Donnelly v Kempsey Local Aboriginal Land Council

Supreme Court of NSW|2021-10-06|Before: Henry J

Solicitors: Johnson Winter & Slattery (Plaintiff/ Cross-Defendant) Maher Legal (Defendant/Cross-Claimant) File Number(s): 2020/244304 Publication restriction: Nil

Judgment

These proceedings arise out the occupation by the plaintiff, Ms Lynette Donnelly, of land owned by the defendant, Kempsey Local Aboriginal Land Council (KLALC), which is located on Gowings Hill Road, South Kempsey (the Property).
KLALC is a Local Aboriginal Land Council and statutory corporation established under s 50 of the Aboriginal Land Rights Act 1983 (NSW) (ALR Act). Under s 51 of the ALR Act, the objects of KLALC are to improve, protect and foster the best interests of all Aboriginal persons within its local area and other persons who are its members.
Ms Donnelly is an Aboriginal Australian who lived on the Property from 1995 for over twenty years. During that time she carried out works to the Property, including installing a pre-fabricated house that had been sold to her by KLALC.
In these proceedings, Ms Donnelly seeks to recover from KLALC an amount of money that reflects the value of improvements which she made to the Property by way of equitable compensation or restitution. Ms Donnelly claims to be entitled to this relief in circumstances where she occupied and carried out the works to the Property in reliance on an arrangement she had with KLALC to grant her a 99-year lease that was void by operation of the ALR Act.
KLALC denies that Ms Donnelly is entitled to any relief. It contends that it is immune from suit by reason of the provisions of the ALR Act and an Anshun estoppel based on Ms Donnelly's proceedings in 2013 that resulted in consent orders granting KLALC possession of the Property. KLALC also denies that Ms Donnelly's works have improved the value of the Property and raises a defence of unclean hands based on her continuing trespass on the Property. In November 2016, KLALC obtained possession of the Property, although Ms Donnelly has continued to use it for her benefit.
KLALC has filed a cross-claim against Ms Donnelly seeking injunctions that require her to remove her personal belongings from the Property and restrain her from entering or using it for any purpose, as well as nominal damages for continuing trespass and costs.
The parties have resolved KLALC's cross-claim for injunctive relief. Orders were made by consent on 19 October 2021 to deal with that aspect of the proceedings.
Thus, the issues for determination arise, in the main, out of Ms Donnelly's claim. They require consideration of events going back to 1991, Ms Donnelly's 2013 proceedings in this Court and dealings between the parties since that time. Also relevant are KLALC's bankruptcy proceedings against Ms Donnelly in the Federal Circuit Court which were adjourned pending the decision in this case and required judgment to be given this month.
For the reasons that follow, I conclude that Ms Donnelly is entitled to relief on her claim in the amount of $115,000, with payment to be made within 21 days of Ms Donnelly complying with the orders made on 19 October 2021, and that KLALC is entitled to nominal damages for trespass in the amount of $800.

The evidence

Ms Donnelly relied on her affidavit affirmed on 22 January 2021. She also relied on an affidavit of Mr Damien Burley dated 2 February 2021 that annexed his expert report dated 20 April 2020 and a supplementary report from Mr Burley dated 1 October 2021. Mr Burley is a Certified Practising Valuer at Acumentis Regional Pty Ltd.
KLALC relied on two affidavits of Mr Anthony Maher sworn 15 February and 22 September 2021. Mr Maher is the solicitor for KLALC.
The hearing was conducted via audio visual link using the Microsoft Teams platform.
Each of the witnesses were cross-examined. I did not form an adverse view of the credit of any of the witnesses and note that no submissions were advanced that such credit findings should be made.
Ms Donnelly gave evidence in a direct and straightforward manner. She came across as someone who answered the questions put to her honestly and to the best of her ability. I should record that Ms Donnelly is unable to read or write and when asked questions about statements made in her affidavit or other documents, had the relevant parts read out to her.
Submissions were made about the reliability of some aspects of Ms Donnelly's evidence and the conclusions in and what weight should be given to Mr Burley's reports, which I deal with below.

Facts

The following is a chronology of the facts and other proceedings between the parties based on the affidavit, oral and documentary evidence. It also draws on the helpful summary of the procedural history by Williams J in Donnelly v Kempsey Local Aboriginal Land Council [2020] NSWSC 1548 (2020 judgment).
Most of the facts are not in dispute. Unless otherwise indicated, I am satisfied of the following matters.

1991-2008: Arrangement between Ms Donnelly and KLALC in relation to the Property

In the early 1990's, Ms Donnelly made enquiries with KLALC about obtaining a lease for some land. Ms Donnelly was told that she would be entitled to obtain a peppercorn lease paying $1.00 per year for 99 years if she joined KLALC and started attending meetings (which she did). Her request for a lease was put on an agenda of a KLALC meeting.
At a KLALC meeting held on 25 November 1991, KLALC resolved to sell two houses from the Figtree Estate to Ms Donnelly and assist her with the costs of transporting those houses to the Property. According to a letter from Ms Donnelly to KLALC, she believed that the houses would still be good to use when she received her lease of the Property.
At a KLALC meeting held on 9 June 1992, KLALC resolved to grant Ms Donnelly a 99-year lease of the Property. Prior to that, KLALC had placed an advertisement in a Kempsey newspaper about a Special Lease Meeting to be held under the ALR Act to discuss the grant of a lease of the Property to Ms Donnelly.
As events transpired, Ms Donnelly was unable to purchase two houses from the Figtree Estate as they had been damaged. On 6 August 1992 [1] , Ms Donnelly wrote to KLALC requesting to purchase one house from the Figtree Estate "now that her lease of the [Property] had been finalised". On 2 September 1992, Ms Donnelly purchased one house for $200. According to Ms Donnelly's evidence, the Figtree house was made from steel frames that were bolted together from top to bottom.
At a KLALC meeting held on 28 September 1992, Ms Donnelly's draft lease of the Property was tabled. The draft lease that was provided to Ms Donnelly was for 99 years and rent of $1 per annum. It records that KLALC had the power to lease any land vested in it by virtue of the powers conferred and conditions imposed under s 40 of the ALR Act and that the premises were to be used for the housing of Aboriginal people. The draft lease also provides that the lessee would pay rates, taxes and charges and that any dwelling houses constructed or altered would be in accordance with Local Government requirements.
On 28 February 1995, Kempsey Shire Council wrote to Ms Donnelly requesting evidence of her ownership of the Property or a letter from the owner granting approval for the purposes of determining her application for a Building Permit to relocate and develop the house from the Figtree Estate on the Property.
On 1 March 1995, KLALC wrote to Kempsey Shire Council and confirmed that Ms Donnelly had applied for and been granted a lease for the Property by KLALC on 9 June 1992.
On 27 March 1995, Kempsey Shire Council issued a conditional Building Permit to Ms Donnelly which allowed her to erect the relocatable Figtree house on the Property. The Building Permit authorised development substantially in accordance with a stamped plan that included sketches of the proposed dwelling, one of which was an internal floorplan that identified the dwelling as having one kitchen, a family room, three bedrooms, one bathroom and one laundry. The Building Permit was subject to 19 conditions which included the construction of vehicular access, the provision of wastewater disposal and water for firefighting purposes, a requirement for inspection and approval prior to use or occupation of the dwelling and a limit of only one dwelling.
In around April 1995, Ms Donnelly relocated and commenced works to the Property, including to install the Figtree house. The Property was vacant land prior to Ms Donnelly taking possession of it.
From around April 1995, Ms Donnelly undertook numerous works to the Property, which included: 1. landscaping and levelling the land around the site of the proposed house; 2. relocating and installing the Figtree house; 3. constructing a retaining wall; 4. undertaking trenching to connect mains water to the house; 5. arranging and paying the cost of erecting a builders' power pole and thereafter the main power pole and connection to the mains electricity supply; 6. installing a drainage and septic system; 7. undertaking concrete paving; 8. planting a protea grove; 9. adding an extension to the east of the house; and 10. constructing a carport.
On 18 May 2001, Kempsey Shire Council undertook an inspection of the Property and subsequently provided permission for Ms Donnelly to occupy the dwelling.
On 7 August 2008, the lawyers for KLALC sent a letter to Ms Donnelly requesting that she vacate the Property by 22 August 2008 as KLALC wanted to take possession. The letter asserted that Ms Donnelly did not have a lease or any other authority from KLALC to occupy the Property, that she did not pay any rent or rates and foreshadowed the commencement of proceedings for possession of the Property in the Supreme Court if Ms Donnelly failed to vacate.
Ms Donnelly's unchallenged evidence is that she had paid rates, water and electricity for the Property up until 7 August 2008. She says that, from August 2008, Kempsey Shire Council would not accept rate payments as they had been told that she had no right of occupation, but that she has since made payments into her solicitor's trust account to enable her to attend to paying those rates once she is able to do so. She also gives evidence that she was surprised to receive the 7 August 2008 letter as she understood that she had a lease at the time.
Pausing here, between 1992 and 2008, KLALC was entitled to lease the Property to Ms Donnelly if the lease was approved at a meeting of KLALC that had been called for that purpose and was the subject of approval by the New South Aboriginal Land Council (NSWALC): ALR Act, s 40B(2) (as in force at the time). It is common ground that the lease to Ms Donnelly was approved at a meeting of KLALC that had been called for that purpose but was not approved by NSWALC.
There is no evidence from KLALC as to whether it sought approval for the lease from NSWALC and, if it did, what response was received. Nor is there any evidence from KLALC as to what prompted it to send the letter in August 2008 asking Ms Donnelly to vacate the Property.

