideration until August 1997, through three drafts and much solicitors' correspondence, was putting an established agreement into a more suitable form; however the established agreement remained a binding contract. There is no evidence of any express arrangement which established that the Contract dated March 1995 was not intended to be binding. In my finding the Contract dated March 1995 was binding and was intended to be."

138 Although not expressly submitting that the respondents should be held to it, the appellants said that his Honour overlooked that the respondents had conceded that the March 1995 contract was unenforceable. They referred to a sentence in the respondents' written submissions at the trial stating, "Salienta does not contend that the document constituted an enforceable agreement". 139 When the sentence is read in context, there was no such concession. It would be remarkable, if that had been the respondents' position, for the trial to have devoted much time to the enforceability of the March 1995 contract and for the trial judge to have made a finding in the manner set out above. 140 The written submissions were in reply to the appellants' written submissions, which by arrangement or direction were delivered first. The appellants' submissions were in support of the proprietary estoppel. In the course of supporting the proprietary estoppel, the appellants said that it was unclear what use Salienta sought to make of "the 1995 Document", and went on to argue that it had no legal effect because it was not intended to be binding and was uncertain. 141 In the submissions in reply, and as part of their argument that the appellants had not made out their case based on proprietary estoppel, the respondents said - "127. The use which Salienta seeks to make of this document is not unclear. The document and its terms provided a significant proportion of the factual matrix or context within which the parties operated. Reference has already been made to the significant way in which Rosefarms conformed with the interest payment schedule set forth in clause 5 of the document. It also formed the basis of subsequent versions of draft contracts formulated by Forsyth in a series of attempts to meet Rosefarms' requirements for its purchase of the property. Salienta does not contend that the document constituted an enforceable agreement . Rosefarms' compliance with the terms of the document, however, constituted a significant representation by it to Forsyth that Rosefarms intended to purchase the property and explains Forsyth's actions referred to in detail in paragraphs 20 to 31 of the defendants' submissions. 128. It is not to the point to describe the 'contract' as one which would have been void for uncertainty. The matters referred to in paragraph 43 of the defendants' submissions are no more than either an attempt by Forsyth to provide alternative bases upon which Rosefarms could commit itself to the purchase or a reflection of Forsyth's avowed intention to act in the reasonable interests of the defendants. Even if the parties did not consider the document to be binding it clearly had the significance earlier referred to in these submissions." [Emphasis added] 142 The appellants delivered submissions replying to the respondents' submissions. They did not seize upon a concession that the March 1995 contract was unenforceable. Instead, they recognised and took issue with other parts of the respondents' submissions in which a binding contract had been referred to, and continued to argue that the March 1995 contract had no legal effect, beginning the argument - "Of course, despite the frequent reference in the Plaintiff's submissions, to an 'agreement' between Forsyth and Clancy (paragraphs 40, 44) - even a 'clear and unambiguous' one (paragraph 102) - there actually never was a binding contract between the parties for the purchase of Yarrawah. Each of the 1992 'option', 1994 'contract' and 1995 'contract' was void for uncertainty, or not intended to create immediate legal relations, or both. Throughout the period from early 1994 to Forsyth's death both parties were engaged in pre-contractual negotiations. … " 143 It is plain that in the so-called concession the respondents were understood as saying only that for the purposes of the appellants' case on proprietary estoppel it did not matter whether or not the March 1995 contract was enforceable, so the respondents did not argue that it was enforceable. After all, the termination of the 1996 licence agreement for which the respondents contended was principally founded on the March 1995 contract being effective in law, and there was other debate over whether the contract was liable to be and had been avoided by Mr Clancy or had been validly terminated by him. The trial judge found against the proprietary estoppel whether or not the March 1995 contract was enforceable. 144 Even though the appellants did not expressly submit that the respondents should be held to the so-called concession, the matter was raised in the appeal and in a rather obscure manner was relied on by the appellants short of that submission. It should be made clear that the reliance, whatever it was, was misplaced. 145 The March 1995 contract was described as a contract for the sale of Yarrawah. It named the parties, the property and the price, and provided (at least ostensibly) for instalment payment of the purchase price and for default and rescission. While it was lacking in the detail to be expected in a contract for the sale of a large farming property, that did not significantly tell against it when the parties had entered into earlier less than professional contracts, including a rather similar contract for the sale of Yarrawah (the 1994 contract for sale), which appeared to be intended to be legally binding. Each contract followed detailed discussion between Mr Clancy and Mr Forsyth as to price and terms. Mr Clancy's evidence that he did not consider the March 1995 contract binding bearing in mind the relationship he had with Mr Forsyth would have to be taken with a grain of salt, but in any event from the occasion for the March 1995 contract and its terms it is in my view apparent that it was intended to be binding. 146 This is confirmed, in my view, in two ways. First, Mr Clancy (in fact Rosefarms) made payments in accordance with the March 1995 contract rather than the 1994 contract for sale, initially exactly so although later not in the required amounts. Secondly, the 1996 licence agreement included a definition of "the Contract", being "the Agreement dated March 1995 for the sale of the Land by Forsyth to Clancy or any subsequent Agreements for the sale of the Land between the Licensor as registered proprietor acting on the direction of Forsyth and the Licensee as Clancy's nominee", and recited that "Pursuant to the Contract Forsyth has agreed to sell the Land to Stephen William Clancy (Clancy) or his nominee". The 1996 licence agreement was signed by Mr Forsyth, and was executed under its common seal by Rosefarms with Mr Clancy attesting as director. The trial judge found that Mr Clancy had a full opportunity to consider its terms and obtain advice about its implications before Rosefarms' execution, and said that, although Mr Clancy sought to disavow it and gave evidence to the effect that he did not know its contents and did not intend that Rosefarms be bound by it, there was no basis in substance on which it could be held not to be binding on Rosefarms as its deed. The recital in the 1996 licence agreement is cogent evidence that the March 1995 contract was intended by Mr Forsyth and Mr Clancy to have legal effect. 147 I first address the submission that the March 1995 contract failed for uncertainty; deficiency in its framing short of such failure is material also to whether it was intended to be binding. It was said that the March 1995 contract was uncertain in two respects. It referred in general terms to incidental water rights, easements, agreements with neighbours and other associated rights; but these could be ascertained and uncertainty resolved: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436-7. It referred to Mr Forsyth as the vendor, when Salienta was the owner of Yarrawah, and contained the clause providing for transfer of the issued capital of Salienta to the purchaser with Yarrawah as Salienta's only asset; but the intention of the parties could be found in construing and applying the contract (ibid), and the trial judge correctly found that the subject of the sale was the land rather than the shares. Mr Forsyth controlled Salienta, he promised to cause Yarrawah to be transferred to Mr Clancy or Mr Clancy's approved nominee, and the shell of Salienta was to be transferred to Mr Clancy or his nominee as well as the land. I do not accept that there was uncertainty fatal to the contract. 148 Undoubtedly there was extensive correspondence between the solicitors for the parties in the period after March 1995 in which they sought to arrive at a formal contract of sale. 149 On 26 June 1995 Mr Clancy's solicitors sent him a lengthy letter seeking instructions on many matters relevant to such a contract: the question of sale of the land or the shares was amongst them. On 18 August 1995 Mr Forsyth's solicitors sent a draft contract and draft mortgage documents to Mr Clancy's solicitors. In the draft contract Salienta was the vendor of Yarrawah and Mr Clancy was the purchaser; the price was $2,327,111 with no deposit; and rather than the instalments of the March 1995 contract there was to be normal completion with vendor finance of $2,077,111 and a mortgage to a company of Mr Forsyth. 150 Mr Clancy's solicitors commented on the draft contract in a letter to Mr Forsyth's solicitors dated 15 September 1995, expressing some concerns about the purchase and requesting many alterations to the draft. The letter included - "It is confirmed that our respective clients have agreed that a Contract for Sale is to issue providing for settlement in the normal course (we would suggest eight weeks after exchange) with a first registered mortgage to secure the loan of $200,000.00 from Headingly Farm Contractors Pty Ltd to Rosefarms Pty Ltd. We would not want time to be of the essence in regard to settlement."

151 The process continued, with the solicitors referring to their clients, and there was discussion of the draft contract at a conference between the solicitors and attended by Mr Clancy and his accountant on 24 November 1995. It seems that the process then slowed, and in a letter to Mr Clancy dated 15 July 1996 Mr Forsyth said - "This letter is to set out the current position agreed between us in relation to Yarrawah. Basically, we are still proceeding in accordance with the March 1995 Contract of Sale signed by both of us. However, it has been agreed that Rosefarms Pty Ltd, rather than you personally, should be the purchaser. Rosefarms Pty Ltd continues in occupation. I confirm that it has the authority of Salienta Pty Ltd and me (if any such authority is necessary) to grant licences to others (and in particular, to Bald Hill Quarries Pty Ltd) to occupy and farm the property. You have provided me with draft documents setting out the terms of the arrangements between Rosefarms Pty Ltd and Bald Hill Quarries Pty Ltd, and I have no objection to them. Perhaps it is also as well to record that the present intention of the parties is to proceed with reasonable expedition to enter into a formal contract of sale (our solicitors considering that my own drafting is somewhat amateurish) followed quite soon by a transfer of the property and a mortgage back. Of course the licences referred to in the second paragraph will be dependent on your own rights, so that in the event of rescission of the contract upon default, or enforcement of the rights of a mortgagee, the rights of the licensee would be at an end."

152 By a letter to Mr Clancy of the same date Mr Forsyth recorded "where we have got to in our financial arrangements, which now diverge a little from the Contract of Sale dated March 1995". Payment of the instalment of $250,000 due on 30 June 1996 was deferred, with interest running at 18 per cent per annum. Mr Clancy would be giving a first mortgage to secure $1,000,000 in priority to the mortgage to Mr Forsyth's company, in consideration for which additional interest would be paid. It was suggested that the two letters of 15 July 1996 be sent to the solicitors "with a view to getting matters moving again". 153 By a letter to Mr Clancy's solicitors dated 9 September 1996, Mr Forsyth's solicitors sent replacement special conditions for the draft contract and fresh draft mortgage documents. In a letter at this time to the solicitors for the prospective first mortgagee, apparently written to support Mr Clancy's application for outside finance, Mr Forsyth said that - "Although the formal Solicitors' Contract is only just being finalised, Rosefarms/Steve and I have had a clear agreement in principal [sic] about the sale for a very long time (probably, indeed, a binding agreement if it came to the point) … .

