Cudgegong Australia Pty Limited v Sydney Metro [2018] NSWCA 298 | Case summary

Court of Appeal (NSW)|2018-11-21|Before: Meagher JA, Leeming JA, Davies J

Background

There is a long history of litigation arising out of the acquisition of the Land. The primary Judge summarised the history as follows: [10] "2 [In 2008] the registered proprietor of the land was Golden Mile Property Investments Pty Ltd. That company had been placed in liquidation and the mortgagee, Stacks Managed Investments Ltd, exercising its power of sale under a registered mortgage, entered into a contract for sale of the land to [Cudgegong] on 22 September 2008 for a purchase price of $2.25 million with completion being due on 1 June 2012. 3 When the proposed acquisition notice was issued [on 31 May 2012], the vendor and purchaser on 21 June 2012 entered into a rescission agreement, and on the same day entered a further contract for sale to [Cudgegong] for $2,888,648 with the completion of the contract scheduled for 1 July 2013. The purchase price was not paid and the sale did not complete due to the acquisition of the land which occurred on 21 September 2012 [by publication of the notice in the Government Gazette]. 4 [Cudgegong] maintained it had an interest in the land and on 12 July 2012 submitted a claim for compensation under s 39 of the [Land Acquisition] Act. The completed form sought $19.3 million for the market value of its interest in the land, and loss attributable to disturbance. That claim was later revised to $16,382,108. 5 On 5 December 2012, the Valuer-General determined that compensation was payable under the Act to Golden Mile as the registered proprietor and to the two mortgagees, Stacks (as first mortgagee) and RTS Super Pty Ltd (as second mortgagee) in the amount of $4,223,400. 6 On 12 December 2012 [Transport NSW] issued a compensation notice under s 42 of the Act to Stacks and to RTS Super offering $3,026,478 in compensation. The mortgagees accepted and were paid that compensation amount. The balance of the compensation was to be held on trust pending a determination whether Golden Mile or [Cudgegong] was entitled to the balance of the compensation. 7 On the application of the former liquidator of Golden Mile, that company was ordered to be re-registered. 8 [Cudgegong] then commenced proceedings under s 66 and/or s 67 of the Act in Class 3 proceedings in the Land and Environment Court. In those proceedings [Cudgegong] sought compensation amounting to $16,273,522 plus disturbance costs. Golden Mile applied to be joined as a party to those proceedings. 9 In June and July 2013 [Cudgegong] and [Transport NSW] exchanged town planning evidence. The experts conferred and produced a joint report. On 10 July 2013 [Cudgegong] filed a notice of motion seeking an order that [Transport NSW] make an advance payment of compensation to [Cudgegong]. 10 Justice Pain in the Land and Environment Court held on 13 March 2014 that [Cudgegong] had an interest in the land for the purposes of the Act and ordered [Transport NSW] to make an advance payment of $757,300 to [Cudgegong] under s 68(2)(b) of the Act. [11] 11 Golden Mile sought leave from the Court of Appeal to appeal from that interlocutory order. The appeal was upheld on 16 April 2015 and the matter was remitted to the Land and Environment Court for the purpose of hearing and determining according to law the respective interests of Golden Mile and [Cudgegong]. [12] 12 At a second hearing in the Land and Environment Court Pain J held on 1 December 2015 that [Cudgegong] had the relevant interest in the land for the purpose of the Act. Golden Mile again sought leave to appeal. [13] Leave to appeal was granted but the appeal was dismissed on 25 August 2016. [14] Thereafter, the compensation proceedings resumed. 13 On or about 6 September 2016 [Transport NSW] paid [Cudgegong] $765,468.59 being the total of the advance payment plus interest. That payment represented a $3 shortfall in interest that was paid to [Cudgegong] the next day. 14 Thereafter, valuation evidence was exchanged between the parties in the compensation proceedings. A conciliation conference was held on 16 December 2016 but no agreement was reached. 15 On 23 February 2017 the present proceedings were commenced."