2013: Ms Donnelly commences proceedings against KLALC to enforce the lease

On 30 October 2013, Ms Donnelly commenced proceedings 2013/327345 against KLALC in this Court (2013 proceeding) seeking declaratory relief in relation to an agreement for lease of the Property between her and KLALC and specific performance of a lease of the Property from KLALC to Ms Donnelly for 99 years at a rent of $1 per year commencing on 9 June 1992, or otherwise on the terms of the unexecuted lease attached to the statement of claim.
Ms Donnelly's statement of claim referred to the facts outlined at [19]-[20], [23]-[26] and [29] above and asserted that she had relied on KLALC's representation about the lease in relocating and installing the house on the Property, making the other improvements, occupying and residing there, and paying rates and levies. It also claimed that KLALC was estopped from denying Ms Donnelly's demand to execute the lease.
On 5 March 2014, KLALC filed its defence in the 2013 proceedings, the essence of which was that KLALC could not grant the lease sought by Ms Donnelly without approval from NSWALC, which approval had not been granted, relying on ss 40 and 40B of the ALR Act. KLALC admitted that it had agreed to assist Ms Donnelly with transportation costs of the Figtree house (although not that the house had been transported in part performance of any lease) and to her application to lease the Property on 9 June 1992, subject to approval by NSWALC.
On 6 May 2014, the parties attended a mediation in Sydney at which they reached an in-principle agreement. Pursuant to that agreement, the Property would be valued.
On 18 July 2014, Mr James Flanagan, a certified valuer from Opteon, conducted an inspection of the Property on the joint instructions of Ms Donnelly and KLALC. In his report dated 20 July 2014, Mr Flanagan valued the land at $120,000, the improvements at $155,000 and the market value of the Property at $275,000 (Opteon Report).
On 14 August 2014, Ms Donnelly's solicitors wrote to KLALC and requested that KLALC seek approval from NSWALC of KLALC's 9 June 1992 resolution to grant a lease to Ms Donnelly for the Property. In a reply to Ms Donnelly sent on 24 September 2014, KLALC's solicitors indicated that it would not seek approval from NSWALC of the purported lease and asserted that such a course did not form part of the in-principle agreement reached at the mediation on 6 May 2014.
On 15 October 2014, KLALC filed a cross-claim in the 2013 proceeding for possession of the Property, leave to issue a writ of possession, and damages. Ms Donnelly's defence to the cross-claim, filed on 5 November 2014, denied KLALC's entitlement to possession.
On 20 August 2015, Ms Donnelly's solicitors served written submissions on KLALC's solicitors which stated that Ms Donnelly accepted that the ALR Act barred her claim to a lease. The submissions identified the only issue between the parties as being the period of time that should be provided for Ms Donnelly to remove her house and fixtures which she had erected since entering into possession and sought a period of three years for her to vacate the Property.
On 25 August 2015, Young AJ made consent orders in the 2013 proceeding in the following terms: 1. Dismiss the statement of claim filed 30 October 2013. 2. Judgment for possession of the whole of the land contained in and being Lot 187 in Certificate of Title Volume 15255 Folio 191, situated at and known as 142 Gowings Hill Road, South Kempsey in the State of New South Wales ('Property'). 3. The plaintiff/cross-defendant is to pay the defendant/cross-claimant's costs to date on the ordinary basis. 4. Leave for the defendant/cross-claimant to file any writ of possession in respect of the Property be withheld until further order. 5. Note that the issue as to the plaintiff's removal of the dwelling, fixtures and fittings on the land is reserved. 6. The proceedings be listed in the Registrar's list on 6 October 2015 at 9am. 7. Further questions of costs reserved.
During October 2015, the parties' solicitors were negotiating about Ms Donnelly's entitlement to remove structural improvements from the Property. A draft deed of agreement set out terms on which KLALC was prepared to resolve the dispute. The draft deed provided for Ms Donnelly to vacate the Property within six months and referred to the option of her removing the dwelling and fixtures from the Property, with KLALC having a right to apply any security or call on a bank guarantee if she did not remove all items so as to return the Property to the same condition as when she took occupation. The recitals, however, referred to KLALC's denial, subject to the deed, that Ms Donnelly was entitled to remove the dwelling, fixtures and fittings from the Property. KLALC's terms were not accepted and the deed was not signed.
On 6 October 2015, Mr Maher notified Ms Donnelly's solicitor that KLALC was not prepared to pay for any dwellings, fixtures, structures or other items on the Property.
On 20 October 2015, Darke J granted leave to issue a writ of possession for the Property but stayed the execution of the writ up to and including 5 pm on 17 November 2015.
On 16 November 2015, Ms Donnelly filed a cross-claim in the 2013 proceeding seeking an order that KLALC pay her the sum of $155,000, which was asserted to be the value of the improvements made to the Property (as assessed in the Opteon Report). Ms Donnelly's cross-claim relied on largely the same factual matters set out in her statement of claim in the 2013 proceeding and claimed damages for $155,000 as the amount expended on the Property.
On 17 November 2015, KLALC filed a notice of motion seeking orders that Ms Donnelly's cross-claim be dismissed on terms that would prevent her from bringing any fresh proceedings or claiming the same relief in fresh proceedings. It also sought orders for Ms Donnelly's solicitor to indemnity KLALC against any costs payable by it in relation to the notice of motion and for Ms Donnelly to pay its costs of the 2013 proceeding from 26 August 2015.
That day, White J (as his Honour then was) dismissed Ms Donnelly's cross-claim and made orders in the following terms: 1. The cross-claim filed by the plaintiff on 16 November 2015 is dismissed on terms that this order shall not prevent the plaintiff from bringing any fresh proceedings or claiming the same relief in fresh proceedings. 2. The plaintiff is to pay the defendant's costs incurred as from 26 August 2015. 3. The defendant's notice of motion filed in court on 17 November 2015 is otherwise dismissed.

2016: KLALC takes possession of the Property and obtains costs judgment

On 9 November 2016, KLALC took possession of the Property, a writ having been issued on 7 March 2016. On the day it took possession, Steve Wallis and Associates attended the Property on KLALC's behalf and produced a report on the Property which identified that several used vehicles, a caravan, two horses, two dogs and goldfish were present on the Property and that the sheds and the front gate had been locked.
Ms Donnelly accepts that when she vacated the Property on 9 November 2016, she left several personal belongings in the dwelling, as well as her two dogs and two horses on the land. She gives evidence that she recalls being offered in late 2016 the opportunity to remove the dwelling and fixtures from the Property but that she was unable to afford the removal and, in any event, had nowhere to put those items. She also gives evidence that at no point had she been told to remove her possessions and animals from the Property and that nobody from KLALC or otherwise questioned her about her presence there.
On 29 November 2016, KLALC obtained judgment in the Port Macquarie Local Court against Ms Donnelly in the amount of $71,431.21. The judgment reflected the value of the certificate of determination of costs and the certificate of determination of the costs assessment in relation to the costs order made by Young AJ which KLALC had registered in the Port Macquarie Local Court.
During December 2016, the parties' solicitors negotiated about Ms Donnelly having access to the Property. She was granted access for two hours on 23 December 2016.

2017: Bankruptcy notice

In March 2017, Ms Donnelly secured pro bono representation from Clayton Utz.
On 27 September 2017, KLALC served a bankruptcy notice on Ms Donnelly for $75,863.96 in respect of the Local Court judgment sum plus accrued interest.
On 16 October 2017, Clayton Utz wrote to Mr Maher asserting that Ms Donnelly had a claim against KLALC in relation to the improvements made to the Property that would exceed the amount of KLALC's claim sufficient to have the bankruptcy notice set aside. The letter invited KLALC to withdraw the bankruptcy notice and confirm that no further action would be taken in respect of it. An offer was made to proceed with settlement negotiations that contemplated Ms Donnelly purchasing the Property from KLALC for $120,000 and paying the Local Court judgment sum over a series of instalments.
On 18 October 2017, KLALC wrote to the Australian Financial Security Authority, copied to Clayton Utz, and withdrew the bankruptcy notice.
On 30 November 2017, Clayton Utz sent Mr Maher a letter from Mr Kane Duke of Kempsey Shire Council to Ms Donnelly dated 30 November 2017 which stated that the Council had inspected the relocated house at the Property and given Ms Donnelly permission to occupy the dwelling.
On 4 December 2017, Mr Duke sent an email to Mr Maher confirming that the inspection referred to in his 30 November 2017 letter to Ms Donnelly took place on 18 May 2001. The email also confirmed that Mr Kane did not enter the dwelling when he inspected it on 30 November 2017, and that upon attendance on 30 November 2017, he "identified an addition to the dwelling that [had] not been approved by Kempsey Shire Council and [was] likely to be dealt with by way of order from [the Council] in the future".
On 19 March 2018, Mr Maher wrote to Clayton Utz about Ms Donnelly's personal possessions and animals at the Property and stated that the consent or permission that had previously been provided for her to leave those them on the Property was "hereby expressly withdrawn". The letter stated that Ms Donnelly was required to take immediate steps to remove all her possessions and animals from the Property at a time and date nominated to KLALC, the animals would be transferred to a public pound at Ms Donnelly's cost if they were not removed by 3 pm on 22 March 2018, and KLALC reserved its right to remove the other items if they were not collected within 21 days. It also stated that it was not to be construed as providing Ms Donnelly or any other person with consent or permission to access the Property.

2018: Second bankruptcy notice and Ms Donnelly's application to set it aside

On 18 April 2018, KLALC served a second bankruptcy notice on Ms Donnelly in the amount of $78,770.13, being the judgment sum plus accrued interest. At this time, Ms Donnelly was no longer represented by Clayton Utz and she took the notice to Legal Aid NSW.
On 2 May 2018, Legal Aid NSW sent a letter to Mr Maher on behalf of Ms Donnelly regarding the second bankruptcy notice. The letter acknowledged the difficulties in resolving the dispute between the parties, referred to Ms Donnelly's offsetting claim by reference to Clayton Utz's 16 October 2017 letter, and proposed a resolution that involved Ms Donnelly entering into a three-year tenancy agreement with KLALC at a weekly rent of $350 with an option to purchase if she became eligible for finance in return for her relinquishing her rights to make any claim in set-off. Ms Donnelly's offer was rejected on 8 May 2018.
On 9 May 2018, Ms Donnelly filed an application in the Federal Circuit Court of Australia to set aside the second bankruptcy notice (SYG1313/2018, 2018 proceeding).
On 16 October 2018, Ms Donnelly lodged a caveat on the Property, as foreshadowed in a letter to Mr Maher dated 27 July 2018 from Ms Donnelly's new pro bono lawyers, Sparke Helmore.
On 4 December 2018, Judge Barnes heard Ms Donnelly's application in the 2018 proceeding.
On 5 November 2019, Judge Barnes dismissed Ms Donnelly's application to set aside the second bankruptcy notice: Donnelly v Kempsey Local Aboriginal Land Council [2019] FCCA 3152. On 13 December 2019, Ms Donnelly was ordered to pay KLALC's costs of the application.

December 2019 - April 2020: KLALC Federal Circuit Court proceedings

On 20 December 2019, KLALC filed a creditor's petition in the Federal Circuit Court of Australia (Bankruptcy proceeding). The creditor's petition was served on Ms Donnelly on 23 December 2019.
On 10 January 2020, Legal Aid wrote to KLALC on behalf of Ms Donnelly requesting access to the Property for the purpose of obtaining an up-to-date valuation, which request was declined.
In February 2020, Ms Donnelly secured pro bono legal representation by Johnson Winter & Slattery.
On 2 March 2020, Ms Donnelly filed a notice stating grounds of opposition in the Bankruptcy proceeding.
On 2 April 2020, at a case management hearing in the Bankruptcy proceeding, Judge Driver directed KLALC to grant access to the Property by no later than 22 April 2020 to a Certified Practising Valuer instructed by Ms Donnelly for the purpose of obtaining an expert report. His Honour set down the matter for a one-day hearing commencing on 4 September 2020.
On 20 April 2020, Mr Burley undertook an inspection of the Property for the Bankruptcy proceeding and produced a report dated 20 April 2020 that valued the Property at $270,000, of which $100,000 was for the land and $170,000 was for improvements. Mr Maher also attended the Property as KLALC's representative during the inspection conducted by Mr Burley, as did Ms Donnelly and her de facto partner, Mr Wayne Witchard. Mr Maher's evidence is that, at the inspection, Ms Donnelly told him that she had dogs locked up at the Property to "protect the place" and they had a discussion about the improvements and the rubbish that was at the Property.

August 2020 to date: Ms Donnelly commences these proceedings

On 11 August 2020, Johnson Winter & Slattery served on KLALC the unsealed statement of claim in these proceedings (2020/244304) and sought KLALC's consent to adjourn the hearing of the Bankruptcy proceeding on 4 September 2020 to allow for the determination of Ms Donnelly's claims in this Court.
On 21 August 2020, Ms Donnelly filed her statement of claim in these proceedings.
On 28 August 2020, KLALC made an application for summary dismissal of these proceedings before Parker J as the Equity Duty Judge. His Honour dismissed the application with costs.
On 4 September 2020, Judge Driver made orders that adjourned the Bankruptcy proceeding pending resolution of these proceedings on the proviso that they were to be pursued diligently by Ms Donnelly and required the parties to inform the Federal Circuit Court within 7 days of the outcome of these proceedings. The orders also extended the expiration of KLALC's creditor's petition presented on 18 December 2018 up to and including 17 December 2021.
By notice of motion filed on 11 September 2020, KLALC sought summary dismissal of these proceedings.
On 18 September 2020, Ms Donnelly filed an amended statement of claim in these proceedings (ASOC).
On 4 November 2020, Williams J dismissed KLALC's motion for summary dismissal of the present proceedings with costs for the reasons in the 2020 judgment.
On 26 November 2020, KLALC filed a defence to the amended statement of claim and its cross-claim in these proceedings.
On 15 January 2021, Ms Donnelly filed her defence to the cross-claim and reply to the defence to the amended statement of claim.
On 12 February 2021, Mr Maher attended the Property. When he arrived, he saw two dogs inside the Property, one of which he recognised from his previous attendance. Mr Maher did not enter the Property.
On 21 September 2021, Mr Maher once again attended the Property. He gives evidence that he observed a padlock on the gate to the Property and a dog which remained on the other side of the gate.