The Contract of Sale makes clear what he will be paying me on settlement - $200,000 on account of a separate development loan; $250,000 off the $2.3M purchase price: and some miscellaneous occupancy charges and interest totalling about $75,000. This will leave owing to me a little over $2M." 154 Correspondence between the solicitors continued concerning the draft contract and draft mortgage documents. In a letter dated 2 December 1996 Mr Forsyth told his solicitors of "a new financing regime" agreed with Mr Clancy - "The essence of it is that he has no obligation to pay any principal until 30 June 2002. He will pay interest being amounts previously agreed plus 18% per annum on the various amounts of $250,000 that, under our previous arrangement, were due on 30 June 1996, 1997 and 1998, after 30 June 1998 he will pay interest at the rate of 18% per annum on the whole amount (the $2.3M odd purchase price plus the $200,000 loan presently in existence from Alnwick to Rosefarms) unless it is renegotiated. I have expressed my preparedness in principle to consider a lower rate of interest, depending up the circumstances at the time, which include, then-current interest rates, the value of Yarrawah, whether interest has been paid with reasonable promptitude, and so forth … Steve is now anxious to proceed promptly with signing a contract and settlement. So, of course, am I …. ". 155 A further draft contract was sent by Mr Forsyth's solicitors to Mr Clancy's solicitors under cover of a letter dated 24 January 1997. The letter included that Mr Forsyth was ill and that he "considers the completion of this transaction to be a matter of urgency". The solicitors were asked to advise when it was anticipated that the contract may be exchanged and whether Mr Clancy would be able to complete within four weeks from that date. By this time it had become apparent that outside finance could not be obtained. The draft contract provided that the entire price of $2,327,111 was to be secured by a mortgage to Mr Forsyth's company, the principal to be repaid on 30 June 2002 with interest payments in the interim. 156 In a letter to Mr Clancy's solicitors dated 18 March 1997 Mr Forsyth's solicitors noted that Mr Forsyth had been having various telephone discussions with Mr Clancy, and said - "We understand that Mr Clancy is endeavouring to put together the cash that will be needed to complete the purchase. In the meantime Mr Forsyth has attempted to impress upon Mr Clancy the importance of entering into the Contract as submitted to you rather than relying on the contractual arrangements which might arise from the contract note exchanged between the parties some time ago. The health of Mr Forsyth has in the short term improved but he still remains most anxious to settle the contractual arrangements with your client which he believes to be as much in the interests of your client as in the interests of the vendor. We would be pleased if you could advise us of your current instructions in the matter."

157 A change came with the letter from Mr Clancy's solicitors to Mr Forsyth's solicitors dated 2 May 1997. Its substance was that the "repayment regime" in the draft contract was unduly harsh, and that Mr Clancy had focussed on "the deal proposed" and, after speaking to his accountant, had realised that it was "unachievable by him". It was said that Mr Clancy wanted the deal - " … rewritten in a way that: (a) is achievable by him and will enable him to repay some of the principle so that refinancing, at some future time, is a realistic option; and (b) more closely resembles the arrangements made under the documents headed 'Contract for Sale of "Yarrawah"' bearing date March 1995 ('the 1995 document')." A detailed proposal was then put forward, and the letter concluded - "Should your client agree to our client's proposal which, essentially is the original deal without the principal repayments; our client would have a reasonably good chance of making a go of the property with your client achieving a good price and a reasonable return on his investment. Should your client not agree, our client will face almost certain ruin which, of course, is in no one's interests." 158 The letter in reply from Mr Forsyth's solicitors dated 31 July 1997 took issue with much of this letter, and demanded some payments said to have fallen due. It concluded - "In addition, our client requires that the purchaser enter into the contract as submitted to you or in the alternative, performs in accordance with the terms of the March 1995 contract. If your client elects not to enter into the most recent contract, it should be aware that the following amounts of principal are now due and payable: (I) $250,000.00 originally payable on 30 June 1996 under the March 1995 contract. (II) $250,000.00 payable on 30 June 1997 under the March 1995 contract.

(III) $200,000.00 repayable to Alnwick Pty Ltd on 30 June 1997. Our client reserves its position with regard to interest on overdue payments. If your client fails to proceed as demanded in this letter, it leaves no alternative other than for Alnwick Pty Ltd to commence proceedings in relation to the outstanding debt of $200,000.00. We understand that your client has received a requisition from the Office of State Revenue with regard to the 1995 contract. As previously advised, our client considers that a binding contract was entered into at that time in relation to that document. We would have thought there were good prospects of the fine applicable to the stamp duty being remitted on the basis that your client entered into the contract most recently submitted and paid the duty applicable to that contract. Negotiations have now been protracted and the purchaser cannot expect the vendor to permit those negotiations to continue indefinitely. Our client regrettably wishes it to be made known to the purchaser that the time has come for it to perform in accordance with its contractual obligations or otherwise to face the actions that will flow." 159 This letter appears to have produced a letter from Mr Clancy to Mr Forsyth and his wife dated 12 August 1997. Mr Clancy said that he felt "that the recent negotiations for the purchase of 'Yarrawah' have been quite unproductive", and that he welcomed the opportunity "to explain my position regarding 'Yarrawah'". In what followed he argued for the purchase of Yarrawah for $2,400,000 less "a modest $1,200,000 on account of my contribution", with either partial or complete vendor finance. He said that it was "pointless dwelling on the various agreements that Neil has put before me from time to time". As the trial judge observed, Mr Clancy made many assertions which were contentious, and indicated by the letter that he was not prepared to treat or continue to treat the March 1995 contract as binding on Rosefarms. 160 In a further letter to Mr Clancy's solicitors dated 21 August 1997, Mr Forsyth's solicitors affirmed their client's position that the March 1995 contract was binding and enforceable. They said that their client had been prepared to consider alternative arrangements but "at the date of this letter no agreement has been reached to release your client from the enclosed Contract". Confirmation was sought that Mr Clancy remained bound and would perform the obligations set out the in March 1995 contract. 161 The confirmation was not forthcoming. In a letter to Mr Forsyth's solicitors dated 25 August 1997, Mr Clancy's solicitors said, after expressing astonishment that it was seriously contended that the March 1995 contract was binding and enforceable and debating some of the history, that Mr Clancy denied that the contract was binding on him. It was also said, "Further, we formally put you on notice that Rosefarms Pty Limited will seek, in the appropriate forum, an order for compensation for the value of the improvements made to 'Yarrawah'." 162 In my opinion, consideration of these events amply supports the trial judge's conclusion that what was under consideration was putting an established agreement into a more suitable form, with the established agreement remaining a binding contract. It is not likely that the parties would have left for so long a formal contract unless they had intended to be bound in the meantime to the March 1995 contract, and the letters of 15 July 1996 and 2 December 1996 in particular clearly reflect that there was a binding contract although one subject to agreed change in the formal contract. Some agreed changes for the formal contract were arrived at, others were under consideration, but underlying the correspondence and the dealings between Mr Clancy and Mr Forsyth which it evidenced was the March 1995 contract, referred to as a contract for sale. 163 The appellants relied on some particular matters in the correspondence. First, in a letter to his solicitors dated 26 September 1995, responding to some of the comments of Mr Clancy's solicitors in their letter of 15 September 1995, Mr Forsyth observed that Mr Clancy would probably not be able to pay stamp duty until he had received the proceeds of a rice crop. It was suggested that this showed unconcern about payment of stamp duty which in turn showed that there was no contract on which duty was payable. The context was payment of stamp duty prior to settlement, and in an earlier letter Mr Forsyth had said that he was willing to accommodate Mr Clancy in deferring the payment of stamp duty "so far as it can properly be done": neither limb of the suggestion is warranted. Secondly, in a letter to his solicitors dated 4 March 1996 Mr Forsyth said that he and Mr Clancy had agreed to defer "execution of any contract" until after a rice crop had been harvested and even until the proceeds were at hand. It was suggested that this showed that there was no binding contract until the execution of a contract. The contract in question was the formal contract, then to be immediately completed, and the same letter recorded that Mr Clancy had asked Mr Forsyth to defer payment of the $250,000 "due on 30 June 1996" and that Mr Forsyth had agreed provided interest was paid. The dealings between Mr Clancy and Mr Forsyth were clearly, in my view, on the basis of a binding existing contract to be replaced by a formal contract. 164 The three classes of case outlined in Masters v Cameron (1954) 91 CLR 353 at 360-1, and the fourth class of case recognised in Sinclair, Scott & Co v Naughton (1929) 43 CLR 310 at 317 (see Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd (1986) 40 NSWLR 622 at 628), are well known. The evidence is against this being a case where the intention of the parties (objectively ascertained - see Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97023) was not to make a concluded bargain at all unless and until they executed a formal contract. It was a case in which the parties were content to be bound immediately by the terms which they had agreed upon while expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms. Even though they contemplated, even partially agreed on, other terms for the substituted contract, in the absence of the substituted contract the original terms of the bargain remained binding.

Proprietary Estoppel 165 The appellants founded their claim on the statement of Lord Kingsdown in Ramsden v Dyson (1866) LR 1 HL 129 at 170 - "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."

Lord Kingsdown said that in these circumstances a court of equity would "interfere in order to prevent fraud", and that "either in the form of a specific interest in the land, or in the shape of compensation for the expenditure, a Court of equity would give relief, and protect in the meantime the possession of the tenant". His Lordship continued, however (at 171) - "If, on the other hand, a tenant being in possession of land, and knowing the nature and extent of his interest, lays out money upon it in the hope or expectation of an extended term or an allowance for the expenditure, then, if such hope or expectation has not been created or encouraged by the landlord, the tenant has no claim which any Court of law or equity can enforce."