The issue before the primary Judge

It is critical to the outcome of Cudgegong's appeal to identify the nature of the estoppel relied on by Transport NSW. The primary Judge, after recounting the background to the litigation, recorded that: [15] "22 [Transport NSW] submitted that the facts in the present matter gave rise to an estoppel in pais in that [Cudgegong] induced [Transport NSW] to adopt and act upon the basis that the acquisition was valid (the representation). [Transport NSW] submitted that the conduct of [Cudgegong] that gave rise to the representation were those matters earlier summarised at [4]-[14] [in the Primary Judgment]. 23 [Transport NSW] submitted that it acted to its detriment in reliance on the representation in three ways: (a) by incurring costs of a substantial nature in the compensation proceedings and by paying compensation to [Cudgegong]; (b) by continuing with the construction work to the point where the land in question has now been built on; (c) by being denied the opportunity to issue a further valid acquisition in a timely manner."
The principles governing estoppel in pais were stated by Dixon J in Grundt v Great Boulder Proprietary Gold Mines Ltd (Grundt): [16] "The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. … Before anyone can be estopped, he must have 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. But the law does not leave such a question of fairness or justice at large. It defines with more or less completeness the kinds of participation in the making or acceptance of the assumption that will suffice to preclude the party if the other requirements for an estoppel are satisfied."
Dixon J repeated in Grundt [17] his analysis in Thompson v Palmer [18] of the "recognised grounds of preclusion": "Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct … or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption." (Citations omitted.)
The ground upon which the primary Judge upheld the estoppel defence was that Cudgegon's actions in relation to its claims for compensation constituted a "clear and unambiguous" representation that the acquisition of the Land was valid and that Transport NSW acted to its detriment in the three respects identified by Transport NSW in its submissions. [19]
Mr Lancaster SC, who appeared with Ms Bathurst for Sydney Metro on the appeal, contended that Transport NSW's estoppel case before the primary Judge was not confined to estoppel by representation. He submitted that Transport NSW also relied on estoppel by convention founded on the mutual assumption by the parties in the Land and Environment Court litigation that the acquisition of the Land was valid. [20]
Transport NSW filed a "Response to Summons" in the Common Law proceedings. The Response identified eight matters which were said to show that Cudgegong: "conducted itself in its relations with [Transport NSW] and concerning the Acquisition on the basis that the Acquisition was for a purpose authorised by the Transport Administration Act, and was lawful and valid, such that [Cudgegong] is estopped from asserting in these proceedings that: i the Acquisition was not for a purpose authorised by the Transport Administration Act; was ultra vires and unlawful, or was invalid …"
The matters identified in the Response included Cudgegong's conduct in submitting a claim for compensation pursuant to the Land Acquisition Act, commencing on appeal in the Land and Environment Court against Transport NSW's initial rejection of the claim for compensation, continuing to claim that it was entitled to an advance payment of compensation pursuant to s 68(2)(b) of the Land Acquisition Act and accepting the advance payment in the sum of $765,468.59. The Response did not expressly allege that Cudgegong, by its conduct, represented to Transport NSW that the Acquisition was valid. Nor did the Response allege that Transport NSW understood that such a representation had been made and acted to its detriment in reliance on the representations.
In the absence of formal pleadings, the ambiguous and incomplete Response may have left it open to Transport NSW to rely on conventional estoppel in the sense explained by Dixon J in Thompson v Palmer, [21] as a basis for its summary judgment application. However, Transport NSW put its case to the primary Judge squarely on the basis of estoppel by representation.
Transport NSW's written submissions in support of the summary dismissal motion expressly relied on estoppel in pais and, in particular on the principle that: "such an estoppel arises where one person (the representor) induced the other (the representee) to adopt and act on an assumption of fact". (Emphasis added.) The written submissions quoted the elements of estoppel as summarised in a leading text: [22] "a. a statement or, more relevantly for the present purposes, other conduct that constitutes a representation of fact; b. its communication to the representee; c. the representee's justifiable belief in its truth and the representee's alteration of position in that belief; d. an attempt by the representor to contradict the representation; e. prejudice or detriment to the representee as a result of the alteration of position if contradiction of the representation were permitted."
The submissions identified eleven matters that were said to constitute conduct giving rise to a representation by Cudgegong that it accepted that the Land was validly acquired by Transport NSW. These overlapped with the matters referred to in Transport NSW's Response to Summons. The submissions also contended that Transport NSW had "altered its position in reliance on [the] representation". (Emphasis in original.) No mention was made of any other form of estoppel.
Transport NSW's written submissions in reply restated its reliance on estoppel by representation. This Court was not taken to anything in the transcript of argument before the primary Judge that suggests that Transport NSW was relying on any other form of estoppel. On the contrary, its oral argument closely followed the written submissions.
It is true that the primary Judge referred to authorities dealing with forms of estoppel other than estoppel by representation. But Transport NSW referred his Honour to these authorities [23] for the purpose of meeting Cudgegong's contention that estoppel is not an answer to a claim that a public authority has exceeded its statutory powers. [24] The primary Judge rejected that contention. [25]
Thus the only estoppel upon which Transport NSW relied before the primary Judge was estoppel by representation. Transport NSW did not rely on conventional estoppel or any other form of estoppel. The primary Judge correctly recorded the nature of the estoppel on which Transport NSW relied. [26]

Should summary judgment have been granted?