The claims and issues between the parties

In these proceedings, Ms Donnelly seeks: 1. an order that KLALC pay equitable compensation to her for the value of the improvements she has made to the Property, namely the installation of the Figtree house on the Land and the associated works referred to at [27] above: ASOC Relief at [3]; and 2. alternatively, an order that KLALC pay restitution to her in the amount of the value of the improvements: ASOC Relief at [3A].
Ms Donnelly had also sought, but did not press at the hearing, a claim for declaratory relief that KLALC holds the Property on constructive trust in her favour to the value of the improvements: ASOC Relief at [1]; T74.39-44.
Ms Donnelly's claim for equitable compensation is based on proprietary estoppel by encouragement or, alternatively, the breakdown of a joint endeavour giving rise to an equity based on the principles in Baumgartner v Baumgartner (1987) 164 CLR 137 (Baumgartner) at 147-8; [1987] HCA 59 and Muschinski v Dodds (1985) 160 CLR 583 (Muschinski v Dodds); [1985] HCA 78.
The basis for Ms Donnelly's claim in restitution is unjust enrichment, which is said to be the benefit to KLALC from Ms Donnelly's improvements to the Property in circumstances where the agreement for the 99-year lease was void by reason of the operation of the ALR Act.
Ms Donnelly's claims are pleaded as arising from: 1. Ms Donnelly's understanding that she had or was entitled to a 99-year lease of the Property, encouraged by the conduct of KLALC: ASOC at [7]-[8]; 2. KLALC's representation to Kempsey Shire Council that Ms Donnelly had been granted a 99-year lease of the Property on 9 June 1992: ASOC at [10]; 3. the works that Ms Donnelly carried out to the Property (namely the works identified at [27] above) were undertaken in reliance on her understanding and KLALC's representation and/or in pursuance of a joint endeavour between Ms Donnelly and KLALC: ASOC at [13]-[15] and [29]; 4. the basis on which Ms Donnelly undertook the works subsequently became ineffective and/or broke down by reason of NSWALC not having given approval of a 99-year lease of the Property, Ms Donnelly and KLALC's mistaken belief that KLALC had power and authority to grant Ms Donnelly a 99-year lease of the Property which it was not permitted to do without the approval of NSWALC pursuant to s 42B of the ALR Act, and KLALC obtaining possession of the Property: ASOC at [16]-[18], [22], [30] and [33]; 5. the improvements made by Ms Donnelly added value to the Property which she can no longer enjoy the benefit of and conferred a benefit onto KLALC: ASOC at [25], [26] and [32d]; and/or 6. the circumstances render it unconscionable for KLALC to retain the benefit of Ms Donnelly's improvements: ASOC at [25]-[31].
By its defence, KLALC raises the following: 1. as a matter of fact, KLALC did not encourage and Ms Donnelly did not have an understanding that KLALC had granted her a 99-year lease as she knew that the Property could not be leased without approval from NSWALC: Defence at [7]-[8]; 2. s 42E of the ALR Act renders KLALC immune from Ms Donnelly's claims as they involve her seeking remedies in respect of a warranty or promise relating to an unenforceable agreement for lease of the Property: Defence at [17], [34(d)]; 3. Ms Donnelly's claim is barred by an Anshun estoppel arising out of the 2013 proceeding: Defence at [34(a)]-[34(b)], [34(c)(iii)]; 4. the works undertaken by Ms Donnelly do not constitute improvements as some were undertaken without approval by Kempsey Shire Council or KLALC, impose a liability on KLALC and, in any event, are affixed to the land and consequently owned by KLALC: Defence at [13(a)]-[13(h)]; and/or 5. Ms Donnelly should be refused relief by reason of unclean hands arising from her continuing trespass on the Property and delay in bringing these proceedings which have caused prejudice to KLALC: Defence at [13(i)], [26(a)]-[26(d)], [34(f)]-[34(g)].
KLALC's defence also asserted res judicata and issue estoppel (Defence at [34(c)(i)]-[34(c)(ii)]), but these were not pressed at the hearing: KLALC's Closing Submissions (DCS) at [33].
As agreed between the parties, the issues for determination are: 1. Whether Ms Donnelly has established that she contributed any improvements to the Property and, if so, to what value. 2. Whether Ms Donnelly has established a claim for equitable compensation based on proprietary estoppel by encouragement or a Baumgartner equity, or a common law claim for restitution. 3. Whether Ms Donnelly's claim is precluded by s 42E of the Aboriginal Land Rights Act 1983 (NSW) (ALR Act). 4. Whether, given the history of legal proceedings between the parties, Ms Donnelly is prevented from obtaining any relief based on Anshun estoppel and other discretionary considerations.
The remaining issue raised by KLALC's cross-claim concerns KLALC's claim for damages for trespass which, as pressed, is a claim for nominal damages only: T53.12-3, T42.49-50.

Issue 1: Has Ms Donnelly established that she has contributed any "improvements" to the Property and, if so, to what value?

There is no dispute that Ms Donnelly carried out the works to the Property that are identified at [27] above (ASOC at [13] and Defence at [13(a)]). The issue between the parties is whether those works constitute improvements to the Property and, if so, what is their value.
Ms Donnelly submits that her works are improvements and confer a benefit on KLALC as they have improved the value of the Property. She relies on Mr Burley's expert valuation evidence to contend that the value of the improvements as at 1 October 2021 is $220,000.
KLALC disputes that Ms Donnelly's works constitute improvements that have added value to the Property. KLALC submits that Mr Burley's valuation evidence should be rejected for reasons that relate to his underlying assumptions and says that the additional structures on the Property are of no benefit to it. It also submits that it made clear to Ms Donnelly that it did not consider the additional structures to be of benefit to it.
As noted above, Mr Burley inspected the Property on 20 April 2020. He did so having been instructed by Ms Donnelly for the purposes of preparing a valuation of the Property that determined the details and value of improvements to it, specifically the details and value of approved and non-approved structural improvements.
Mr Burley's first report, dated 20 April 2020 (20 April Report), identifies the Property as an irregular-shaped large residential lot. It records that the Property is subdivided into five main paddocks, is connected to town water and electricity and has been improved by the addition of an average quality, older-styled single level dwelling with three bedrooms, two bathrooms, kitchen, living, dining and laundry rooms and an extensive deck to the southern and western alignments, which was relocated to the site around 1995. It identifies the approved structural improvements as including the dwelling, connection of services (including water and electricity), land improvements such as site levelling, cut and fill, retaining walls and fencing. The unapproved improvements are identified as including an incomplete extension to the eastern alignment and the carport to the western side of the dwelling.
Mr Burley adopts a direct comparison method of valuation assuming that the highest and best use of the Property is the existing rural residential use, based on the designation of the property in the Town Planning Scheme as "R5 Large Lot Residential". His valuation assumes that the Property was 'land only' as at the date of occupation with extensive rubbish present, no fencing and no land improvements.
In undertaking his valuation, Mr Burley also records that the title to the Property includes a restriction on dealings and plans as it is subject to the ALR Act. He notes that any dealing must be fair and equitable to the local Aboriginal council members, assumes that any dealing would consider the definition of market value included in his report, and therefore assumes that the restriction has no impact on his valuation. I pause to observe that no submission was advanced by KLALC that this assumption was flawed or undermined the conclusions in Mr Burley's report, or that the ALR Act restrictions meant that his approach of assessing the market value of the improvements was not an appropriate method of valuation.
Mr Burley values the Property at $270,000, with the land component at $100,000 and the improvements at $170,000. Mr Burley's report apportions the value of the improvements as follows: Improvements Added Value Dwelling and Outdoor Area $118,500 Ancillary Improvements Concrete/Paths $5,000 Landscaping $2,500 Fencing $3,000 Garden Sheds/other $500 $11,000 Connection of Services $5,000 Total Improvements $134,500 Adopt $135,000 Unapproved Structures Carport (western end) $8,850 Extension (eastern end) $26,100 $34,950 Adopt $35,000