166 Lord Cranworth's statement of principle in the same case was more confined, involving mistaken belief as to present ownership (at 140). Lord Kingsdown dissented in the result in Ramsden v Dyson, but his statement has since been recognised on many occasions. It was approved by the Privy Council in Plimmer v Wellington Corporation (1884) 9 App Cas 699. His Lordship's speech was considered and applied in, for example, Inwards v Baker (1965) 2 QB 29 and Crabb v Arun District Council (1976) Ch 179. 167 In Waltons Stores (Interstate) Pty Ltd v Maher (1988) 164 CLR 387 at 404 Mason CJ and Wilson J said that under the principle of proprietary estoppel applied in Ramsden v Dyson - " … a person whose conduct creates or lends force to an assumption by another that he will obtain an interest in the first person's land and on the basis of that expectation the other person alters his position or acts to his detriment, may bring into existence an equity in favour of that other person, the nature and extent of the equity depending on the circumstances. And it should be noted that in Crabb , as in Ramsden v Dyson , although equity acted by way of recognising a proprietary interest in the plaintiff, that proprietary interest came into existence as the only appropriate means by which the defendants could be effectively estopped from exercising their existing legal rights. One may therefore discern in the cases a common thread which links them together, namely the principle that equity will come to the relief of the plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt ; see also Thompson . Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption."

168 In the words of Brennan J in Waltons Stores (Interstate) Pty Ltd v Maher at 419 - "The element which both attracts the jurisdiction of a court of equity and shapes the remedy to be given is unconscionable conduct on the part of the person bound by the equity, and the remedy required to satisfy an equity varies according to the circumstances of the case."

What is essential is unconscionability. If on the faith of an expectation created or encouraged by the defendant the plaintiff expends money on the defendant's land, and it would be unconscionable in the circumstances for the defendant to assert his legal ownership of the land without recognition of the expenditure, a court of equity may give a remedy to the plaintiff. The remedy may be by compelling the defendant to give effect to the expectation. It need not be so: for example, it may be that the plaintiff's equity will be satisfied by a charge over the land for the expenditure. 169 The expectation put forward by the appellants, as the expectation created or encouraged by the respondents on the faith of which they had expended money on improving Yarrawah, was that Yarrawah would come to belong to Rosefarms. The expression of the expectation was important to the appellants' argument. The expectation as pleaded had been that Rosefarms would be permitted to purchase Yarrawah at fair value, having regard to the improvements it had made. The expectation put forward on appeal was even more general, that Yarrawah would come to belong to Rosefarms, and the argument included that how it would come to belong to Rosefarms was of no consequence in considering unconscionability. 170 It may be accepted that there was a general expectation that Yarrawah would come to belong to Rosefarms, and for present purposes I do not think it matters that the expectation may have been, or included, that Yarrawah would or might come to belong to Mr Clancy as distinct from Rosefarms. But I do not think that such an expectation fully or accurately states the true position. 171 Under the first licence and option to purchase the appellants, as I will refer to them without distinguishing between Mr Clancy and Rosefarms, were obliged to carry out capital improvements to Yarrawah to a total value of approximately $200,000. Improvements to that value were made by about March 1993, and to the knowledge of Mr Forsyth the appellants continued to spend money on improvements to Yarrawah. However, the parties then entered into the 1994 contract and the March 1995 contract, effectively replacing the option to purchase. Under each of the documents the appellants would come to own Yarrawah, together with the benefit of the improvements they had made and would make, in return for an agreed purchase price. The parties also entered into the 1996 licence agreement under which the appellants would lose their entitlement to occupy the property if they did not complete the purchase of Yarrawah. As the trial judge said - "At all times there was before Mr Clancy a document which described in clear detail the terms upon which Mr Forsyth was prepared to sell the property; several different documents from time to time, but the proposal before Mr Clancy was always clearly stated in writing. At no time was it reasonable for Mr Clancy to expect that Mr Forsyth would transfer Yarrawah to Rosefarms at any less price than the price stipulated. Different prices were stipulated from time to time. When there were movements, they were upward. The amounts and times of payments were renegotiated; but in no way was it ever held out to Mr Clancy that Rosefarms could obtain the property for a lower price than Mr Forsyth currently stipulated in writing, or that he could get benefit from his improvements except by buying the property (except, of course, for what he was earning by his operations on Yarrawah)."

172 In my view a fuller and more accurate statement of the expectation is not just that Rosefarms would come to own Yarrawah, but that Rosefarms would come to own Yarrawah if it purchased it by paying the purchase price from time to time agreed. The appellants did not purchase Yarrawah by paying the purchase price. On the contrary, as the earlier discussion in these reasons shows Mr Clancy repudiated his or Rosefarms' contractual obligations. 173 The appellants submitted that this was an incorrect assessment of the expectation. It was not legitimate, they said, to include in the expectation the condition that Rosefarms (or Mr Clancy) should pay the purchase price from time to time agreed. Payment of the purchase price was no more than the way the interest held out to the appellants would come to them, and did not qualify the expectation; put another way, it was necessary to address the expectation held out to the appellants in the event that they did not pay the purchase price. And the expectation in that event, the appellants said, gave rise to the proprietary estoppel. Hence, as earlier noted, the appellants' argument included that how Yarrawah would come to belong to Rosefarms was of no consequence in considering unconscionability. 174 I do not think this can be accepted. The submission required that it be postulated that Rosefarms (or Mr Clancy) did not pay the purchase price for Yarrawah. It was said that even in that event there was an expectation, held out or encouraged by Mr Forsyth, that Yarrawah would come to belong to Rosefarms. That could be so if Mr Forsyth were to give Yarrawah to Rosefarms, or to sell it to Rosefarms for a price other than the price agreed from time to time - for example, as in the original pleading at a fair value having regard to the improvements made from time to time. The arrangements (to use a neutral word) for the sale of Yarrawah at agreed prices belied the expectation, particularly where the 1996 licence agreement contemplated that the March 1995 contract might be rescinded and that Rosefarms' licence would thereupon terminate. This was consistent only with Rosefarms having no interest in Yarrawah, and not even a right of occupation, if it (or Mr Clancy) did not pay the purchase price. Indeed, Mr Clancy agreed in cross-examination that he "never had any expectation that Yarrawah would come to Rosefarms in any other way … than by its purchase from Salienta". 175 The appellants relied on matters outside the arrangements. They suggested that, as well as expressing pleasure from time to time about the improvements being made to Yarrawah, Mr Forsyth had said that he did not expect to receive the value of the improvements and wanted Mr Clancy to have their benefit. According to Mr Clancy, when he and Mr Forsyth first discussed the purchase and sale of Yarrawah in 1992 he told Mr Forsyth that the rent Mr Forsyth wanted could not be justified unless there were improvements to increase the income from the property, and when he said he "was not going to improve the property if we don't end up with it" Mr Forsyth replied "That's fine". Mr Clancy agreed in his evidence that he meant that he would not improve the property if he did not get a chance to buy it. There was evidence that at one time Mr Forsyth said to Mr Clancy, "Are you happy to keep doing all this work? I know we have a clear agreement in principle about the sale and I don't expect to receive the value of the improvements which you are carrying out. Do you want to bring forward the purchase?"; and that at another time Mr Forsyth said, "I want you to reap the rewards for all your efforts on Yarrawah". 176 Further, the appellants suggested that Mr Forsyth had conveyed the same in some of his letters to Mr Clancy or to the appellants' solicitors. In a letter to Mr Clancy dated 28 January 1997 Mr Forsyth said, "I do very much want you to reap the financial benefits from Yarrawah which your enterprise and industry deserve". In a letter to Mr Clancy and his wife dated 10 April 1997 Mr Forsyth said, "I am particularly concerned that both of you should reap the full rewards to which you are entitled for the enormous initiative, perseverance, ingenuity and hard work that you have put into the venture". 177 All these were in the context of purchase of Yarrawah under one of the arrangements. Mr Forsyth may well have wished to see the appellants obtain the benefits of the improvements, but only by their purchasing Yarrawah pursuant to the contract from time to time in force. That, indeed, is tolerably clear in the exchange in which Mr Forsyth asked Mr Clancy whether he was happy to keep doing all the work: doing the work was directly linked with having "a clear agreement in principle about the sale", and it was because of the agreement that Mr Forsyth did not expect to receive the value of the improvements. The same emerges from another exchange of which Mr Clancy gave evidence, in which Mr Forsyth asked if Mr Clancy was "comfortable about doing all this work if you don't own the property as yet" and offered to "bring forward" the purchase. The exchange is not consistent with Mr Clancy receiving the benefit of doing the work if the purchase was not completed. 178 I do not think this evidence supports an expectation that Rosefarms would come to own Yarrawah otherwise than by completing the purchase and paying the purchase price. Nor, although the appellants did not put their proprietary estoppel case in this way, does it support an expectation that Rosefarms (or Mr Clancy) would in some manner be compensated for the money spent on improvements if the purchase of Yarrawah was not consummated. The improvements were being made at Rosefarms' (or Mr Clancy's) risk if it (or he) was unable to complete the purchase. It must not be forgotten, also, that in the meantime the appellants were gaining income from the farming of Yarrawah, income flowing from the improvements they made. 179 In the letter to Mr Clancy of 26 June 1996 his solicitors said that under an instalment contract, if the purchaser defaulted "the vendor is able to take back the property and gain the benefit of any appreciation in its value (including improvements carried out by you)". This may have led to the correspondence about an immediately settleable contract, ultimately without agreement and with Mr Clancy wishing to stay with an instalment purchase. There was no response or other assertion that Mr Clancy had been led to believe that if Rosefarms or he defaulted in the purchase it or he would nonetheless be able to purchase Yarrawah at some other price, or be compensated in some way for the expenditure on improvements. 180 In the letter from Mr Clancy's solicitors of 2 May 1997 one of the reasons for the repayment regime being unduly harsh was said to be that Mr Clancy had "invested a huge amount of money and effort into improving 'Yarrawah'." The response in the letter of 31 July 1997 was that the obligation to make improvements in the first licence agreement and option to purchase was a quid pro quo for the low licence fee, that if the purchaser did not proceed with the purchase the benefit of the improvements would remain with the vendor, and that the arrangements had been "reflected in the various documents exchanged between the parties without any departure from those agreed principles". Although Mr Clancy's letter of 12 August 1997 to Mr Forsyth and his wife included it was unreasonable that he should "spent my own money on improvements to 'Yarrawah' which I now have to buy back", and asserted an "original understanding of the fact that I would be credited with the value of the improvements on the property …", there was no credible evidence of a basis for the asserted understanding, which in any event presupposed completion of the purchase. 181 Mr Clancy agreed that at no earlier time had he suggested the unreasonableness to Mr Forsyth. He said that the understanding came from the first licence agreement and option to purchase, but was unable to point to any part of the document so providing. 182 I am unable to see that there is any unconscionable conduct on the part of the respondents in insisting on their legal ownership of Yarrawah and their consequent entitlement to possession. The appellants could not expect to come to own Yarrawah unless they paid for it in accordance with one of the agreements from time to time in force, or to receive the benefit of the money spent on improvements (other than by way of increased return from farming the property as licensee) unless they purchased it in accordance with one of those agreements; they did not spend the money on improvements on the faith of the expectation put forward in the appeal. Again to cite from the reasons of the trial judge (paras [83]-[87]) - "From October 1992 until the parties ceased to act on the basis of the Option at some time from December 1994 from June 1995, the only expectation on which it was reasonable for Mr Clancy to act was that if he exercised the Option within the time available, and incurred and met the obligations which came with exercising the Option, he would have the property including the benefit of the improvements which he was carrying out; he had no reasonable basis or an expectation that he would get the benefit of the improvements in any other way. From 13 December 1994 onwards and again from June 1995 onwards, the only expectation on which it would be reasonable for Mr Clancy to act in incurring expenditure for improvements, and the only expectation which it could be said was created or contributed to by Mr Forsyth, was an expectation that Rosefarms would own the property and have the benefit of the improvements if the terms and the documents of those dates were carried out, Rosefarms met the obligations expressed in them and did so within the times referred to; all the obligations, including as to the price. … All of Mr Forsyth's acts of acquiescence and encouragement occurred in the context of express arrangements, reliance on which is entirely sufficient to explain the conduct of Mr Clancy and Rosefarms in occupying and improving the land. For the period during which the parties acted on the Option the rights under it were a sufficient source of remedies and protection against incurring loss by carrying out the improvements. The value of the improvements could be realised by purchasing the land in exercise of the option and would be lost if that were not done; so much was then obvious. At later stages any expectation which it would be reasonable to rely on and could be the source of equitable remedies must have related to the Memorandum of 13 December 1994 and then from June 1995 onwards to the Contract dated March 1995. From June 1995 onwards the Contract dated March 1995 and expectations of advantages to be obtained under it were the only reasonable bases upon which Mr Clancy and Rosefarms could rely for protection in respect of improvements. The only reasonable expectations of advantage to flow from improvements which Mr Clancy could hold related to completing the contract and taking title under it, and it must then have been obvious that if those things were not done no long-term value would be gained from the improvements. … In these circumstances it is in my judgment in no way unconscionable for Salienta and Mr Forsyth's successors to rely on Salienta's legal title to the land, its legal right of possession and on the termination of the contract dated March 1995."