The primary Judge correctly recognised that UCPR r 13.4(1)(b) cannot be invoked to dismiss proceedings summarily unless there is a high degree of certainty about the ultimate outcome should the proceeding go to trial in the ordinary way. [27] The matters that must be established in order to make out a defence of estoppel by representation [28] are fact specific. While there may be summary dismissal applications in which the defence can be made out to the requisite degree of certainty, such cases are unlikely to be common, at least in the absence of agreed facts.
In the present case Transport NSW's submissions to the primary Judge relied on a series of matters that collectively were said to constitute a representation that the Acquisition was not for an unauthorised purpose and was therefore valid. The submissions did not explain why Cudgegong's conduct should be understood as conveying the representation. This led Mr Tomasetti to submit that Transport NSW's failure to explain precisely how the conduct conveyed the representation to Transport NSW meant that the conduct was insufficiently clear and unambiguous to found an estoppel by representation.
Whatever the merits of this argument, Transport NSW's submissions to the primary Judge seem to have assumed that the representation induced it to believe that the Acquisition was valid and that it acted to its detriment in the faith of that belief. The difficulty with that assumption is that although Transport NSW filed affidavits from responsible officers, those affidavits were not read. Consequently, Transport NSW did not adduce evidence to address several critical matters, including the following:

the representation, if any, Transport NSW understood was conveyed by Cudgegong's conduct and the basis of that understanding;
whether Transport NSW was induced by Cudgegong's conduct to form a belief about the validity of the Acquisition; and
whether Transport NSW's actions in the course of the litigation were influenced by a belief formed as the result of Cudgegong's conduct.

It may be accepted that, as the primary Judge found, Transport NSW acted to its detriment in the course of the proceedings in the Land and Environment Court. [29] But that fact, of itself, does not establish that Transport NSW was induced to act to its detriment in consequence of a representation by Cudgegong that the Acquisition Notice was valid. In the absence of evidence from officers of Transport NSW, the material before the primary Judge left open a plausible argument that Transport NSW incurred expense and otherwise acted to its detriment for reasons unconnected with any belief formed on the basis of any representation made by Cudgegong.
The evidence before the primary Judge is consistent with Transport NSW having formed the view that the Acquisition Notice was valid on the basis of its own advice, quite independently of any compensation claim made by Cudgegong. The evidence is also consistent with Transport NSW making the advance payment because it was obliged by statute to do so, and not because of any representation by Cudgegong as to the validity of the Acquisition Notice. [30] There are other issues that might have been the subject of evidence. The connection between the costs incurred by Transport NSW in defending Cudgegong's claim for an additional $13 million or so in compensation and any representations by Cudgegong as to the validity of the Acquisition Notice is not self-evident. Similarly, Transport NSW's decision to develop the Land may have had nothing to do with any representation made by Cudgegong.
For these reasons it cannot be said with a high degree of certainty that Transport NSW's defence based on estoppel by representation will be successful at a final hearing.

Issue estoppel

During the hearing in this Court members of the Court pointed out that Transport NSW may have had an argument available to it based on issue estoppel. Cudgegong commenced proceedings against Transport NSW in April 2013 in the Land and Environment Court seeking an order that the compensation payable in respect of its interest in the "acquired land" be determined at $16.7 million plus disturbance costs. In Cudgegong 3 Pain J held that as between Cudgegong and Golden Mile (the latter having become a party to the proceedings), Cudgegong had the relevant compensable interest in the Land for the purposes of the Land Acquisition Act. Her Honour also directed that Transport NSW make the advance payment to Cudgegong. [31]
On one view, it was an essential element in Cudgegong's compensation claim that the Acquisition Notice was valid. Since Transport NSW was a party to the proceedings in which Cudgegong's entitlement to compensation was upheld, it might have been argued that the issue of validity of the Acquisition Notice was determined in those proceedings and thus Cudgegong was bound by an issue estoppel. [32]
Transport NSW did not raise this argument before the primary Judge, include it in the notice of contention or refer to it in its written submissions in this Court. When the question was raised Mr Lancaster sought to rely on it but frankly admitted that he was "picking it up on the run". Mr Lancaster subsequently sought leave to file an amended notice of contention raising the point. Leave was refused.
The Court took this course because a plea of issue estoppel would seek to uphold an order for summary dismissal of proceedings which was not put to the primary Judge and which would require the matter to be adjourned so that the parties could prepare and make submissions (whether in writing or orally). As Mr Tomasetti pointed out, the question of whether Transport NSW can rely on issue estoppel in the circumstances of this case is by no means straightforward. Moreover Mr Tomasetti accepted that if the matter proceeds to trial it will be open to Transport NSW to rely on the contention at that stage of the proceedings.
It was for these reasons, including Mr Tomasetti's concession, that the Court declined to permit Transport NSW to file an amended notice of contention.