In his affidavit of 1 February 2021, Mr Burley opines that he expects the value of the Property would have increased by approximately 10% to 15% since the date of his 20 April Report, with the ratio between the value of the land and the improvements remaining consistent with the ratio in that report. Mr Burley's opinion is based on improvements in the market for rural residential assets similar to the Property within the Kempsey and Greater Macleay area since the date of his 20 April Report and assumes that the Property, dwelling and other improvements remained in the same physical state as when he observed them on 20 April 2020.
In a letter dated 1 October 2021, Mr Burley revised his assessment of the value of the Property to $380,000, with the land component at $160,000 and the improvements at $220,000. He assesses the value of the unapproved structures as remaining at $35,000 and the value of the other improvements as increasing to $185,000. Mr Burley's revised valuation is based on improvements in the market for rural residential assets since 2020, was produced without a further inspection of the Property and assumes that the Property, dwelling and other improvements remained in a similar condition as when he observed them on 20 April 2020.
KLALC did not take issue with some of the works identified and valued as improvements by Mr Burley, such as the connection of services, concrete paths, landscaping, fencing and garden sheds (ancillary improvements), together valued at $16,000. However, it challenges Mr Burley's valuations on the basis that he has failed to take into account two matters: first, the impact of possible storm damage since conducting his inspection on 20 April 2020; and second, the prospect of the Council needing to undertake remedial works to deal with the unapproved rubbish dump on the Property and unapproved works to the dwelling, including to address the internal fit out of the dwelling not conforming with the Building Permit stamped plan.
The fact that there were storms and floods in the extensive mid-north coast region of NSW after April 2020 is not, in my view, sufficient to conclude that Mr Burley's valuation is unreliable. The contention that the Property likely suffered damage because it is located within the storm-affected "mid-north coast region" goes no further than speculation given there is no evidence that suggests the Property was damaged by storms or floods in a way that might adversely impact on Mr Burley's valuation of the improvements.
In cross-examination, Mr Burley gave evidence that he was aware that storms and floods had affected the mid-north coast region of New South Wales in 2021 but considered that the Property was not on flood-affected land. This view was stated to be based on information contained in the New South Wales planning portal and his observations of the Property as being located on an "elevated" and "sloping site" that is "not on a flood plain" and "rises above [the] road". This is consistent with the cadastral map in evidence which shows that the lowest point of the Property is about 30 metres above sea level and situated above any watercourses.
KLALC could have asked Ms Donnelly whether there had been any storm or flood damage to the Property since April 2020, but it did not do so. Nor did KLALC lead any evidence of such damage to the Property or to any neighbouring property in support of its contention. Further, and while not determinative, the recent photographs of the Property included in Mr Maher's evidence do not show any observable damage to the dwelling or the Property that might have arisen from storms or floods.
KLALC's submission that Mr Burley's valuation does not account for the presence of illegal buried rubbish is based on Mr Maher and Ms Donnelly's evidence about buried rubbish, the 20 April Report which records Ms Donnelly referring to "extensive rubbish" on site at the date of occupation, and Ms Donnelly's evidence to the effect that the "extensive rubbish" included wrecked cars, bikes, doors, gearboxes and glass bottles. KLALC submits that this raises the possibility that building waste may have been deposited in the rubbish holes and of oil or fuel contamination, which also undermines the reliability of Mr Burley's report.
Mr Burley accepted in cross-examination that the existence of contaminated waste material on the Property or the issuance of a Council order with respect to an "unapproved rubbish dump" would impact his valuation. However, his evidence in re-examination was that the burial of vegetation matter, glass bottles or broken glass would have no impact so long as it was not contaminated and the main contaminant of concern was asbestos.
According to Mr Maher's evidence, at the 20 April 2020 inspection of the Property, Ms Donnelly referred to digging up two big holes and pushing rubbish, trees and stumps, into the holes, and Mr Witchard referred to "millions of glass bottles" in the holes. Mr Burley also gave evidence that he was told about the presence of bottles and other "surface items" at the inspection but did not recall any discussion about bulldozers digging holes. In relation to the alleged rubbish dump, Ms Donnelly gave evidence that the "only thing that went into those two holes was crushed glass that I could not pick up", and that car parts and other items were taken to the scrap yard: T42.3-4.
Based on Mr Maher's and Ms Donnelly's evidence that referred to the "large holes" and "rubbish", I do not consider that Ms Donnelly's evidence that only crushed glass was buried in the holes is entirely reliable. That said, I accept her evidence that scrap metal and other objects, such as bikes, car parts and building materials, were not buried on the Property. As previously mentioned, I found Ms Donnelly to be a truthful witness. In my view, Ms Donnelly's evidence to that effect is also plausible given Mr Burley and Mr Maher did not refer in their evidence to those items being mentioned by Ms Donnelly and Mr Witchard.
Thus, I find it likely that the material buried on the Property was limited to crushed glass, glass bottles, and vegetation waste, including from levelling the land and cutting down trees to their stumps. I do not consider that the evidence supports a finding of a likelihood of contamination or buried waste that would adversely impact Mr Burley's valuation.
KLALC's submission that seeks to cast doubt on Mr Burley's valuation also relies on the apparent disconformity between the floorplan of the dwelling approved by the Building Permit and the present layout of the dwelling. It submits that this may render the whole of the main dwelling an unapproved structure which may be dealt with by way of an order by the Kempsey Shire Council and, thus, Ms Donnelly's works do not improve the Property's value.
Mr Burley accepted that were the Council to issue an order in relation to unauthorised structures, it would affect his valuation. His evidence also identifies that the dwelling includes an additional kitchenette and ensuite with laundry facilities which are not marked on the floorplan of the stamped plan attached to Ms Donnelly's Building Permit.
In answer to questions about the departure of the internal configuration of the dwelling from the stamped plan, Mr Burley gave evidence that, in his experience, the Council will generally require people to take out unapproved appliances. He did not consider that "the kitchenette etc. made any difference to the added value of the structure". The 20 April Report also identifies that Mr Burley took into account the "awkward" internal design of the dwelling in his valuation.
Ms Donnelly's evidence is that the entire house was relocated from the Figtree Estate and the bathroom and kitchen fittings were installed by a plumber. When asked by the Court whether changes were made to add the kitchenette and ensuite when the dwelling was relocated to the land, Ms Donnelly stated "I don't think so … That's how it was": T40.41-2. She also gave evidence, which I accept, that the kitchenette and ensuite identified in Mr Burley's report were in the dwelling at the time of Kempsey Shire Council's May 2001 occupation inspection: T47.46-T48.8.
Based on that evidence, I am satisfied that the main dwelling was in its present form, which included the additional kitchenette and ensuite, when Kempsey Shire Council inspected the dwelling in May 2001 and granted Ms Donnelly permission to occupy.
Further, and as Ms Donnelly submits, Building Permit Condition 1 states that "the development referred to in this application is to be carried out substantially in accordance with the approved development plans as modified by any conditions of this consent".
Ms Donnelly referred me to cases which have considered the latitude afforded to developers by the use of the phrases "generally and in accordance with" and "substantially the same" in planning contexts. In Grace Bros Pty Ltd v Willoughby Municipal Council (1980) 44 LGRA 400, Wootten J stated (at 406-7) that: The use of the words "generally and in accordance with" [in interim development orders] are obviously intended to allow for some deviation from the drawings … The significance of any particular deviation will depend upon the criteria by which it is judged.
Whether a development is "substantially the same" has been interpreted as meaning essentially or materially the same or having the same essence: North Sydney Council v Michael Standley & Associates Pty Ltd (1998) 43 NSWLR 468 at 481-2 (Stein JA), citing Vacik Pty Ltd v Penrith City Council (Land and Environment Court (NSW), Stein J, 24 February 1992, unrep).
Applying those principles and in view of the nature of the internal changes and Mr Burley and Ms Donnelly's evidence, I am not persuaded that the main dwelling with its current internal layout was not approved by Kempsey Shire Council or that the additional kitchenette and ensuite with laundry facilities represent liabilities that are likely to be dealt with by way of an order for demolition or rectification works.
In my view, the present main dwelling is essentially or materially the same as the dwelling the subject of the plan attached to the Building Permit; it is a three-bedroom residence that fits within the footprint of the Building Permit layout plan. To the extent that KLALC's submissions suggest that it was incumbent on Ms Donnelly to adduce evidence about who constructed the additional kitchenette and ensuite and that they complied with relevant building codes and Australian standards, I reject them. This is particularly in the context where I accept Ms Donnelly's evidence that Kempsey Shire Council inspected and approved the current layout and facilities of the main dwelling in May 2001 and approved occupation on that basis.
Having regard to the above matters, I am satisfied that the items referred to in Mr Burley's 20 April Report as the dwelling and outdoor area, the ancillary improvements, and connection of services involve works undertaken by Ms Donnelly that constitute improvements to the Property. As to their value, for the reasons set out above and noting the absence of expert evidence to the contrary, I accept Mr Burley's evidence and assess their value to be $135,000 as at 20 April 2020 (based on his 20 April Report), and $185,000 as at the date of the hearing (based on his 1 October 2021 report that updates the valuation to reflect movements in the market demonstrated by comparable property sales in the locality).
The position is, in my view, different for the unapproved improvements identified in Mr Burley's 20 April Report as the eastern extension and carport.
As Ms Donnelly accepts, these structures have been constructed without approval by Kempsey Shire Council. I also infer that either or both of those structures comprise the unapproved addition to the dwelling identified by Mr Duke at his 30 November 2017 inspection and may be the subject of some order in the future, although I accept there is some vagueness and uncertainty as to what action might be required by Council given the "addition" is unspecified and four years have passed. In the absence of any evidence from Ms Donnelly to the contrary and given the material in the Opteon and 20 April Reports indicating that the eastern extension is incomplete, I would also infer that the eastern extension and carport were not in existence at the time of the inspection by Mr Kane in May 2001 and the occupation approval.
While Mr Burley's evidence attributes some value to the unapproved improvements, in my view, Ms Donnelly has not established that those works are improvements in the sense that they are of benefit to KLALC and should be attributed some value in this case. This is primarily for the reason that I do not consider they are works of the type that could enliven any obligation to pay equitable compensation or make restitution in accordance with the principles referred to below. Ms Donnelly was not authorised by the Building Permit approval to undertake those works and they were carried out contrary to the terms of the draft lease (as referred to at [22] above). In that context, I do not see how her expectation or understanding that she had been granted the 99-year lease could be said to have induced her to carry out the unapproved works.
Nor do I accept that KLALC's failure to deny the correctness of Ms Donnelly's expectation of a 99-year lease could be said to have caused her detriment in respect of unapproved works or that those works could be considered improvements to the Property that were in any way encouraged by KLALC or about which KLALC could be expected to have had knowledge or acquiesced in them being undertaken.
Accordingly, in this case, I have concluded that Ms Donnelly has not established that the unapproved structures are improvements to the Property in the sense that they are of value or any benefit to KLALC and will not attribute any monetary value to them for the purposes of considering Ms Donnelly's claims.
Finally, I should record that I have placed no weight on the valuation contained in the Opteon Report. It was not relied on by Ms Donnelly in oral or written submissions. As KLALC submits, it also assumed, incorrectly, that the development complied with all requirements and disregarded the restrictions on dealings that were taken into account by Mr Burley, as referred to at [97] above.

Issue 2: Has Ms Donnelly has established a claim for equitable compensation based on proprietary estoppel by encouragement or a Baumgartner equity, or a common law claim for restitution?

In closing oral submissions, KLALC accepted that the factual material before the Court would give rise to a proprietary estoppel by encouragement, a claim in restitution, or a Baumgartner equity on which the Court could grant the relief sought by Ms Donnelly, assuming her claims were not barred by reason of s 42E of the ALR Act, Anshun estoppel, other equitable considerations, and KLALC's challenge to the claimed improvements: T115.3-50. In other words, KLALC did not take issue with the underlying factual bases for those claims. Nor did it any advance any other legal or other submissions in defence of those claims.
That said, it is appropriate to record my factual findings on the matters raised by Ms Donnelly's claims and my conclusions on each of them.

Factual findings

The parties are agreed on most of the facts that underpin Ms Donnelly's claims. They agree on the key facts about the arrangement to lease between 1992 and 1995 and the subsequent history, which is set out at [18]-[81] above.
Relevantly, it is common ground that: 1. in 1992, Ms Donnelly and KLALC entered into an agreement for lease of the Property: T95.25-6; 2. KLALC treated the lease as though it were on foot by informing Kempsey Shire Council that a lease had been granted and giving Ms Donnelly possession of the Property: T94.27-30, DCS at [21]; 3. Ms Donnelly treated the lease as though it were on foot by developing the Property by putting a home on it: T94.27-32; 4. the Property was vacant land prior to Ms Donnelly taking possession of it: T94.25-6, DCS at [20]; 5. the lease was granted, possession of the Property was given and the works undertaken on it without NSWALC giving its approval for the lease to Ms Donnelly in accordance with s 40B of the ALR Act: T94.32-5; 6. as a consequence of NSWALC not giving its approval and by reason of s 40(2) of ALR Act, the agreement for lease was rendered void from 1992; 7. the "improvements" to the Property, namely the dwelling and other works undertaken by Ms Donnelly, are fixtures on the land: T121.43-7, DCS at [55]-[56]; and 8. Ms Donnelly's claim in the 2013 proceeding for specific performance of the agreement for lease was misconceived, for reasons that include the operation of s 40 of the ALR Act that rendered the agreement for lease void: T87.28-30, T91.25-6.
As raised by KLALC's defence, there was a factual dispute about whether KLALC's conduct encouraged Ms Donnelly's understanding that she had a 99-year lease, whether she proceeded to carry out works on the assumption that KLALC had granted her that lease, and whether she knew that the Property could not be leased to her by KLALC without approval from NSWALC. While the concessions made by KLALC's counsel during closing submissions (as referred to at [127] above) suggest that KLALC no longer disputes those matters, I set out my findings about them below.
I am satisfied that the evidence establishes that KLALC represented to Ms Donnelly that she had been granted a 99-year lease by KLALC, that Ms Donnelly undertook the works to the Property on the assumption that she had been granted such a lease, and that KLALC's conduct encouraged that assumption until at least August 2008. In my view, those findings are supported by the following objective evidence: 1. KLALC's 9 June 1992 resolution: at [20]; 2. KLALC's sale of the Figtree house to Ms Donnelly for use on the property: at [21]; 3. KLALC's letter to Kempsey Shire Council informing them that a lease had been granted to Ms Donnelly in connection with Ms Donnelly's building permit application: at [24]; 4. KLALC's grant of possession of the Property to Ms Donnelly around that time: at [26]; 5. Ms Donnelly's evidence that she undertook works to the Property and was granted approval to occupy the dwelling by Kempsey Shire Council after the Property had been inspected on 18 May 2001: at [27] and [28]; and 6. the absence of any evidence that KLALC asserted a right to possession of the Property until its letter to Ms Donnelly dated 7 August 2008: at [29].
As to the need for approval from NSWALC, Ms Donnelly's evidence, which I accept, is that she was not aware until the hearing of the 2013 proceeding that KLALC was not able to execute the lease without the approval of NSWALC. Her evidence in cross-examination was consistent with this. Ms Donnelly did not accept that she always knew that NSWALC approval of her lease was required or that NSWALC approval was pending when she enquired as to the status of her draft lease. She also gave evidence that she did not know KLALC could not finalise the lease itself or that it had not been finalised. In response to a question about whether she knew NSWALC approval was required, she responded (at T35.30-3): Why didn't they notify me before I put the home on the property?
I do not consider Ms Donnelly's evidence in her 22 October 2014 affidavit (which was filed in support of the 2013 proceeding) that in the years following 1995, she regularly approached various members of KLALC to request that her lease be finalised and was told by KLALC representatives that they had not "heard anything back yet" to be inconsistent with her lack of knowledge that NSWALC had to approve the lease, or that KLALC could not grant, and had not granted, it to her already. To my mind, those approaches are equally consistent with Ms Donnelly's evidence that she was unaware of the requirement for approval by NSWALC, that she undertook the works on the understanding that a lease had been granted (based on the objective evidence referred to above) and that she approached KLALC to get the lease signed after receiving its letter in 2008, as referred to in her statement of claim in the 2013 proceeding.
I also consider it open to find that, between 1992 and 2008, KLALC knew, or ought reasonably be expected to have known, that Ms Donnelly would and did expend money and effort in preparing the Property to build on and transporting and then installing the Figtree house on the Property. KLALC may not have known precisely the nature and extent of work done by Ms Donnelly to the Property (such as the extent of the landscaping or planting of the Protea grove), nor precisely when she was doing it. However, KLALC must have known, or at least acquiesced, in Ms Donnelly undertaking the works to level the ground, construct the dwelling and make the Property and the house liveable (such as by connecting the water and electricity) from around 1995, and that she lived on the Property during the period from 1995 to 2008 having undertaken those works with an expectation that she had been granted a 99-year lease.
In my view, those findings are supported by the following facts: 1. KLALC's acceptance that the Property was vacant land before Ms Donnelly took occupation: at [130(d)] above; 2. the terms of the lease which provided for the lessee to pay rates, taxes and charges and that any dwelling was to be constructed in accordance with Local Government requirements: at [22]; 3. the sale of the Figtree house to Ms Donnelly for the purposes of use on the Property: at [19] and [21]; and 4. KLALC's letter to Kempsey Shire Council in 1995 confirming the existence of the lease in connection with Ms Donnelly's building permit: at [24].
It is also supported by the absence of any evidence that KLALC warned Ms Donnelly not to undertake any works to the Property without approval of the lease having been obtained from NSWALC or that Ms Donnelly had no right to occupy the Property until the letter sent by KLALC to Ms Donnelly in August 2008.
I have already dealt with the other key factual dispute raised by Ms Donnelly's claims, namely whether the works she carried out to the Property were improvements, are of value and confer a benefit to KLALC.
For the reasons set out at [91]-[126] above, I consider that the works undertaken by Ms Donnelly comprising the "improvements" to the Property referred to in Mr Burley's 20 April Report (but excluding the unapproved structures) are of value and confer a benefit to KLALC. That benefit is represented by the increase to the overall market value of the Property.