183 The appellants relied on Cameron v Murdoch (1986) 63 ALR 575, Lim Teng Huan v Ang Swee Chuan (1992) 1 WLR 113 and Cadorange Pty Ltd v Tanga Holdings Pty Ltd (1990) 20 NSWLR 26 to exclude or minimise the significance of the agreements in considering unconscionability. 184 In Cameron v Murdoch one member of a family, Alex, farmed and built a home on land of a member of the family partnership, Dougal. He alleged that he did so in reliance on representations by the other members of the family that he would always have the use and occupation of the land and eventually would obtain its ownership, whether by gift, inheritance or purchase at a price which would reflect his role of farming and improving the land and having regard to the sense of family obligation and justice. It was found that there was a representation that he would in some way be enabled to acquire the land, and that he acted and abstained from acting upon that footing in various ways. Accordingly, it was held that he had an equity in the land arising out of a proprietary estoppel, and that the equity could most appropriately be satisfied by giving him the right to purchase the land at a discount. 185 In 1975 Alex had been granted two leases of the land, for terms of 5 years and with options to purchase. In other proceedings it was held that the options to purchase were void for uncertainty. When considering whether the figures in the leases, updated to take account of inflation, could be used in arriving at the discount, it was said (at 596) - "The 1975 leases are no doubt evidence of the best terms which Alex could then obtain from Dougal by agreement. It does not, however, follow from this that the terms agreed were sufficiently favourable to Alex to satisfy the equity which he had in those lands." An assessment of the discount by looking at the circumstances "in the round" and arriving at a figure which appeared to be fair and just was approved. 186 The appellants submitted that Cameron v Murdoch showed that there could be an equity under the principles of proprietary estoppel even though the plaintiff's possession of and expenditure of money on land was referable to a legal agreement with the owner of the land. However, the 1975 leases were not treated as material to the existence of the equity. They were treated as material to the calculation of the discount. The representation made to Alex was made well prior to 1975, in about 1948 (see Cameron v Murdoch (1983) WAR 321 at 352-61 esp at 360), and he acted on it well prior to 1975. The leases were evidence of the representation and part of his acting on it (ibid at 358). Cameron v Murdoch was a wholly different case from the present case. 187 In Lim Teng Huan v Ang Swee Chuan the land belonged beneficially to the plaintiff and the defendant in equal shares. The defendant decided to build a house on the land, and began construction. During construction the parties entered into an agreement under which the plaintiff acknowledged that the construction was with his consent, and agreed to exchange his interest in the land for other land which the defendant expected to acquire. The agreement was void for uncertainty, because the land to be provided by the defendant by way of exchange for the plaintiff's interest was not ascertainable. It was held that it would be unconscionable for the plaintiff to go back on the assumption which he had permitted the defendant to make, an assumption that on payment of compensation the defendant would become the owner of the plaintiff's interest in the land. The appropriate remedy was transfer of the plaintiff's interest in the land to the defendant on payment of half its present value. 188 The agreement had recited that the defendant had constructed the house on the land with the plaintiff's consent, and that the parties had agreed to the exchange for which it then purported to provide. It was accepted that the recitals could be evidence of the parties' intentions even if the agreement was void for uncertainty, but it was submitted that there was no evidence that the defendant had relied on the agreement or recitals in it when he proceeded with the construction of the house, so that one of the necessary ingredients for an estoppel was missing. The submission was rejected - "Although the defendant did not give direct evidence of such reliance, the sole purpose of the agreement was to regularise the positions so that the defendant's house would be built on land to which he was solely entitled: the inference that thereafter the defendant proceeded in reliance on that agreed arrangement is inevitable … ". (at 118) 189 This case does not support the appellants. The agreement was unenforceable, but the recitals were relied on to establish an equity by which the defendant was put in a position approximating that in which he would have been had it been enforceable. At best for the appellants, if the March 1995 contract had been unenforceable the reasoning might have enabled them to obtain a transfer of Yarrawah on payment of the purchase price stated in that contract. That was not the appellant's case, and the appellants had unequivocally repudiated the March 1995 contract. 190 In Cadorange Pty Ltd (in liquidation) v Tanga Holdings Pty Ltd Cadorange twice agreed to sell land to Tanga, both companies being under the control of the same person. The first agreement was rescinded by consent in order to make the second agreement. The second agreement was either rescinded by consent or was invalid under the Companies Code. During the currency of the agreements Tanga spent money on the land. The question was whether Tanga could recover its expenditure in the liquidation of Cadorange. 191 The expenditure on the land had been made because the common controller, and so both companies, believed that by virtue of the first agreement Tanga would come to own the land: it was intended that it would erect a building and then lease the building to Cadorange. Tanga argued that there had been acquiescence by Cadorange in its expenditure on the land whereby it could recover "by virtue of the principle of acquiescence, sometimes called proprietary estoppel" (at 34). It was said, however, that the common controller knew the true situation and chose to incur the expenditure on the basis that the transfer of title was a technicality, and that there was no representation encouraged by Cadorange that Tanga would benefit from expenditure on the land, because (at 35) - " … it is difficult to maintain the proposition that there has been a representation or acquiescence by a company in a group towards another member of the group or person connected with them if there has not been a formal resolution. It can hardly be said that the contract itself was a formal resolution, because if the expenditure was made by the claimant under the contract, that was not as a result of a misrepresentation that benefit would inure to the claimant by the spending of money. Rather, the claimant thought it would benefit by having the contract completed in due course and charging rent as the proprietor in fee simple of the land ." (Emphasis added) 192 A declaration was nonetheless made that Tanga had an equitable lien over the proceeds of sale of the land. The basis was a very narrow one (at 40) - "It seems to me that as the matter really is one of unconscionability and as there are some precedents on which the claimant can rely, I am justified in holding that it is in this case unconscionable for the liquidator to hold on to the proceeds of sale, including the increment caused by the claimant's efforts, without compensating the claimant. Perhaps this case advances the law of restitution a little further in the direction it has been progressing in the last decade, but, if that is so, so be it. In my view, at least in some cases, if there is an inter-company transaction which engenders an expectation that a contract will in due course be completed, and pursuant to that expectation a company in the group expends money on land belonging to another company in the group and then that other company goes into liquidation and the liquidator sells the land with the benefit of those improvements, it would be against the conscience of the company in liquidation to take advantage of the windfall without compensating the company which expended the money. Accordingly, in my view, an equitable lien exists." 193 I do not think that Cadorange Pty Ltd v Tanga Holdings Pty Ltd assists the appellants. The present case is not concerned with an inter-company transaction where the vendor goes into liquidation and can or does not complete the sale. It is a case in which the parties were relevantly at arms length and the purchaser refused to complete the contract by payment of the purchase price. The part played by the contract in relation to unconscionability in Cadorange Pty Ltd v Tanga Holdings Pty Ltd is quite different from the part played by the agreements in the present case. 194 In my opinion, therefore, the claim pursuant to proprietary estoppel was correctly rejected by the trial judge.