Conventional estoppel

As has been pointed out, Transport NSW's case before the primary Judge was based on estoppel by representation, not estoppel by convention. [33] No argument was put to his Honour that the parties had mutually adopted the validity of the Acquisition Notice as a conventional basis for their relationship.
Transport NSW did not file a notice of contention seeking to rely on estoppel by convention as an alternative ground for upholding the primary Judge's decision. Transport NSW's written submissions in this Court did not rely on estoppel by convention.
Mr Lancaster submitted in the course of oral argument that, notwithstanding that the argument had not previously been advanced, Transport NSW should be permitted to rely on it. For much the same reasons that have been given for rejecting the attempt to raise the issue estoppel argument, Transport NSW should not be permitted at this very late stage to rely on estoppel by convention. Furthermore, a defence of estoppel by convention may give rise to factual questions, such as whether the dealings between Cudgegong and Transport NSW were consistent with Cudgegong reserving its right to challenge the validity of the Acquisition Notice.

Notice of contention

It is unnecessary to decide whether UCPR r 59.10 applies to the Common Law proceedings. Even if it does, the Court has power to extend time. It cannot be said that an application to extend time pursuant to r 59.10(2) is bound to fail.

Orders

The following orders should be made:
Cudgegong's notice of appeal filed on 12 July 2018 be dismissed as incompetent.
Cudgegong pay Sydney Metro's costs of the motion filed on 2 August 2018 insofar as it seeks an order dismissing the notice of appeal as incompetent.
Cudgegong be granted leave to appeal.
Cudgegong be directed to file and serve the notice of appeal within seven days.
Allow the appeal.
Set aside the orders made by Davies J on 21 June 2018, and in lieu thereof dismiss the notice of motion filed 13 October 2017.
Order Sydney Metro to pay Cudgegong's costs of the Notice of Motion filed in the Common Law Division on 13 October 2017.
Order Sydney Metro to pay Cudgegong's costs of the appeal (including the application for leave to appeal).

Endnotes

Cudgegong Australia Pty Ltd v Transport for New South Wales [2018] NSWSC 929 (Primary Judgment) at [21].
Primary Judgment at [35]-[36].
Primary Judgment at [66]-[67].
Primary Judgment at [74], [94].
UCPR r 59.10 relevantly provides as follows:

"(1) Proceedings for judicial review of a decision must be commenced within 3 months of the date of the decision.

(2) The court may, at any time, extend the time for commencing proceedings fixed by subrule (1).

(3) In considering whether to extend time under subrule (2), the court should take account of such factors as are relevant in the circumstances of the particular case, including the following:

(a) any particular interest of the plaintiff in challenging the decision, (b) possible prejudice to other persons caused by the passage of time, if the relief were to be granted, including but not limited to prejudice to parties to the proceedings, (c) the time at which the plaintiff became or, by exercising reasonable diligence, should have become aware of the decision, (d) any relevant public interest." 6. Primary Judgment at [90], [91]. 7. Primary Judgment at [93]. 8. Supreme Court Act 1970 (NSW), s 101(2)(e). 9. See now Transport Administration Act 1988 (NSW), s 38. 10. Primary Judgment at [2]-[15]. 11. Cudgegong Australia Pty Ltd v Transport for NSW [2014] NSWLEC 19; 212 LGERA 125 (Cudgegong 1). 12. Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd (2015) 89 NSWLR 237; [2015] NSWCA 100 (Golden Mile 1). 13. Cudgegong v Transport for NSW (No 3) [2015] NSWLEC 185 (Cudgegong 3). (Between Cudgegong 1 and Cudgegong 3 Pain J dealt with a stay application.) 14. Golden Mile Property Investments Pty Ltd (in liq) v Cudgegong Australia Pty Ltd [2016] NSWCA 224 (Golden Mile 2). 15. Primary Judgment at [22]. 16. (1937) 59 CLR 641; [1937] HCA 58 at 674-676 (McTiernan J agreeing). 17. Grundt at 676. 18. (1933) 49 CLR 507; [1933] HCA 61 at 547. 19. Primary Judgment at [66]. 20. As to estoppel by convention, see Grundt at 577; KR Handley, Estoppel by Conduct and Election (2nd ed, 2016, Thomson Reuters), at [8-001]-[8-003]. 21. See at [20] above. 22. Estoppel by Conduct and Election at [1-006]. 23. Such as Pye v Hawkins (1967) 87 WN (Pt 1) (NSW) 143; Australian Workers Union (New South Wales Branch) v Minister for Natural Resources (1991) 43 IR 158 (NSWCA). 24. Primary Judgment at [26]. 25. Primary Judgment at [74]. 26. Primary Judgment at [22]-[23]. 27. Primary Judgment at [34] citing Simmons v NSW Trustee and Guardian [2014] NSWCA 405 at [196]-[200] (Gleeson JA, Beazley P and Barrett JA agreeing) and authorities cited there. 28. See at [26] above. 29. See at [8] above. 30. Section 68(2) of the Land Acquisition Act provides that if a State authority gives an owner a compensation notice, the authority is required to pay 90 per cent of the amount offered in the notice as an advance payment within 28 days after the authority is given notice of the institution of proceedings. If the advance payment exceeds the amount of compensation to which the owner is entitled, the owner must repay the excess: s 48(4), (5). 31. Cudgegong 3 at [93]. 32. See Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 at [21]-[22] per curiam. 33. See at [25] above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 December 2018

Transport Administration Amendment (Sydney Metro) Act 2018(NSW)

Solicitors: Wyndham Lawyers (Appellant) Ashurst Australia (Respondent) File Number(s): 2018/214747 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Citation: [2018] NSWSC 929 Date of Decision: 21 June 2018 Before: Davies J File Number(s): 2017/58504

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the decision] By a notice (Acquisition Notice) published in the Government Gazette on 21 September 2012, pursuant to section 19(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Land Acquisition Act), Transport for New South Wales (Transport NSW), the predecessor to the respondent (Sydney Metro), acquired land at Rouse Hill for the construction of the North West Rail Link. In February 2017, the applicant sought declarations in the Common Law Division that the acquisition of the land was invalid. Sydney Metro sought an order pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 13.4(1)(b) dismissing the proceedings on that ground that no reasonable cause of action was disclosed. Sydney Metro contended that the applicant was estopped from claiming that the Acquisition Notice was invalid because it had claimed compensation under the Land Acquisition Act for the acquisition of its interest in the land. The primary Judge upheld Sydney Metro's contention and dismissed the proceedings. The applicant sought leave to appeal. The Court heard argument on the leave application and the appeal concurrently. Granting leave and allowing the appeal Sackville AJA (Meagher and Leeming JJA agreeing) held: (i) The only estoppel upon which Sydney Metro relied upon before the primary Judge was estoppel by representation: [1], [2], [30]. Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61; Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58; applied. (ii) Sydney Metro did not adduce evidence to address several critical matters establishing the elements of estoppel by representation. The evidence before the primary Judge left open a plausible argument that Sydney Metro incurred expense and otherwise acted to its detriment for reasons unconnected with any belief formed on the basis of any representation by the applicant: [1], [2], [33]-[35]. (iii) An order for summary dismissal should not be made unless there is a high degree of certainty about the ultimate outcome should the proceedings go to trial in the ordinary way. It could not be said with a high degree of certainty that Sydney Metro's defence based on estoppel by representation would be successful at a final hearing: [1], [2], [31], [36]. Simmons v NSW Trustee and Guardian [2014] NSWCA 405 applied. (iv) Sydney Metro might have an argument available based on issue estoppel as on one view the validity of the Acquisition Notice was an essential element in the applicant's compensation claim. Leave to rely on this contention should be refused as it was not raised before the primary Judge and Sydney Metro could rely on the contention if the matter proceeds to trial: [1], [2], [37]-[41]. Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 considered. (v) Sydney Metro did not previously rely on conventional estoppel before the primary Judge. It should not be permitted to rely on the defence at this stage because it would give rise to factual issues: [1], [2], [42]-[44].

Cudgegong Australia Pty Limited v Sydney Metro

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Judgment (12 paragraphs)

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