Consideration of Ms Donnelly's claims

Subject to my findings on KLALC's defences (as raised by Issues 3 and 4), I am satisfied that the facts in this case support the elements of a proprietary estoppel by encouragement and a claim in restitution by unjust enrichment, although I do not accept Ms Donnelly's submission that they support a claim for equitable compensation based on a Baumgartner equity.

Proprietary estoppel

In support of her claim based on a proprietary estoppel, Ms Donnelly's counsel referred to Sullivan v Sullivan [2006] NSWCA 312 (Sullivan) at [11] where Handley JA outlined the ingredients of proprietary estoppel by encouragement by reference to 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.
The expectation of a proprietary interest may be induced or encouraged by a promise or representation, but a party need not satisfy the more stringent requirements set by the law of contract. A court giving effect to a proprietary estoppel by encouragement is not enforcing a promise. As McPherson J stated in Riches v Hogben [1985] 2 Qd R 292 at 301 (whose observations were referred to with approval by the majority decision in Giumelli v Giumelli (1999) 196 CLR 101 (Giumelli) at 121; [1999] HCA 10): It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise.
A proprietary estoppel arises if the quality of assurances giving rise to the relevant expectation and detrimental reliance, taken together, make it unconscionable for the person who made the assurances to resile from them: Arfaras v Vosnakis [2016] NSWCA 65 at [75] (Ward JA, Beazley P and Simpson JA agreeing).
In this case, I have found that KLALC represented and encouraged an expectation on the part of Ms Donnelly that she had been granted a 99-year lease. By its conduct, KLALC encouraged Ms Donnelly's actions of acquiring the Figtree house, taking possession of the Property and going to the expense and effort of undertaking the works to construct the dwelling and connect services to the Property.
In my view, KLALC's conduct involved the necessary quality of assurance so as to give rise to an expectation of a proprietary interest in the Property on the part of Ms Donnelly and detrimental reliance given that her expectation was combined with her buying the Figtree house and making improvements to the Property with the knowledge of, or at least acquiescence by, and without objection from KLALC. Further, the detriment flowing from the removal of the expectation which Ms Donnelly suffered was due to KLALC not obtaining approval from NSWALC and the operation of ss 40(2) and 40B of the ALR Act, rather than any apparent fault on Ms Donnelly's part. That detriment was the loss of the right to occupy and enjoy the improvements she had made to the Property pursuant to the supposed long-term lease. I note that no submission was advanced by KLALC to the contrary.
To my mind, prima facie (and subject to the operation of KLALC's other defences), those circumstances render it unconscionable for KLALC to resile from the expectation created without some form of relief being granted to Ms Donnelly.
As Ms Donnelly submits, the starting point for a remedy in such a case would be to give effect to the expectation of the 99-year lease: Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 (Sidhu v Van Dyke) at [85]. However, in this case, Ms Donnelly does not seek, and nor is it possible, for the Court to give effect to her expectation by granting her any proprietary rights to the Property by way of a long-term lease. Ms Donnelly accepts that, under the ALR Act, her agreement for lease is void and any new dealing would require the approval of NSWALC. Accordingly, the detriment suffered by Ms Donnelly cannot be equated to the loss of the proprietary interest that she expected to receive and which she no longer enjoys. Rather, she submits that the payment of a money sum to the value of the improvements she made, by way of equitable compensation, is appropriate in this case. I agree.
While the starting point is the enforcement of the expectation, a remedy requiring the estopped party to convey the property to the claimant may not be appropriate if such a remedy would be disproportionate to the detriment suffered by the claimant or the requirements of conscionability: Sidhu v Van Dyke at [85]; Giumelli at [50]. This could arise where enforcing a proprietary interest may adversely affect a third party's legitimate interests or an order to that effect (for example, by way of conveyance of the relevant property) is prevented by statute: see, for example, Van Dyke v Sidhu [2013] NSWCA 198 (Van Dyke v Sidhu) at [138]; Rhodes v Badenach [2000] TASSC 160 (Rhodes v Badenach) at [49].
In Van Dyke v Sidhu (which was upheld on appeal to the High Court in Sidhu v Van Dyke) and Rhodes v Badenach, proprietary estoppel was made out but equitable compensation rather than a declaration of trust or orders providing for the enforcement of the expectation of a fee simple interest in property by way of conveyance was ordered.
In Rhodes v Badenach, the plaintiff had commenced living in a cottage on land owned by the deceased. The plaintiff, believing that the deceased had left to cottage to him by his will, carried out improvements to the cottage and other parts of the lot, provided services to the deceased and forewent employment for a number of years. The deceased did not leave the cottage to the plaintiff in his will as represented. The plaintiff claimed proprietary estoppel against the executors of the deceased's estate and sought various relief including a declaration that they held certain land on trust for the plaintiff, orders requiring them to transfer the land to him, and equitable compensation.
Blow J found that proprietary estoppel was made out. However, as the deceased's lot could not be subdivided so as to allow a transfer over to the plaintiff of the cottage only due to restrictions under planning laws, his Honour took the view that "the only appropriate remedy is an order for the payment of compensation and an order charging [the deceased's lot] with the payment of the compensation": at [49]. In determining the amount of compensation to award, his Honour took into account the value of the improvements made by the plaintiff to the land having earlier held that the plaintiff had suffered detriment by altering his position, including by making the improvements. His Honour had also earlier concluded that the deceased and his estate had been "unjustly enriched in that they received the benefit of the improvements that the plaintiff made … even taking into account the accommodation benefits provided to the plaintiff during the relevant years": at [37]. The benefit was the payment of lower than a reasonable market rent.
In this case, Ms Donnelly has made improvements to the Property on the faith of the expectation created by KLALC, which expectation was later abandoned and cannot now be fulfilled. She has suffered detriment as a result as she can no longer reside in her dwelling or otherwise take the benefit of the other structural improvements which she made to the Property. According to Ms Donnelly's evidence, she cannot afford to remove her "improvements" and even if KLALC had agreed to let her do so (and if it were assumed they were not fixtures and could be removed), she has nowhere to put them. Ms Donnelly may have obtained the benefit of occupying the Property for a peppercorn rent for many years, but this was consistent with the expectation created by KLALC's conduct and KLALC has now been enriched by receiving the benefit of the improvements that Ms Donnelly made to the Property which she can no longer enjoy.
In the circumstances of this case, justice cannot be done between the parties by holding KLALC to the expectation it created in Ms Donnelly. As Ms Donnelly had been induced to make outlays on the Property on the faith of KLALC's conduct, one approach might be to start from the position that it would not be unconscionable for KLALC to resile from its assurances on the condition that it reimburse Ms Donnelly for her outlays. The difficulty with such an approach is that it seems to me to fail to have regard to the fact that Ms Donnelly's works were carried out with a view of her continuing occupation of the Property, the "do-it-yourself" way in which some of the works were carried out, with Ms Donnelly (and perhaps Mr Witchard) putting her own skill and efforts into them, and the absence of any proper basis or evidence on which the Court can quantify the value of her outlays.
For those reasons, I accept Ms Donnelly's submissions that equitable compensation is an available remedy for her proprietary estoppel claim and that the value of her improvements is an appropriate proxy and starting point for valuing the equitable claim arising from KLALC's conduct and the detriment she has suffered in acting on the expectation created by that conduct. It remains to be considered whether relief of that type is precluded in this case by s 42E of the ALR Act or Anshun estoppel and whether it should be refused or reduced on some other discretionary basis.