Baumgartner Equity 195 In Baumgartner v Baumgartner it was decided that a house held in the name of one party to a de facto relationship was held on trust for the two parties in the proportions in which they had contributed their earnings to its acquisition, subject to a charge for the first party's initial contribution. Mason CJ and Wilson and Deane JJ, with whose approach and reasons Toohey J and Gaudron J generally agreed, considered that assertion of an entire beneficial interest amounted to unconscionable conduct which attracted the intervention of equity and the imposition of a constructive trust (at 149). It was said (at 148) that the intervention of equity could be attracted pursuant to - " … the general equitable principle which restores to a party contributions which he or she has made to a joint endeavour which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them.

Their Honours cited from the judgment of Deane J (with whom Mason J agreed) in Muschinski v Dodds (1985) 160 CLR 583 at 620, in which his Honour said that - " … the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so … ".

196 In his separate reasons Toohey J rested his agreement on the pooling of earnings for the purposes of the parties' joint relationship and the subsequent failure of the relationship (at 152). In her separate reasons Gaudron J observed that the acquisition of the land and the subsequent building of the house constituted a joint undertaking designed to further the joint relationship, and that the substratum of that relationship and undertaking was removed without attributable blame (at 157). 197 The appellants submitted that there was a joint endeavour between Rosefarms (through Mr Clancy) and Salienta (through Mr Forsyth) for the development of Yarrawah and its purchase by Rosefarms; that the joint endeavour had failed; and that it was not intended that Salienta should enjoy the benefit of the improvements, other than the initial improvements to the value of approximately $200,000. So, they submitted, equity should intervene and impose a charge in their favour. 198 The trial judge did not specifically deal with a claim by the appellants under a Baumgartner equity. The appellants' pleading did not allege a joint endeavour. The written submissions provided to the trial judge were before us, and they did not clearly assert a Baumgartner equity distinct from the claim pursuant to proprietary estoppel. 199 The relationship between Mr Clancy and Mr Forsyth and their respective companies was not that of parties to a joint endeavour akin to the joint endeavours in Muschinski v Dodds and Baumgartner v Baumgartner. It was a commercial relationship, although with personal regard and friendship, regulated by long negotiations and a succession of agreements. Each of the parties had his or its own interests, those of Mr Clancy and Rosefarms being to buy Yarrawah and in the meantime make money from farming it and those of Mr Forsyth and Salienta being to sell Yarrawah. The separate interests did not make up a joint endeavour because Yarrawah was common to them, or because Mr Forsyth was happy to see success on the part of Mr Clancy. They were selfish interests, quite different from the congruent interests of the parties to a de facto relationship in securing accommodation for themselves and, where applicable, their family. Further, the relationship did not come to an end without attributable blame, or in circumstances in which it was not intended that one party should not be advantaged over the other. It came to an end when Mr Clancy and Rosefarms repudiated their obligations towards Mr Forsyth and Salienta in circumstances in which, for the reasons earlier discussed, it was known that Salienta would have the benefit of the improvements and there was no unconscionability on its part in taking that benefit. 200 The principle identified in Baumgartner v Baumgartner is founded on unconscionable conduct. It is not sufficient to point to a relationship and characterise it as a joint endeavour which has failed. The so-called Baumgartner equity may properly be not a separate principle but a manifestation, in particular circumstances, of a proprietary estoppel (or of a more general doctrine of estoppel by conduct, if such comes to be recognised: see Giumelli v Giumelli (1999) 196 CLR 101 at 112-3). 201 Carson v Wood (1994) 34 NSWLR 9, to which the appellants referred as an illustration of a Baumgartner equity "in a much more commercial context", was a case of pooling of resources to carry out a joint business venture, but in any event was determined by regard to general equitable principles and on the ground that unconscionable conduct warranted the imposition of a constructive trust (see at 17-18). It is necessary to establish unconscionability, to which the nature of the relationship and the manner and consequences of its ending are material. For reasons already set out, there was not unconscionability in the present case, and labelling the relief a Baumgartner equity does not improve the appellants' position.

Restitution 202 As has been seen, the appellants' pleading claimed limited restitutionary relief, maybe only the payments made by Rosefarms as provided for in the March 1995 contract. In their written submissions to the trial judge the appellants contented themselves with two sentences in relation to restitution. First, after many pages devoted to proprietary estoppel they said, "Alternatively, the facts also disclose an entitlement to relief based upon unjust enrichment principles". Secondly, as the last sentence in the submissions they said that if Rosefarms had no proprietary interest "then Salienta ought be ordered to pay to Rosefarms compensation for the monies spent upon or value added to Yarrawah". We do not know what more, if anything, was put to the trial judge in oral submissions - perhaps nothing, because his Honour did not deal with restitution. 203 As has also been seen, there was some confusion in the appellants' restitutionary claim as described on appeal. It was clear, however, that the only claim in the event that the March 1995 contract was binding and enforceable was to recovery of the increased value of Yarrawah attributable to the improvements, with an allowance in favour of the respondents for Rosefarms' occupation. This claim should be approached on the basis that the March 1995 contract was an enforceable contract. It was repudiated by Mr Clancy, and was validly terminated by the respondents. 204 As Beazley JA has noted, the appellants did not contend on appeal for recovery of the interest payments, that is, the amounts paid as provided for in the March 1995 contract. As has been seen, the pleaded case for recovery of payments was limited. Further, the so-called interest payments may well have been intended to be not interest payments but payments by way of an occupation fee (the 1996 licence agreement had only a nominal fee of $1). The correct characterisation of the payments seems never to have been in issue, because their recovery on restitutionary grounds seems never to have been in issue. It is therefore understandable that the appellants should have confined their restitutionary case on appeal to recovery of the increased value of Yarrawah attributable to the improvements. 205 The appellants submitted that they were entitled to recover the increased value of Yarrawah attributable to the improvements, while acknowledging an allowance in favour of the respondents for Rosefarms' occupation, even if the March 1995 contract was enforceable and was terminated for their default. The effect of their argument was that their entitlement was a matter of right, not dependent on unconscionability, and so that they could recover even if they failed to establish unconscionability for the purposes of proprietary estoppel or a Baumgartner equity. They relied on a passage in Lexane Pty Ltd v Highfern Pty Ltd (1985) 1 Qd R 446 and the cases cited in it, and on dicta of Brennan J in Stern v McArthur (1988) 165 CLR 489 referring to Lexane Pty Ltd v Highfern Pty Ltd. 206 In Lexane Pty Ltd v Highfern Pty Ltd the purchaser under an instalment contract entered into possession and expended money on improvements. It paid $4,500,000 of the purchase price of $11,500,000. It failed to complete on the due date, and the vendor terminated the contract. The purchaser claimed relief against forfeiture and specific performance of the contract. 207 McPherson J declined to grant relief against forfeiture, saying he could not see the result of the termination as inequitable or that the vendor was acting unconscionably in insisting upon rescission. In addressing the position of the purchaser if the termination were effective, his Honour said that the purchaser was entitled to recover the instalments of the purchase price except for the deposit of $1,150,000, and (at 455) - "In addition, the purchaser is entitled to restitution in respect of permanent improvements made to the land while in his possession to be measured by the extent to which the value of that land has been enhanced: Sandeman v Wilson [(1880) 1 LR (NSW) Eq, 1, 11]; Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd (1935) VLR 114, 123-124; (cf however Rawson v Hobbs (1961) 107 CLR 466, 485 where Dixon CJ spoke of a refund of the 'costs' of such improvements)."

208 His Honour did not go into the basis for the entitlement to restitution in respect of improvements. Later (at 458) he referred to a process of "equitable restitution … to ensure that the purchaser is compensated for the value of the improvements made or expenditure effected on the subject property". It should be noted that the relief against forfeiture with which his Honour was concerned was relief against the loss of the purchaser's equitable interest in the land, which then included the improvements, and there was no claim for recovery of the value of the improvements or the expenditure. 209 In Sandeman v Wilson (1880) 1 LR NSW Eq 1 the purchasers paid £4,000 of the purchase price of £9,000, and were obliged to pay the remainder in four instalments. They entered into possession and spent money improving the land. They failed to pay the first of the instalments. The vendors re-took possession of the land and sold it to a third party, and did not repay any part of the £4,000. The purchasers sued to recover the £4,000 less the value of stock sold while they were in occupation. The vendors said that they, the vendors, had not terminated the contract, and so they could keep the money. Not surprisingly, it was held that the vendors had terminated the contract when they resold, and it was said (at 10) that they had to repay the £4,000 "subject to such deductions as may be just to meet the sums spent by [the vendors] in sales and otherwise". It was said that the purchasers would "bring in [their] claim, which will be subject to these deductions." 210 The note of the decree then made included that the vendors were entitled to deduct a reasonable rental for the use and occupation of the land by the purchasers during the time the purchasers were in possession, "and also the value of all permanent improvements erected by [the purchasers] on the lands and premises whilst in possession" (at 11). Inquiries were directed, including into "the value of the buildings and other permanent improvements erected on the lands by [the purchasers] during their possession". 211 The judgment and the decree as noted read curiously, as if the value of the improvements was a deduction by the vendors rather than an entitlement of the purchasers. However that be, it does not seem that the court was asked to rule, or did rule, in relation to compensation for the value of the improvements, and whether the decree so far as it provided for compensation for the improvements was the subject of consideration when brought in does not appear. 212 In Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd the purchaser under an instalment contract went into possession and, as permitted by the contract, on-sold allotments from a sub-division of the land with transfers pro tanto by the vendors. The purchaser defaulted in payment of instalments, and the vendors terminated the contract and re-took possession. The purchaser claimed repayment of the instalments in excess of a deposit and recovery of amounts paid for rates and road making charges. The vendors counter-claimed for damages for breach of contract. It was held that the purchaser was entitled to what was described as relief against forfeiture of the instalments. Saying that the case should be dealt with in the way the Full Court dealt with similar facts in Berry v Mahoney (1933) VLR 314, Lowe J continued (at 123) - "There are then, broadly, two matters to be brought into account - on the plaintiff's side the amount which it has paid and which the defendants claim to forfeit; and on the other, the damages which the defendants have sustained by the loss of their contract, ie, the difference between the balance unpaid of the contract price and the value of the land sold and not transferred by the defendants pursuant to the contract at the time of rescission. In ascertaining defendants' damage, improvements made by the plaintiff which increased the value of the land repossessed by the defendants at the time of rescission should be taken into account … ". 213 His Honour did not say that the purchaser was entitled to compensation for the improvements to the land. Improvements made by the purchaser which increased the value of the land were to be taken into account in ascertaining the vendors' damages. That is, in ascertaining the difference between the balance of the purchase price and the value of the remaining land, for the latter figure it was the value of the remaining land at the time the contract was terminated, necessarily including the improvements made by the purchaser. 214 In Berry v Mahoney the purchasers were held to be entitled to repayment of instalments paid under a contract in excess of the deposit, on terms by which the vendor would have as damages sustained through the loss of the contract the difference between the contract price and the value of the property at the date of termination of the contract. There was no question of compensation to the purchasers for the value of improvements. 215 Rawson v Hobbs (1961) 107 CLR 466 involved the purchase of a grazing property held under conditional purchase leases, together with stock and equipment, under an instalment contract. The purchase price was £10,160 of which £3,160 was paid by way of deposit. The purchasers went into possession and expended money erecting a house and sinking a bore. Clause 12 of the contract provided that either party could annul the sale if the Minister refused consent to the transfer of the leases. The purchasers were told that the Minister would not consent, and before any instalment fell due purported to annul the contract pursuant to cl 12. They claimed a declaration that the contract had been duly annulled and damages. 216 Dixon CJ considered that the purported annulment pursuant to cl 12 was ineffective, because while the purchasers had been told that the Minister would not consent the refusal of consent was still a matter for the future. He held, however, that the purchasers had been entitled to treat themselves as discharged from the contract because it was clear that the vendor would not be able to make title to the leases. His Honour said that because some stock and equipment had been sold the discharge could not be by rescission ab initio with complete restitutio in integrum, and that it was a question of "the conditions of equitable relief" (at 484). After discussion of the pleadings, he said (at 485) - "The pleadings contain a sufficient statement of the facts though the conception of the causes of action or basis of relief may be open to criticism. The Court is not confined in granting relief to that which the plaintiffs have specified and in the situation which the foregoing account of the case describes the appropriate relief appears to be a declaration that the plaintiffs are discharged from the contract of sale and are entitled to a refund of the purchase money paid by them and to the cost of erecting the house and sinking the bore subject to a deduction therefrom of the amount named in the contract as the price allocated to plant and machinery, £970 and of the price of the number of sheep which may be taken to have been delivered, viz £600". 217 Kitto J considered that the purchasers were entitled to annul the contract pursuant to cl 12. In his Honour's view, the effect of the clause was that the annulment made the contract void ab initio regardless of restitutio in integrum, and the money spent by the purchasers on the property while they were in occupation was not recoverable (at 489). 218 Windeyer J considered that the purchasers became discharged from the contract because the vendors were not in a position to give good title. He asked (at 492), "How then does this work out?", and after concluding that the purchasers were liable to pay the vendor for the stock and equipment they had sold, but to retain the proceeds of sale, said (at 493) that as to "the other matters in question" he agreed with Dixon CJ. 219 The reasoning to the purchasers receiving the cost of erecting the house and sinking the bore is, with respect, not entirely clear. It appears to have been that on their discharge from the contract the purchasers were to be restored to their original position, which is understandable where the so-called deposit was in truth part payment. Because that could not be done with exactitude, equitable doctrines were applied: cf Alati v Kruger (1955) 94 CLR 216 at 223-4, stating that equity would "do what is practically just between the parties, and by so doing restore them substantially to the status quo". 220 The reach of equity where a contract is set aside ab initio is great, see more recently Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 at 110-113. If there be rescission ab initio, for example because of fraudulent misrepresentation, the purchaser will be entitled to compensation for the value added to the land by his improvement (see Brown v Smitt (1924) 34 CLR 161), but normally termination of a contract for default of the other party does not extinguish it ab initio, but only in futuro, and a purchaser may not be entitled to be restored to his original position if the contract is terminated by the vendor for the purchaser's default. In Mason and Carter, Restitution Law in Australia, para 1438 it is suggested that the "substantial restitution" in Rawson v Hobbs was in part because of "the general approach of the Australian courts to the discharge of land contracts" and in part due to "the operation of statutory provisions governing the conditional purchase of leases of grazing land held under statute". I respectfully have some difficulty with this explanation, but the more important point is that Rawson v Hobbs may not provide guidance in an ordinary case of a defaulting purchaser. 221 In Stern v McArthur, although the instalment contract provided for the vendors to retain possession, with the vendors' knowledge the purchasers went into possession and built a house on the land. The purchasers paid some of the instalments but then defaulted in their payment. By cl 15 of the contract in the event of default by the purchasers the deposit would be forfeited and the vendors could terminate the contract. By cl 18 on default in payment of instalments the balance of the purchase price became immediately payable. The vendors required payment of the balance of the purchase price, and when it was not paid terminated the contract. When foreshadowing a claim to any loss on resale, the vendors stated that they would allow the purchasers to receive the benefit of any improvements but that otherwise any increase in the value of the land would go to the vendors. It was held by majority that the purchasers were entitled to relief against forfeiture of their interest in the land. The offer to compensate the purchasers for the value of the improvements was taken into account in considering whether there should be relief against forfeiture, see per Mason CJ at 504-5, per Deane and Dawson JJ at 529 and per Gaudron J at 541. 222 Only Brennan J and Gaudron J expressed views on the purchasers' entitlement to receive the benefit of any improvements. 223 In the passage to which the appellants referred, Brennan J said (at 509) - "Before Waddell J the vendors accepted that, if successful, they were bound to allow the purchasers the value of the improvements they had made and they accept that, if successful in this Court, the up-to-date value of those improvements must be allowed. The vendors' acceptance of that obligation reflects a purchaser's entitlement in equity to compensation for the permanent improvements he has made with the vendor's consent while the purchaser was in possession if the vendors should rescind the contract of sale: see Lexane Pty Ltd v Highfern Pty Ltd and cases there cited. I respectfully agree with McPherson J that the measure of that compensation is 'the extent to which the value of that land has been enhanced'."

Later in his reasons, when rejecting in relation to relief against forfeiture the analogy between a contract of sale and a mortgage, his Honour said that there is no penalty when a vendor rescinds inter alia because the vendor "is obliged to compensate the purchaser for the permanent improvements made on the land with the vendor's consent to the extent that the value of the land is thereby enhanced" (at 519). At the conclusion of his reasons his Honour said (at 521) that the so-called windfall of the natural increment in land value properly belongs to the vendors, "though they are bound to compensate the purchasers for the value of the improvements they have made". 224 Gaudron J said (at 533) - "At first instance Waddell J held that the appellants were entitled to the relief claimed by them and that the respondents were entitled to 'relief against forfeiture of the value added to the land by the house as at the date on which it is re-sold and such of the payments made (other than the deposit) as are not required to meet any of the items mentioned in cl 15 of the contract'. Although his Honour expressed the remedy in relation to the instalments paid in terms of relief against forfeiture it would seem that what was intended was a declaration of the respondents' entitlement pursuant to cl 15 of the contract. The basis of the grant of relief against forfeiture of the value added to the land was not made clear. In this court it was suggested by counsel for the appellants that the respondents were entitled to an equitable lien as part of a purchaser's lien quite independently of any concession made by the appellants. It is not readily apparent that this entitlement (assuming it to exist) should be anything other than an immediate entitlement rather than one to be ascertained in the event of resale: see Rawson v Hobbs ." 225 Gaudron J does not seem to have endorsed the purchasers' entitlement to receive the benefit of any improvements, and implicit in taking into account the offer to compensate for the value of the improvements in considering whether there should be relief against forfeiture may have been that, in the absence of such an offer, the vendors would not otherwise have been obliged to compensate the purchasers in that respect. In the courts below it appears to have been assumed that the purchasers had no such entitlement, because loss of their expenditure was one of the factors making the vendors' termination unfair and so founding relief against forfeiture: see McArthur v Stern (1986) 5 NSWLR 538 at 554-6 per Priestley JA, with whom Hope JA agreed, and at 541 per Mahoney JA in dissent. 226 I have gone to these cases in some detail because, with respect, I do not think that they provide clear support for a purchaser's entitlement as a matter of course to be compensated in respect of permanent improvements to the land if the vendor terminates the contract for the purchaser's default, whether to the extent to which the value of the land has been enhanced or in the amount of the expenditure. In Sandeman v Wilson it was not a matter of decision; Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd was concerned with the vendors' damages; Rawson v Hobbs may be founded on an innocent purchaser being restored to his original position; Lexane Pty Ltd v Highfern Pty Ltd does not explore the basis for the entitlement there accepted; and Brennan J in Stern v McArthur also does not go to the basis for the entitlement. That is not to say that a purchaser does not have an entitlement in some circumstances. But on what basis, and when? 227 The four cases of Sandeman v Wilson, Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd, Rawson v Hobbs, and Stern v McArthur were considered in T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (In Liq) (1991) 1 VR 610. The purchaser under an instalment contract went into possession and built a house on the land. The vendor knew prior to contract that the house would be built. The purchaser defaulted, and the vendor terminated the contract. The vendor re-sold, thereby obtaining the benefit of the building of the house. The purchaser claimed that the vendor held the proceeds of sale, less the value of the land, upon a constructive trust for it. In the judgment of Kaye J, with whom Young CJ and Murphy J agreed, it was said of the trial judge's decision (at 617) - "Thus his Honour held in effect that the respondent was entitled to payment of the value of the improvement made to the land by the house erected on it. In doing so, he did not state what principle of law or equity he applied. However, at an earlier stage in his reasons for judgment after reviewing authorities relating to equitable relief, his Honour stated: 'I am satisfied that there is very clear authority to support the proposition that improvements made by a purchaser in possession are, unlike a genuine deposit by the purchaser, but like instalments paid, to be taken into account to the credit of the purchaser where the contract is rescinded.' It would therefore appear that his Honour accepted that the respondent was entitled by way of equitable relief to the value of the improvements which it had made to the land before the agreement was rescinded."