Restitution

Ms Donnelly's claim in restitution is based on the alleged benefit to KLALC in the nature of her improvements to the Property in circumstances where the agreement for lease is void. Ms Donnelly submits that she has conferred an incontrovertible benefit on KLALC by making the improvements which KLALC freely accepted or acquiesced in. Alternatively, she contends that, having regard to the objective valuation of the improvements, it is conscionable for KLALC to make restitution to Ms Donnelly reflecting the present value of those improvements.
Ms Donnelly relies on Fensom v Cootamundra Racecourse Reserve Trust [2000] NSWSC 1072 (Fensom). In Fensom, Bryson J held that the Cootamundra Racecourse Reserve Trust should make restitution to the plaintiffs on the basis of unjust enrichment. His Honour took into account the value of improvements made to the Racecourse by the plaintiffs in circumstances where the parties had shared a general expectation that a long-term interest in the land would be granted to the plaintiffs, which expectation failed to materialise.
His Honour reviewed authorities that considered restitution on the ground of unjust enrichment by conferral of benefits, commencing with the High Court decision in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [2987] HCA 5, a case in which the majority recognised that the principle of unjust enrichment, not an express or implied contract or promise, underlies an obligation to pay fair value for works carried out under an unenforceable contract, stating (at 256-7): [Unjust enrichment] constitutes a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case. (citations omitted)
Bryson J also noted that an element of receipt, adoption or acceptance of a party's work is significant in restitution claims and considered cases where works had been carried out on property in the expectation of a sale or lease of that property to the party undertaking the works, which did not eventuate: see Van den Berg v Giles [1979] 2 NZLR 111 and Angelopoulos v Sabatino (1995) 65 SASR 1 (Angelopoulos).
In Angelopoulos, compensation on the basis of restitution was awarded in respect of work carried out by a proposed lessee of hotel premises during negotiations for a lease which did not eventuate. Doyle CJ (Duggan and Nyland JJ agreeing), observed (at 9-10) that while acceptance of a benefit is a basis for recovery in restitution, other factors must also be considered, such as the basis upon which the provider of the benefit acted, the choice which the recipient of the benefit had in deciding whether or not to accept the benefit, and the defendant's conduct and knowledge of what the plaintiff was doing and the basis on which they did it.
In Fensom, after considering the elements referred to by Doyle CJ, Bryson J concluded that restitution should be awarded to the plaintiffs for the value of the improvements made to the land and not the plaintiffs' actual expenditure. His Honour stated (at [96]-[98]): [96] The categories of case in which Restitution remedies are awarded are diverse, and not made less so by the decision in Pavey & Matthews. However, they include cases where improvements are carried out to property in the expectation, created or contributed to by the defendant, that the plaintiff will acquire some interest in the property, for example as purchaser or lessee, but the expectation is not fulfilled for some reason such as that the proposed contracting parties never actually reach an agreement, or that they reach an apparent agreement which for some reason is void or unenforceable … [97] In relation to improvements the concept of acceptance of improvements by the owner of land is made difficult because it is the nature of improvements to become part of the property itself, and taking back possession of the property with the improvements is not always acceptance of the benefit of the improvements. The supposed acceptance, the whole circumstances of the parties' dealings and the plaintiffs' conduct in making the improvements must be evaluated and a conclusion must be reached overall as to whether the circumstances give rise to an obligation to make fair and just restitution. As with other areas of the law which require decisions to be based on evaluation and the application of standards, a clear and complete exposition of all supporting reasoning is hardly possible. The principles on which the remedy is awarded do not allow precision of statement. In my view the concept of acceptance of benefit as used in the context of unjust enrichment was fulfilled for the improvements and their value, and not for the plaintiffs' actual expenditure or labour.
KLALC does not take issue with the approach taken or the principles applied by Bryson J in Fensom and, as noted above, accepts that there is factual material before the Court that might support the grant of such relief. In response to this claim, and in addition to contending that a claim in restitution is denied by s 42E(5) of the ALR Act, KLALC relies on its submissions that the "improvements" are not benefits to KLALC because they were made without council approval and are thus in the nature of liabilities. It is submitted that, insofar as Ms Donnelly's claim for restitution is based on unjust enrichment, the Court needs to be satisfied that KLALC has been enriched in circumstances where it would be unconscionable for KLALC to retain the improvements. KLALC argues that this has not been made out as the evidence demonstrates that it places no value on the structures.
I have already considered KLALC's submissions regarding the absence of council approval and the liability of the improvements and have accepted that the unapproved structures should not be treated as improvements that are of benefit or value to KLALC in this case. The position is, I think, different for the other improvements, particularly those to the dwelling.
I am not persuaded by KLALC's submission that the evidence shows that it places no value on those improvements. In support of that submission, KLALC pointed to the terms of the deed it proposed to Ms Donnelly (referred to at [42] above) in which KLALC offered to accept return of the Property back in the form of vacant land and the confirmation that it was not prepared to pay Ms Donnelly for the dwelling and other structures in October 2015 (referred to at [43] above). That KLALC offered to allow Ms Donnelly to remove the dwelling and other structures from the Property in October 2015 as part of a without prejudice offer to settle their dispute and was not willing to purchase them does not, to my mind, say anything about the intrinsic value of the improvements and the objective value and benefit to KLALC in them remaining on the Property.
I accept the submission from KLALC's counsel that KLALC is entitled to possession and can deal with the Property in whatever way it thinks fit within the remit of its objects and functions under the ALR Act, such as by subdividing it or placing a community garden on it. However, in the absence of any evidence from KLALC as to its intentions for the Property, the Court is left with the Mr Burley's independent evidence that Ms Donnelly's works have increased the value of the Property. For the reasons set out earlier, I have accepted Ms Donnelly's submissions that his evidence demonstrates that the works are improvements and have some value. In my view, an objective assessment of the position, based on the evidence, supports the conclusion that the improvements provide a tangible benefit to KLALC, in the sense that they improve the market value of the Property. They could also be presumed to have some value to KLALC, assuming it wishes to lease the Property to some other person.
This benefit to KLALC has been derived at Ms Donnelly's expense. The basis on which Ms Donnelly provided the benefit was her expectation that she was to obtain a long-term interest on the Property. While I accept that it was not objectively possible for Ms Donnelly to receive that interest in the absence of approval from NSWALC, as I have found, Ms Donnelly was not aware of that matter until after she commenced the 2013 proceeding. By that time, the works had been undertaken and the improvements had inured to the Property.
Based on the facts referred to at [130], [132] and [135] above, I also consider it open to find that, from 1992 until sometime in 2008, KLALC shared in Ms Donnelly's mistaken expectation that she had a long-term lease of the Property and that KLALC was aware of, or at least acquiesced in, Ms Donnelly occupying and carrying out works to the Property on that basis. It also knew, or ought reasonably to have known, that Ms Donnelly was not undertaking works to the Property gratuitously and for KLALC's benefit, but was doing so for her own purposes in the expectation of a 99-year lease.
KLALC had a choice in deciding whether to allow Ms Donnelly to take occupation of the Property, relocate the Figtree house for that purpose and build on the Property. It could have refused to confirm the grant of the lease to Kempsey Shire Council in 1995, refused to sell Ms Donnelly the Figtree house, or informed Ms Donnelly that she would be occupying and undertaking any works to the Property at her own risk. It did not do so. KLALC could also have taken steps to eject Ms Donnelly before she had committed to and then completed the construction of the dwelling in around 2001. On the evidence before the Court, KLALC did nothing until it sent its letter to Ms Donnelly in August 2008 and then waited until Ms Donnelly commenced the 2013 proceeding to take action to obtain the order for possession. While taking back possession involved KLALC taking Ms Donnelly's improvements that had become part of the Property, KLALC was also on notice that Ms Donnelly asserted a right to recover the improvements or their value.
To my mind, these circumstances go beyond the bare conferral of the benefit of Ms Donnelly's improvements to the Property without KLALC having had any option but to take them. Rather, they point towards Ms Donnelly having established a prima facie obligation on KLALC to make restitution based on unjust enrichment. In my view, that restitution should be assessed as a sum of money quantified by reference to the value of Ms Donnelly's improvements.
While restitution is not a discretionary remedy, the range of considerations for determining what sum of money is appropriate may include some of the considerations which affect the selection of an equitable remedy: Fensom at [98]. That said, the question of whether the enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [150].
Accordingly, I am also satisfied that Ms Donnelly has established a common law claim for restitution based on the value of her improvements.

Baumgartner equity

Ms Donnelly's counsel refers to the principle endorsed in Baumgartner as stated by Deane J in Muschinski v Dodds at 620, as follows: … 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. (citations omitted)
Ms Donnelly submits that the history of the matter shows that she (an Aboriginal Australian) and KLALC (a Local Aboriginal Land Council) shared in a project that involved the construction of housing for Ms Donnelly which enabled KLALC to develop the land on which the Figtree house had stood. Ms Donnelly pleads that she made the improvements to the Property in pursuance of that project, which she describes as a joint endeavour with KLALC: ASOC at [29].
For an equity of the type in Baumgartner to arise, there must be a joint endeavour or relationship in which expenditure is shared for a common benefit in the course of and for the purposes of which an asset or proprietary interest is acquired: Austin v Hornby [2011] NSWSC 1059 at [159].
The difficulty I have with Ms Donnelly's claim is that I do not accept that the facts establish that a joint relationship or endeavour existed between Ms Donnelly and KLALC by way of a shared project between them.
In my view, a joint relationship or endeavour cannot be inferred from the existence of the agreement for lease or Ms Donnelly's works to the Property. Ms Donnelly did not occupy the Property as part of a joint endeavour. Nor did she undertake the works to install the Figtree house or pay the rates for or on behalf of KLALC. Rather, she took these actions on the understanding and expectation that she had been granted a long-term lease that set out the terms on which she was entitled to occupy the Property and would enjoy the benefit of the works she carried out to the Property for the term of that lease which was, in substance, a lease for life.
The fact that KLALC may have known that Ms Donnelly would occupy the Property and receive a house by virtue of the sale and transportation of the Figtree house to the Property and that one of KLALC's objects is to provide housing for Aboriginal persons is not, in my view, sufficient to give rise to an expectation that Ms Donnelly's works were intended to be shared and carried out for a common benefit or purpose under some joint endeavour or relationship which has now failed.
It follows that I have concluded that Ms Donnelly has not established a claim for equitable compensation based on a Baumgartner equity.

Issue 3: Is Ms Donnelly's claim precluded by s 42E of the ALR Act?

KLALC's position is that Ms Donnelly is not entitled to relief in this proceeding because her claims are precluded by s 42E(5) of the ALR Act. That section, which came into force on 31 March 2010, provides as follows: (5) A person is not entitled to damages, or any other remedy, against a Local Aboriginal Land Council in respect of a warranty or other promise relating to an unenforceable agreement referred to in subsection (4).
Before turning to the parties' submissions and the issues they raise, it is convenient to set out an overview of the relevant legislative history and current provisions of the ALR Act.

The Aboriginal Land Rights Act 1983 (NSW)

Between 16 August 1991 and 30 March 2010, Part 6 Div 4 of the ALR Act contained s 40 which relevantly provided: 40 Disposal of land restricted (1) The New South Wales Aboriginal Land Council or a Local Aboriginal Land Council may not sell, exchange, lease, dispose or, mortgage, or otherwise deal with land vested in it, except in accordance with this Division. (2) Any sale, exchange, lease, disposal or mortgage or, or other dealing with, land in contravention of this Division is void.
Between 16 August 1991 and 24 October 2002, s 40B in Part 6 Div 4 of the ALR Act relevantly provided: 40B Lease, use etc. of land … (2) A Local Aboriginal Land Council may, subject to the provisions of any other Act and with the approval of the New South Wales Aboriginal Land Council: (a) lease or change the use of land vested in it; and … but only if the lease, change of use or the grant or release of the easement has been approved at a meeting of the Local Aboriginal Land Council specifically called for that purpose at which a quorum was present. (3) The New South Wales Aboriginal Land Council may not refuse to give an approval of a lease or change of use under this section except on the ground that the terms or conditions of the lease are inequitable to the Local Aboriginal Land Council concerned or that the change of use would be detrimental to the interests of other Local Aboriginal Land Councils.
The Aboriginal Land Rights Amendment Act 2001 (NSW) amended the ALR Act to introduce s 3, which sets out the purpose of the ALR Act, amend s 40B and renumber Part 6 Div 4 to be Part 2 Div 4 of the ALR Act.
As amended in 2001 with effect from 25 October 2002, s 40B relevantly provided: 40B Lease, use etc. of land … (2) A Local Aboriginal Land Council may, subject to the provisions of any other Act and with the approval of the New South Wales Aboriginal Land Council: (a) lease land vested in it for a period of 3 or more years (including any option to renew the lease), and (a1) change the use of land vested in it, and … but only if the lease, change of use or the grant or release of the easement has been approved at a meeting of the Local Aboriginal Land Council specifically called for that purpose at which a quorum was present.
Section 3 of the ALR Act presently provides as follows: 3 Purpose of Act The purposes of this Act are as follows: (a) to provide land rights for Aboriginal persons in New South Wales, (b) to provide for representative Aboriginal Land Councils in New South Wales, (c) to vest land in those Councils, (d) to provide for the acquisition of land, and the management of land and other assets and investments, by or for those Councils and the allocation of funds to and by those Councils, [2] (e) to provide for the provision of community benefit schemes by or on behalf of those Councils. [3]
Section 42E was introduced as part of the Aboriginal Land Rights Amendment Act 2009 (NSW), which came into force on 31 March 2010. That Act introduced a range of amendments to Div 4 of the new Part 2 of the ALR Act, including ss 42A-42P (2010 Amendments). The 2010 Amendments also replaced the old ss 40 and 40B.
Sections 42B and 42C relate to the appropriation or resumption of and dealings with land vested in an Aboriginal Land Council. They have not been amended since commencement and provide: 42B Appropriation or resumption of Aboriginal land Despite anything in any Act, land vested in an Aboriginal Land Council must not be appropriated or resumed except by an Act of Parliament. 42C Land dealings by Aboriginal Land Councils generally (1) A land dealing by an Aboriginal Land Council in contravention of section 42D or 42E is void. (2) This Division is in addition to any requirements of or under any other Act in relation to a land dealing. (3) This section has effect despite any other Act or law.
Sections 42D and 42E contain the requirements for approval of land dealings in respect of land vested in NSWALC and a Local Aboriginal Land Council (LALC) respectively. Section 42D prohibits NSWALC from dealing with land unless it has notified the LALC for the area in which the land is situated of the proposed dealing and considered any comments by that Council.
Section 42E relevantly provides: 42E Approval required for land dealings by Local Aboriginal Land Councils (1) A Local Aboriginal Land Council must not deal with land vested in it except in accordance with an approval of the New South Wales Aboriginal Land Council under section 42G. (2) However, the approval of the New South Wales Aboriginal Land Council is not required for the following land dealings by a Local Aboriginal Land Council: (a) a lease for a period of less than 3 years (including any option to renew the lease), other than a social housing management lease, (b) a land dealing prescribed by the regulations for the purposes of this section. (3) (Repealed) (4) An agreement to deal with land vested in a Local Aboriginal Land Council that is made by the Council is, if the land dealing is not approved by the New South Wales Aboriginal Land Council and an approval is required, unenforceable against the Local Aboriginal Land Council. (5) A person is not entitled to damages, or any other remedy, against a Local Aboriginal Land Council in respect of a warranty or other promise relating to an unenforceable agreement referred to in subsection (4). … (7) This section has effect despite any other Act or law.
Section 40(1), as amended by the 2010 Amendments, contains the definitions of "deal with land" and "land dealing" as follows: deal with land means - (a) sell, exchange, lease, mortgage, dispose of, or otherwise create or pass a legal or equitable interest in, land, or … (h) any other action (including executing an instrument) relating to land that is prescribed by the regulations. Note - In this Act, a reference to land includes any estate or interest in land, whether legal or equitable (see section 4(1)). land dealing means an action in relation to land of a kind referred to in paragraphs (a)-(h) of the definition of deal with land.
Section 42F provides that a LALC may apply to NSWALC for approval of a land dealing of land vested in the LALC and sets out the requirements of such an application. Section 42G sets out the requirements for approvals by NSWALC of land dealings by LALCs, including as to the conditions of approval. Section 42K provides for dealing approval and registration approval certificates.
Part 9 of Sch 4 to the ALR Act contains the savings and transitional provisions applicable to the 2010 Amendments. Clause 51 relates to existing land dealings and provides: 51 Existing land dealings (1) Except as provided by this Part, the new land dealing provisions do not apply to or in respect of an existing registrable instrument or to an existing land dealing. (2) Except as provided by this clause and clause 52, the former land dealing provisions continue to apply to an existing land dealing and an existing registrable instrument. (3) If the requirements of the former land dealing provisions were not complied with in relation to a land dealing entered into before the commencement of the new land dealing provisions, the new land dealing provisions apply to that land dealing.
Clause 50 of Part 9 of Sch 4 contains the definitions and relevantly provide: 50 Definitions (1) In this Part: amending Act means the Aboriginal Land Rights Amendment Act 2009. existing land dealing means a land dealing that was approved by the New South Wales Aboriginal Land Council before the commencement of the new land dealing provisions. existing registrable instrument means a registrable instrument giving effect to or forming part of an existing land dealing. former land dealing provisions means Division 4 of Part 2 of this Act, as in force immediately before its substitution by the amending Act. new land dealing provisions means Division 4 of Part 2 of this Act, as substituted by the amending Act. (2) Words and expressions used in this Part have the same meaning as they have in Divisions 4 and 4A of Part 2 of this Act, as substituted by the amending Act.