228 Each of Sandeman v Wilson, Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd and Rawson v Hobbs was referred to as an illustration of equitable relief granted to a purchaser who, while in possession and before rescission, made permanent improvements to the land thereby enhancing its value. It was said that the vendor argued that the purchaser was not entitled to equitable relief because the purchaser had been in default under the contract and because its default had involved breach of an essential condition. After reference to Stern v McArthur, it was said that it was consistent with authority that equitable relief may be granted to a purchaser who was in breach of an essential condition of a contract "if there are exceptional circumstances, and that such exceptional circumstances may include unconscionable conduct on the part of the vendor who rescinded the contract". It was then said - "The learned trial judge stated that if it had been necessary for him to have done so, he would have found that there was unconscionable conduct on the part of the appellant because of the combination of the following three matters: first, the potential windfall to the appellant was so large in proportional and relative terms; secondly, that the advantage was attributable to improvements erected by the respondents; and thirdly, that the appellant had not offered to make any allowance at all to the respondent for those improvements. In my view those were relevant circumstances to be taken into account. To those considerations I would add the facts that the appellant by its letter of 25 October 1979 consented to the respondent erecting a building on the site, and that the display home was erected by the respondent with the necessary building permit. From the totality of those matters his Honour might have properly concluded that the appellant's conduct in failing to allow the respondent the value of its permanent improvements made to the land was unconscionable. In those circumstances the respondent was entitled to equitable relief by payment of the value of those improvements."

229 Their Honours may or may not have accepted the analogy with instalments paid under a contract. They referred to cases concerned with relief against forfeiture, but do not seem to have regarded the equitable relief as relief against forfeiture (cf the view of the case taken in Mason and Carter, Restitution Law in Australia, para 1170). The basis of the decision is unconscionability. If so, there is not an entitlement as a matter of course. It depends on whether it would be unconscionable for the vendor to have the improved land without paying to the purchaser the increased value attributable to the improvements. 230 In P C Developments Pty Ltd v Revell (1991) 22 NSWLR 615 there was an express forfeiture provision. The contract provided that the purchaser could enter upon the land prior to completion in order to demolish existing buildings and begin building work, and that if the contract was not completed for any reason other than the default of the vendors the purchaser could not claim compensation or reimbursement for that work from the vendors. The vendors terminated the contract for the purchaser's default. The purchaser claimed relief from this operation of the contract on the ground that it involved a penalty or forfeiture. At first instance the claim was upheld on the ground it was a penalty, and it was ordered that the purchaser have compensation equivalent to the value which, by the work done, he had added to the land. On appeal, it was held by majority that there was no penalty or forfeiture, and that the purchaser was not entitled to the compensation. 231 Underlying the purchaser's claim was that, in the absence of the forfeiture provision, he would be entitled to compensation or reimbursement from the vendors. Having struck down the forfeiture provision as a penalty, without discussion the trial judge had applied Lexane Pty Ltd v Highfern Pty Ltd. Striking down the forfeiture provision as a penalty may be put aside: there is no such provision in the present case. In considering relief against forfeiture, however, in the sense of forfeiture of the purchaser's interest in the land, Mahoney JA looked beyond the forfeiture provision, and Clarke JA referred to compensation for improvements in the absence of a contractual provision. 232 Mahoney JA asked whether the purchaser should, by relief against forfeiture, be put in the same position as if he had completed the contract (at 632). He said that it was claimed that the action of the vendors, "considered in the context of the consequences of it", was unconscionable (at 633). After discussion, he said that any unconscionability had to be because the result of the exercise by the vendors of their right to terminate the contract was that they received a windfall benefit from the work done by the purchaser - a windfall in the sense that it was not the purpose of the contract to provide that benefit (at 635-6). In his Honour's view, it was not correct that - " … if, in the event, the exercise of a right to terminate a contract for breach happens to produce for one of the parties a benefit which neither has seen as the essential purpose of the contract to produce, that exercise of the right is unconscionable or unconscionable unless the benefit is passed to the other party." (At 636) 233 While it was not directly addressed, this is not consistent with the purchaser being automatically entitled to the value of the improvements. If the purchaser were so entitled, the vendors would not receive a windfall benefit, but would have to compensate the purchaser. 234 Clarke JA, who dissented in the result, asked whether the forfeiture provision was penal and whether it would be unconscionable for the vendors to retain the benefit of the improvements in all the circumstances (at 646). His reasoning to concluding that the provision was penal in nature included (at 647-8) - "Senior counsel for the respondents sought to rely on a suggested analogy with contractual terms entitling a vendor to retain, on rescission, the land and instalments of purchase money which had been paid. I have already referred to the authorities which indicate that provisions of that nature are regarded as penal but I should, in this context, also mention the passage from the judgment of Deane J and Dawson J in Stern in which they say that relief is afforded against the retention by the vendor of both the land and any instalments of purchase price (other than a genuine deposit) as in the nature of relief against a penalty because 'it relieves the purchaser against losing the land and the payments he has made. Such a consequence could only be by way of punishment upon default'(at 524). The position is similar, so it was submitted, in relation to the value of improvements. In the absence of any contractual provision the vendor would be bound, upon the termination of the contract, to compensate the purchaser for the permanent improvements made on the land. Brennan J made this point in Stern when he said (at 519): '... When a vendor rescinds in the exercise of his general law rights, it is not unconscionable for him to take the benefit of the forfeiture which is thereby effected: there is no penalty, for the vendor is bound to refund what the purchaser has paid (other than a genuine deposit) and he is obliged to compensate the purchaser for the permanent improvements made on the land with the vendor's consent to the extent that the value of the land is thereby enhanced.'

(See Sandeman v Wilson (1880) 1 LR (NSW) Eq 1 at 11; Real Estate Securities Ltd v Kew Golf Links Estate Pty Ltd [1935] VLR 114 at 123-124; Rawson v Hobbs (1961) 107 CLR 466 at 485 and Lexane Pty Ltd v Highfern Pty Ltd [1985] 1 Qd R 446.) If then, the argument runs, a clause forfeiting instalments of purchase money is penal in nature so is a clause forfeiting the right to the value, or cost, of improvements. For my part I am prepared to accept that as a general rule this would be so. A clause granting to a vendor the benefit of the improvements undertaken by a purchaser in possession upon termination of the contract would generally be seen as a penalty for non-completion. But it is not necessarily so. The facts of each case must be considered."

235 His Honour then said that in view of the very large windfall that the vendors would receive, partly at least as a consequence of the improvements, it would be unconscionable for them to insist on their rights under the provision, and so there should be relief from the effects of the penalty (at 649). While a purchaser's entitlement to compensation for improvements made was accepted, its basis was not investigated. 236 Lexane Pty Ltd v Highfern Pty Ltd was considered in Sunstar Fruit Pty Ltd v Cosmo (1995) 2 Qld R 214. In that case the purchaser had entered into possession prior to completion, and unknown to the vendor and contrary to a provision of the contract had spent money improving the land. The vendor failed to complete, and the purchaser terminated the contract. It claimed restitution in respect of the expenditure on improvements. 237 Derrington J said (at 225) that the rationale for the claim was - " … that as the defendants will retake possession of the property consequent upon their own default, it would be unjust if they were enriched by the benefit of the improvements on it by the plaintiff having to pay compensation."

In his Honour's discussion of the cases his Honour described Lexane Pty Ltd v Highfern Pty Ltd and Sandeman v Wilson as cases in which restitution was allowed "as part of the equitable adjustments between the parties when an instalment contract failed because of the default of the purchaser" (at 226). He said that the justification for restitution flowed from the vendor's knowledge of the right of the purchaser to effect improvements, though not necessarily of the acts in exercise of that right, and that in effecting the improvements the purchaser must do so at least under the belief of a right to do so (at 226-7). He continued - "In the present case, the plaintiff is not shown to have acted under more than an expectation of having the benefit of the improvement upon the completion of the transaction. Its having done the work does not imply belief in a contractual right to do so and may be compared with the misprediction referred to by Professor Birks and mentioned above. But even if it existed such a belief on the purchaser's part would not have been enough. The operation of the doctrine of restitution under analogous heads requires a participation by the vendor in such a way as to render his subsequent enrichment unjust, for enrichment alone is not ipso facto unjust at law. This factor as it is manifested in the instalment contract cases can only be in the form of the implied approval by the vendor to the improvements by reason of the nature of the contract itself which allows the purchaser to have possession for a sufficient period in circumstances where the possibility of his effecting improvements is to be expected. That will also be logical in cases other than instalment contracts where the same considerations apply. That is not the position in the present case for when the plaintiff entered into possession, it was only to be a temporary state of affairs pending completion, and no implication of any suitable approval could be drawn from those circumstances." 238 It is apparent that his Honour did not accept an automatic entitlement in the purchaser to compensation in respect of the improvements, even when the vendor was the defaulting party. There had to be circumstances of unjust enrichment. The relationship between the emerging law of restitution and equitable intervention on grounds of unconscionability is not settled (see for example Toohey J in Baumgartner v Baumgartner at 152-4; Mason, "Restitution in Australian Law" in Finn (ed) Essays on Restitution, 1990; Jones, "The Law of Restitution: The Past and the Future" in Burrows (ed), Essays on the Law of Restitution, 1991; Byrne, "Restitution and Equity" (1995) 11 QUTLJ 169; Mason and Carter, Restitution Law in Australia, para 235), but they have much in common. 239 Instalments of the purchase price paid by the purchaser, other than a deposit paid as security for the completion of the contract, are repayable by the vendor if the contract is terminated, even if it is terminated for the purchaser's default: see for example McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 at 469-70 per Starke J and 477-8 per Dixon J. It is said that the vendor cannot have the land and its value too (a phrase stemming from Laird v Pim (1841) 7 M & W 474 at 478 per Parke B; 151 ER 852 at 854), and that the vendor's title to the money is not absolute but conditional on the subsequent completion of the contract (ibid; see also Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at 464-5 per Dixon J; Baltic Shipping Co v Dillon (1992) 176 CLR 344 at 352, 385). The instalments are recoverable at law, as on a failure of consideration (McDonald v Dennys Lascelles Pty Ltd at 470 per Starke J and 479 per Dixon J), and unless there is a provision of the contract by which the vendor is entitled to retain the instalments it is not necessary to seek equitable relief. If there is such a provision, although it has been referred to as relief against forfeiture (eg Pitt v Curotta (1931) 31 SR (NSW) 477 at 480) the equitable relief is properly not relief against forfeiture but on the footing that the provision is in the nature of a penalty (Legione v Hateley (1983) 152 CLR 406 at 445 per Mason and Deane JJ, cf at 458 per Brennan J referring to relief against forfeiture of the purchase price; Stern v McArthur at 524 per Deane and Dawson JJ). 240 Recovery of instalments does not provide a satisfactory analogy for recovery of the value of improvements in a case such as the present. The appellants were not obliged to spend money on improvements (other than the initial $200,000), the money spent on improvements was not paid to Salienta as part of the purchase price or in consideration of conveyance of Yarrawah, and the benefit of the expenditure did not accrue to Salienta conditionally on the subsequent completion of the sale of Yarrawah. There is relevantly no failure of consideration, and the remedy on termination of the contract is for breach of contract not restitution of a benefit (see for example Baltic Shipping Co v Dillon at 390 per McHugh J). Nor does the statement that the vendor can not have the land and its value too apply in the same way - that Salienta obtains the benefit of the money spent on improvements is a necessary consequences of it having the land following the appellants' default, and the benefit of course is not necessarily commensurate with the amount expended. 241 Nor is there any question of equitable relief in relation to a contractual provision on the footing that it is in the nature of a penalty. No contractual provision in this case prescribes that Salienta shall have the benefit of the improvements made by the appellants or of the consequent increased value of Yarrawah. 242 Equitable relief against forfeiture of the appellants' interest in the land, by "denying validity to the vendor's act of rescission" (Stern v McArthur at 510 per Brennan J) and thereby reinstating the purchaser's right to purchase and decreeing specific performance (as in Stern v McArthur), does not arise, because the appellants are not willing to pay the last agreed purchase price. Adapting the words of Lord Diplock in Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (1983) 2 AC 694 at 701 in a related context, relief against forfeiture of an interest in land is pregnant with an affirmative order that the vendor perform the contract. 243 In P C Developments Pty Ltd v Revell the purchaser was initially successful in obtaining what was described as relief against forfeiture although not able to complete the contract, but that was because it was agreed that, if entitled to relief against forfeiture of his interest, he "should in effect be placed in the same position as if he had completed the contract" (at 632) or should have compensation for damages in lieu of a decree for specific performance (at 641). This case does not stand as authority for relief against forfeiture by payment of compensation as distinct from reinstating the purchaser's right to purchase and decreeing specific performance. Nor does the description of the conceded entitlement in Stern v McArthur at first instance (Waddell J, 2 November 1984, unreported) as "relief against forfeiture of the value added to the land by the house …". 244 Why, then, may a purchaser in some circumstances have an entitlement to be compensated in respect of permanent improvements to the land? 245 The entitlement is described as an entitlement as a condition or term of equitable relief in Rossiter, Penalties and Forfeiture, pp 184-5, with the observation that the common thread running through the cases is that the purchaser has sought equitable relief. The description probably comes from Rawson v Hobbs, where the purchaser did not seek equitable relief but seems to have been given it as if there should have been rescission ab initio; from the other cases, the postulated common thread is incorrect. In any event, the question remains: why may the purchaser get a condition or term of equitable relief in the shape of an order that the vendor pay compensation for improvements? 246 The entitlement is described as "a matter to be dealt with by way of adjustment on discharge" in Mason and Carter, Restitution Law in Australia, para 1170 (referred to also as restitutionary relief and a substantial restitution requirement at paras 1438 and 1439). The language of equitable adjustment was also used in Sunstar Fruit Pty Ltd v Cosmo to describe Lexane Pty Ltd v Highfern Pty Ltd and Sandeman v Wilson. Still the question remains: why may there be adjustment on discharge, or restitution? 247 It seems to me that, if Salienta is to pay to Rosefarms the increased value of Yarrawah attributable to the improvements, it must be either on the basis of what was described by Deane and Dawson JJ in Stern v McArthur (at 526-7) as the notion underlying much of equity's traditional jurisdiction to grant relief against unconscientious conduct, namely that a person should not be permitted to use or insist upon his legal rights to take advantage of another's special vulnerability or misadventure for the unjust enrichment of himself, or by adoption of principles of unjust enrichment. The former notion was described by Mason and Deane JJ in Legione v Hateley (at 444) as "the fundamental principle according to which equity acts, namely that a party having a legal right shall not be permitted to exercise it in such a way that the exercise amounts to unconscionable conduct". In terms of unconscionability, the basis must be that there may be relief if it would be unconscionable in all the circumstances for Salienta to retain the benefit of the improvements without compensating Rosefarms for its expenditure. If principles of unjust enrichment be applied, it must be found that Salienta's enrichment by having the benefit of the improvements is in the circumstances at the expense of Rosefarms and unjust. Rejecting the appellants' stance, in cases such as the present the purchaser does not have an automatic entitlement to recover from the vendor the amount expended or the increase in the value of the land, and may receive only such relief as equity may afford in order to prevent unconscionability or as may be necessary to avoid unjust enrichment. 248 The postulated basis of equitable relief on the ground of unconscionability goes beyond relief against forfeiture of an interest in the land, in that the purchaser obtains relief although unable or unwilling to complete the purchase. It takes up the basis of relief by way of proprietary estoppel recognised in Waltons Stores (Interstate) Pty Ltd v Maher, the element of unconscionability both attracting the jurisdiction of a court of equity and shaping the remedy to which Brennan J referred (at 419), but with a sufficient remedy an order for payment of equitable compensation. This is effectively what was done in T M Burke Estates Pty Ltd v P J Constructions (Vic) Pty Ltd (in Liq), and Nepean District Tennis Association Inc v Penrith City Council (1988) 66 LGRA 440. In the latter case the club resurfaced tennis courts held under licence from the council in anticipation, encouraged by the council, of a long term lease. It was held that, in the absence of an assurance that a lease would be granted, the proprietary relief of a lease would not be granted. But it was said that relief could be given against a party who would have been unjustly enriched by contributions made, or improvements made to his land, having regard to the expectations of the parties at the time, citing Morris v Morris (1982) 1 NSWLR 61, Muschinski v Dodds and Baumgartner v Baumgartner, and that because it would be unconscionable for the council "to accept the full benefit of the expenditure without some compensation or notice" (at 448) it should pay to the club a depreciated value of the resurfacing work less an allowance for a market rental to the date the council obtained possession. 249 In England a general principle that equity will restrain the enforcement of legal rights when it would be unconscionable to insist on them has been thought unacceptable, see Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana at 700; Union Eagle Ltd v Golden Achievement Ltd (1997) AC 514 at 519. In Australia the High Court has given unconscionability in this respect a more significant role in the grant of equitable relief, while still cautioning that a strong case must be made out to warrant departure from holding parties to their bargain and that unconscionability should not bring judicially idiosyncratic notions of fairness. But there is no need in principle, once unconscionability warranting equitable relief has been found, for the remedy to be proprietary, even by creation of a lien. In circumstances such as the present the principles invoked for proprietary estoppel can readily enough be applied, but with the remedy not being proprietary, and it may be noted that in Ramsden v Dyson Lord Kingsdown contemplated relief "either in the form of a specific interest in the land, or in the shape of compensation for the expenditure …". 250 In Nepean District Tennis Association Inc v Penrith City Council there was also reference to unjust enrichment, and the claim in Sunstar Fruit Pty Ltd v Cosmo was put forward as an unjust enrichment claim. In Union Eagle Ltd v Golden Achievement Ltd a possible greater role of "the law of restitution and estoppel" was foreshadowed (at 520), but the principles of unjust enrichment, although recognised, are not yet embedded in Australia as themselves grounds for relief. They were not the subject of submissions in the appeal. 251 In deciding whether, assuming that there may be an entitlement on one of these bases, on the facts in this case Salienta is to pay to Rosefarms the increased value of Yarrawah attributable to the improvements, the relevant considerations are not necessarily the same as those arising in relation to equitable relief pursuant to proprietary estoppel. At least in relation to unconscionability there is substantial common ground, although arguably the fact of a contract between the parties has different significance where the purchaser's claim is founded on the failure of the contract. It must not be forgotten that the appellants claimed the increased value of Yarrawah attributable to the improvements over the whole period of the relationship, from 1992 onwards, and did not limit their claim to the improvements during the currency of the March 1995 contract. For the first two years or so there was no contract of sale, but an option to purchase. For about three months there was the 1994 contract for sale: although it seems that its enforceability was in dispute at the trial, I see no reason to regard it as any less binding and enforceable than the March 1995 contract. The option to purchase was not exercised, and the 1994 contract for sale should be taken to have been consensually rescinded. The appellants can not be in any better position in relation to the improvements prior to March 1995 than in relation to the improvements made during the currency of the March 1995 contract. 252 I do not think repetition of the earlier material in these reasons is necessary. There is no doubt that Mr Forsyth, and through him Salienta, knew of the improvements, and acquiesced in and encouraged the making of the improvements in the manner earlier referred to. But in the circumstances I have described I do not think there would be unconscionability in Salienta having the benefits of the improvements without compensatory payment for the increased value of Yarrawah attributable to the improvements. Nor in my view would there be unjust enrichment.

Mesne Profits 253 The appellants' submissions did not go beyond stating the bases outlined earlier in these reasons. The respondents made no submissions on the subject. It was a matter for the trial judge whether, in the way the hearing had proceeded, it was appropriate to direct an inquiry into Salienta's damages by way of mesne profits. No reason has been shown to interfere with the course his Honour took. Under the 1996 licence agreement the right of occupancy was conferred on Rosefarms, and nothing was put to us to indicate that Mr Clancy was in possession of Yarrawah instead of or together with Rosefarms. The order for payment of mean profits should have been against Rosefarms alone.

The Result 254 Save that Mr Clancy does not have to pay the damages by way of mesne profits, the appellants have failed in the appeal. I do not think that their partial success, which may well only have corrected a slip on the part of the trial judge, or should temper the order for costs otherwise appropriate, or should affect the trial judge's orders as to costs. 255 I propose the following orders - (1) Appeal upheld in part; (2) Vary the orders made by deleting "defendants" from order 4 and substituting "second defendant". (3) Otherwise appeal dismissed. (4) Appellants pay respondents' costs of the appeal. ****************

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