Submissions

KLALC submits that Ms Donnelly's claims are precluded by s 42E(5) of the ALR Act because the agreement for lease of the Property entered into by Ms Donnelly and KLALC on 9 June 1992 is a "land dealing" within the meaning of s 42E(4) and cl 51(3) of Sch 4 Part 9 to the ALR Act, and an "unenforceable agreement" within the meaning of subss 42E(4) and (5).
KLALC submits that this follows from NSWALC not having approved the lease from KLALC to Ms Donnelly or the change of use of the Property from vacant to residential land, as required by ss 40 and 40B of the ALR Act (as in force in 1992). It submits that ss 40 and 40B of the ALR Act (as in force in 1992) are part of the "former land dealing provisions" referred to in cl 51(3) of Sch 4 Part 9 and, as they were not complied with, cl 51(3) operates such that the "new land dealing provisions" apply to the agreement for lease as a land dealing, and s 42E(5) is engaged.
KLALC accepts that the agreement for lease was void at or around the time it was entered into in 1992 but submits that being void under the former land dealing provisions does not prevent the agreement for lease being a "land dealing" or "unenforceable agreement" to which the new land dealing provisions apply. KLALC submits that this interpretation of "land dealing" and the application of the new land dealing provisions to the agreement for lease (as an unenforceable agreement) is consistent with the legislative purpose of the 2010 Amendments. That purpose is said to be to provide for a comprehensive and new regime covering all situations of non-compliance under the old provisions in a manner that would not subject Aboriginal land councils to claims for damages or any other remedy in respect of non-complying land dealings.
KLALC submits that its approach to construction is also consistent with the view taken by Jacobson J in Eden Local Aboriginal Land Council v NTSCORP Ltd [2010] FCA 745 (ELALC v NTSCORP) at [10].
KLALC also submits that Ms Donnelly's claims seek a remedy in respect of a warranty or other promise relating to an unenforceable agreement to deal with land, within the meaning of s 42E(5). KLALC referred to the agreement for lease as a warranty or contractual promise that formed the "central relationship" giving rise to each of Ms Donnelly's claims for equitable compensation and restitution and that each of the forms of relief sought by Ms Donnelly is a remedy within the meaning of s 42E(5).
KLALC submits that the agreement for lease was an agreement to deal with land within the meaning of s 42E(4) of the ALR Act and an unenforceable agreement based upon (and therefore relating to) the resolution to grant Ms Donnelly a lease, which was a warranty or other promise in respect of which Ms Donnelly seeks damages "or any other remedy". That is because it was the agreement for lease, and the parties subsequently conducting themselves as if a lease had been granted, which gave rise to Ms Donnelly's expectation that she would acquire some interest in the Property.
KLALC also submits that the expressions "in respect of" and "relating to" in s 42E(5) are extremely wide, with the words "relating to" simply requiring a connection or association between the warranty or other promise and the unenforceable agreement. It submits that Ms Donnelly could only be entitled to the remedies she seeks by reason of equitable or legal rights which she claims arise in respect of the representations made to her by KLALC and that, accordingly, the relief falls squarely within the disentitling provision of s 42E(5). It says that if Ms Donnelly can set up any of her claims, she will have established a legal or equitable interest in the Property and, thus, a land dealing within the meaning of s 42E(4).
Ms Donnelly submits that s 42E(5) does not apply to bar her claims because the agreement for lease between her and KLALC was already void under the land dealing provisions of the ALR Act that were in effect prior to the 2010 Amendments. She submits that cl 51(3) of Sch 4 Part 9 should be construed to render the new land dealing provisions, including s 42E, applicable only to extant land dealings, in the sense that approval for the land dealing is yet to be sought or in the process of being approved. In support of this submission, reference was made to Illawarra Local Aboriginal Land Council v Stewart [2016] NSWSC 125.
Ms Donnelly submits that, even if the new land dealing provisions apply to the agreement for lease (as a land dealing and unenforceable agreement), they nevertheless do not deny her a remedy. While accepting that "in respect of" has a wide meaning, she says that the phrase must be construed in the context of statutory provisions which render agreements to deal with land unenforceable and void, and not approached too broadly. She also submits that she is not claiming relief to give effect to an unenforceable agreement (which she accepts would be precluded by s 42E(5)) or to enforce a promise or warranty in respect of the agreement for lease within the meaning of s 42E(5). Rather, she says that her claims are independent of the agreement for lease and concern an expectation engendered by KLALC in respect of the proprietary estoppel claim and a conferral of a benefit in respect of the restitution claim.
Ms Donnelly also submits that the language of Sch 4 Part 9 of the ALR Act (particularly cl 51(3)) and s 42E (particularly subs (7)) does not show a clear intention to displace the presumption against the retrospective extinguishment of accrued rights in respect of a void or unenforceable agreement for lease, except to the extent that the new approval process would apply to an extant land dealing. In support of that submission, Ms Donnelly refers to Australian Education Union v General Manager of Fair Work Australia (2012) 246 CLR 117; [2012] HCA 19 (Australian Education Union) at [30] and subss 30(1)(c) and (e) of the Interpretation Act 1987 (NSW) which provides: (1) The amendment or repeal of an Act or statutory rule does not - (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule, or … (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability or penalty, and any such penalty may be imposed and enforced, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, as if the Act or statutory rule had not been amended or repealed.
Ms Donnelly contends that a reading of s 42E and the transitional provisions that deprives Ms Donnelly of her accrued rights would not promote the purpose or objective underlying the ALR Act, particularly the land dealing provisions in Part 2 Div 4, which are aimed at protecting against transactions involving Aboriginal Land Council assets at an undervalue and to the disadvantage of the local Aboriginal community.
Ms Donnelly also submits that a broad reading that denies Ms Donnelly's claims would not be consistent with the purpose of the 2010 Amendments, which were intended to provide a clearer and more transparent regime for land dealings in relation to pre-existing circumstances and to protect Aboriginal land councils from liability for loss caused by unenforceable agreements. Ms Donnelly submits that it would not advance this purpose if s 42E(5) were interpreted to render an Aboriginal land council immune from action to pay for what would otherwise be a windfall gain at the expense of a member of the local Aboriginal community.
In reply, KLALC contends that the application of s 42E(5) is not affected by any presumption against retrospective interference with accrued rights. It says that the transitional provision in cl 51(3) of Sch 4 Part 9 of the ALR Act is sufficiently clear to rebut any such presumption and that its construction of cl 51(3) (which has the effect of subjecting the agreement for lease to s 42E(5)) is consistent with the purpose of the amendments to prevent the collective, rather than the individual, being exposed to penalties because of historical failures to comply.

Preliminary issue - "change in use"

In response to KLALC's submission that referred to "the change of use from vacant to residential land", Ms Donnelly submits that KLALC should not be permitted to rely on a change of use of the Property under s 40B of the ALR Act as a basis for arguing that the new land dealing provisions in the ALR Act apply to bar her claim. I accept that submission.
As Ms Donnelly submits, KLALC raised the "change of use" contention, namely that the former land use provisions were not complied with because NSWALC never approved the change of use of the Property from vacant land, for the first time during the course of the hearing. KLALC's defence pleads that s 42E of the ALR Act applies based on the allegation that the former s 40B applies in respect of a lease of the Property without NSWALC approval. Its written opening submissions did not refer to the need to obtain NSWALC's approval for any "change of use" in respect of the Property or any failure to do so. I accept Ms Donnelly's submissions that, had "change of use" been pleaded, she may have addressed the contention with relevant evidence as to what constitutes a change of use within the context of the Property and its zoning as "R5 Large Lot Residential".
There are two other issues with KLALC's reliance on a "change of use" of the Property.
First, I am not persuaded that the change in the Property from being vacant to occupied by Ms Donnelly with a house and other structures on it necessarily constitutes KLALC changing the use of land vested in it for the purposes of the old s 40B. As Ms Donnelly submits, that expression may be intended to relate to the zoning of the land, rather than a layperson's understanding of what it means to change the use of land.
Second, since the 2010 Amendments, NSWALC approval is required in respect of "land dealings" as denoted by the definition of "deal with land" in s 40, which does not encompass a "change of use" of land. As approval for a change of use of land vested in a LALC is not required under the new regime, any failure to obtain such approval may have rendered the land dealing void under the old s 40, but would not engage s 42E(4) or render any agreement to do so unenforceable for the purposes of s 42E(5).

Consideration and determination

The task of the Court is to construe the ALR Act to determine whether s 42E(5) precludes Ms Donnelly from bringing her claims in this proceeding. That depends on whether, as a matter of construction, the agreement for lease is a "land dealing" and "unenforceable agreement" within the meaning of the ALR Act and, if it is, whether Ms Donnelly's claims for relief are in respect of a warranty or promise in relation to that unenforceable agreement.
That constructional task requires the Court to give the words of the statute the meaning that the legislature is taken to have intended them to have. Ordinarily, that will correspond with the grammatical meaning of the provisions. However, the Court is also required to take into account the context of the provision, the consequences of a literal or grammatical construction, the purpose of the ALR Act, and the cannons of construction, which may require the words of the provision to be read in a way that does not correspondence with the literal or grammatical meaning: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 (Project Blue Sky) at [78].
The meaning of the relevant provisions of the ALR Act is to be determined by reference to the language of the instrument viewed as a whole and on the basis that the provisions are intended to give effect to harmonious goals. Where a conflict appears to arise from the language of particular provisions, it may be alleviated, so far as possible, by adjusting the meaning of competing provisions to achieve the result which would best give effect to the purpose and language of the provisions: Project Blue Sky at [70].
The starting point in the analysis is that, as land vested in KLALC, the Property was subject to the restrictions contained in s 40 and 40B of the ALR Act at the time the agreement for lease was entered into by Ms Donnelly and KLALC in or around June 1992. It is common ground that, as a consequence of NSWALC not providing its approval to KLALC to lease or otherwise deal with the Property by entering into an agreement for lease with Ms Donnelly, the lease or agreement for lease (as a dealing with land) contravened Part 6 Div 4 of the ALR Act (as in force at the time) and was void.
The first issue raised by the parties' submissions is whether an agreement for lease that is void under the ALR Act as at 1992 is an "unenforceable agreement" and a "land dealing" for the purposes of subss 42E(4) and (5) and cl 51(3) of Sch 4 Part 9 to the ALR Act. While I accept that there is force to KLALC's submissions on this issue, the conclusion I have come to is that it is not.
As to the two authorities to which I was referred by the parties, in my view, they have limited application to the issue of construction raised in this case.
In ELALC v NTSCORP, Jacobson J considered the operation of the new land dealing provisions in the context of an application for a declaration that native title did not apply to land that was the subject of a proposed lease to Telstra. Jacobson J held that, even though the application was made before the new land dealing provisions came into force, it was subject to and governed by the new land dealing provisions rather than ss 40 and 40AA which had since been repealed. His Honour said that this followed from the definitions of "existing land dealing" and "existing registrable instrument" in the ALR Act, which meant that subcll 51(1) and (2) did not apply, and the application of cl 51(3) which subjected the application to the new land dealing provisions.
While Jacobson J's approach is not inconsistent with KLALC's position, his Honour did not consider whether the new land dealing provisions would apply to a land dealing that was void by reason of the operation of the old land dealing provisions or one that predated the amendments. Further, and unlike the position in this case, it is apparent from his Honour's reasons that Eden LALC was in the process of preparing an application for approval from NSWALC for the proposed land dealing with Telstra in accordance with s 42G of the new land dealing provisions in the ALR Act. In other words, there was an existing land dealing that was proposed to be subjected to the approval process under the 2010 Amendments, in contrast to an agreement for lease that had been rendered void over 18 years earlier as in the present case.
In that context, I accept Ms Donnelly's submission that ELALC v NTSCORP is not authority for the proposition that the new land dealing provisions apply to the agreement for lease in this case, or that s 42E(5) operates to extinguish Ms Donnelly's accrued rights.
In Illawarra Local Aboriginal Land Council v Stewart [2016] NSWSC 125, Hidden J considered a claim in a proceeding brought by Illawarra LALC to recover possession of land vested in it. The defendant, Ms Stewart, claimed to be entitled to possession of the land under a 99-year lease that she had entered into on 19 September 1989. Ms Stewart filed a cross-claim seeking a declaration that Illawarra LALC was estopped from exercising any right of re-entry.
Hidden J held that the 99-year lease was invalid as the necessary approvals had not been obtained as required by s 40(2) of the ALR Act as in force at 1989. His Honour made orders for possession in favour of Illawarra LALC and dismissed Ms Stewart's cross-claim. Even though the case was heard after the 2010 Amendments were introduced and the "new land dealing provisions" in Part 2 Div 4 of this Act were in operation, Hidden J dealt with the claims made on the basis of the provisions of the ALR Act that were in force as at 1989 (when the lease was entered into). In my view, Hidden J's approach tends to favour Ms Donnelly's construction. That said, his Honour's reasons do not refer to s 42E(5) or any other sections of the new land dealing provisions, and did not consider whether the savings and transitional provisions had any relevance to Ms Stewart's claim.
Turning to the language of the statute, "land dealing" is defined in s 40(1) of the ALR Act (following the 2010 Amendments) as a certain kind of action in relation to land, which is relevantly defined in "deal with land" to include an action to lease or otherwise create or pass a legal or equitable interest in land. While there was no equivalent definition in the ALR Act prior to the commencement of the 2010 Amendments, the old s 40(2) referred to actions in relation to land of a similar kind, such as lease and sale, and extend to any "other dealing with land".
The agreement for lease entered into between the parties in 1992 was a lease or an "other dealing with land" within the meaning of the old s 40(2). Subject to the question of whether the sections apply, an agreement for lease would also constitute a "land dealing" within the meaning of cl 51(3) and s 42E(4) as presently in force.
The issue with KLALC's submission that the agreement for lease entered into by Ms Donnelly and KLALC on 9 June 1992 is a "land dealing" and an "unenforceable agreement" within the meaning of subss 42E(4), 42E(5) and cl 51(3) of Sch 4 Part 9 to the ALR Act is that the agreement for lease was void by operation of s 40(2) as at 1992, well before the introduction of the 2010 Amendments.
The ordinary and natural meaning of the word "void" when used in relation to a contract or a dealing (in this case an agreement for lease in relation to land) is that the contract or dealing is a nullity, with no legal existence and no legal effect. This is to be contrasted with a dealing that is voidable, where something more needs to be done so as to deprive the dealing of any effect.
In my view, the use of the words "is void" in s 40(2) (as in force at 1992) to describe the consequence of a non-complying land dealing indicates that it was intended by the legislature that a dealing in land made in contravention of that Division of the ALR Act would no longer have any effect. Put another way, as the land dealing is void and thus a nullity, there would be no basis on which to seek or obtain approval from NSWALC for it anymore. Like a contract, presumably a void land dealing could not be revived.
In this case, when subss 42E(4) and (5) of the ALR Act were introduced, the agreement to deal with land between Ms Donnelly and KLALC was void and a nullity, with no legal existence. In the absence of an extant land dealing that required approval, in my view, there is no agreement to deal with land or unenforceable agreement for the purposes of s 42E(4), and s 42E(5) is therefore not engaged.
The savings and transitional provisions make the task of construction more difficult. That said, I consider that the language used in cl 51(3) of Sch 4 Part 9 supports the above interpretation. The clause provides that the new land dealing provisions are to apply to a land dealing entered into before the commencement of the new land dealing provisions if the requirements of the former land dealing provisions NSWALC were not complied with. To my mind, that clause is drafted in a way that presumes there is a land dealing that continues to exist (that is, a land dealing that is not void) and on which the new land dealing provisions could operate.
The primary object of the 2010 Amendments was to create clearer and more certain processes for Aboriginal land councils to follow when they deal with, dispose of, or develop land. The amendments have the effect of requiring nearly all dealings with land by a LALC to be approved by NSWALC and introduced detailed procedures and requirements for approvals by NSWALC of those land dealings, the registration of interests created by land dealings, the assessment of land dealings by expert advisory panels, and dispute resolution mechanisms. They were introduced to reinforce the beneficial and remedial nature of the ALR Act, and in response to recommendations to amend following the findings of an Independent Commission Against Corruption investigation into a LALC in 2003. The provisions that rendered a land dealing by a LALC that required but was not the subject of an approval void, and an agreement by a LALC to deal with land that was not approved (if required) unenforceable against the LALC, were considered to be necessary for certainty and strong protection against corruption: Explanatory Note, Aboriginal Land Rights Amendment Bill 2009 (NSW); New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 25 June 2009 at 16818.
It is consistent with that object for cl 51(3) to operate to subject existing land dealings that had not yet been through the approval process under the old land dealing provisions to the machinery of the new land dealing provisions, rather than extending the machinery and operation of the new land dealings provisions to void land dealings that had been entered into before commencement of the 2010 Amendments and could not be the subject of approval.
I accept that KLALC's construction is supported by the beneficial and remedial nature of the ALR Act. The provisions of the ALR Act (as currently in force) also appear to contemplate that a land dealing by a LALC that has not been approved by NSWALC might be both void (as it is in contravention of s 42E: see s 42C(1)) and an agreement to deal with land that is unenforceable against the LALC (see s 42E(4)). In other words, the fact that a land dealing is void because it has not been approved by NSWALC may not mean there is no longer any land dealing or agreement to deal with land for the purposes of ss 42E(4) and (5). However, I consider that the constructional choice should be resolved in favour of the interpretation advanced by Ms Donnelly for the reasons outlined above.
There is also the canon of construction relied on by Ms Donnelly, namely the presumption against legislation operating retrospectively to exclude accrued rights. As stated by Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 (Maxwell v Murphy) at 267; [1957] HCA 7: The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events. See also: ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18 at [27] (French CJ, Crennan, Kiefel and Keane JJ), [50] (Gageler J).
The presumption does not operate on statutory provisions of a procedural character, namely, legislation that appoints or regulates the manner in which rights or liabilities are to be enforced: Maxwell v Murphy at 267-8 (Dixon CJ), 285-6 (Fullagar J). Whether the statutory enactment or amendment is procedural in nature requires determining whether it affects pre-existing substantive rights or liabilities. That a provision is expressed in terms of remedy only is not conclusive: Victrawl Pty Ltd v Telstra Corp Ltd (1995) 183 CLR 595 at 615-6 (Deane, Dawson, Toohey and Gaudron JJ); [1995] HCA 51; New South Wales v McMullin (1997) 73 FCR 246 (NSW v McMullin) at 252A-252B.
The presumption may be rebutted by express language or necessary implication: Victrawl v Telstra at 621, citing Rodway v The Queen (1990) 169 CLR 515 at 518; [1990] HCA 19. In Maxwell v Murphy, Dixon CJ expressed the requirement as an intention contrary to the presumption which appears with "reasonable certainty": at 267.
In Australian Education Union , French CJ, Crennan and Kiefel JJ referred to the requirement of "clear language": at [30]. In that case, their Honours recognised that the strength of the presumption is graduated according to the extent of the statute's propounded effects but cautioned against an approach that takes into account broad notions of fairness and justice. They preferred an approach where the construction that minimises the retrospective effect of legislation is adopted, stating at [32]: … It is sufficient to focus upon the constructional choice which are open on the statute according to established rules of interpretation and to identify those which will mitigate or minimise the effects of the statute, from a date prior to its enactment, upon pre-existing rights and obligations.
The parties did not address the question of whether s 42E(5) of the ALR Act is a provision of a procedural or substantive character. Nor did they seek to identify precisely when it was asserted that Ms Donnelly's rights or causes of action accrued.
While s 42E(5) is expressed in terms of a remedy, in my view, it should be interpreted as substantive in character. The section does more than merely alter the manner of enforcing a right or claim. It operates to bar any cause of action giving rise to a claim for damages or any other remedy in respect of a warranty or other promise relating to an unenforceable agreement against a Local Aboriginal Land Council entirely: see NSW v McMullin at 252B.
Accordingly, I consider that s 42E(5) would be presumed to operate prospectively to causes of action arising on or after 31 March 2010 (being the date of commencement of the provision) and would not preclude Ms Donnelly's claims and rights which she maintains arise from the consequences of the void agreement for lease which had accrued prior to that date.
I am also unpersuaded by KLALC's submission that the language of cl 51(3) shows a clear intention that its operation is to have the effect of extinguishing accrued rights in respect of a void land dealing and unenforceable agreement, except to the extent that the new approval process contained in the new land dealing provisions will apply to the existing land dealing.
Relevantly, cl 51(3) does not expressly provide that the new land dealing provisions are to apply to a land dealing that "is void" before the commencement of the new land dealing provisions. Rather, the clause refers to a land dealing entered into before the commencement of the 2010 Amendments in respect of which the requirements of the former land dealing provisions were not complied with. This suggests that the legislature was proceeding on the basis that a land dealing which had been rendered void prior to the time of commencement was not to be preserved for the purposes of the new land dealing provisions. This is to be distinguished from a land dealing that had not complied with the requirements but was not yet void, because, for example, the approval process was still under way, as was the case in ELALC v NTSCORP.
Had it been the intention of the legislature for land dealings that are void to be subject to the new land dealing provisions and for any accrued rights to be extinguished, it would have been a simple matter to insert the words "or a land dealing that is void under the former land dealing provisions" into cl 51(3) or use clear language reflecting an intention to infringe accrued rights: see Australian Education Union at [30]. In my view, that is not reflected in the language of cl 51(3).
For these reasons, in my opinion, the better construction of cl 51(3) is that it does not apply to a land dealing entered into before the commencement of the new land dealing provisions which was void under the ALR Act (as in force in 1992) well before the date of commencement, as was the case with the agreement for lease. It follows that there was no relevant unenforceable agreement to deal with land in this case to which subss 42E(4) and (5) could apply at the time of the 2010 Amendments, and Ms Donnelly's claims are not precluded by the ALR Act.
On the conclusion I have come to, the remaining issue of whether Ms Donnelly's claims are for a "remedy against a [LALC] in respect of a warranty or other promise relating to an unenforceable agreement" do not strictly arise for determination. However, as it was the subject of submissions, I set out below my reasoning on that issue, although in a more summary form.
There is no dispute that Ms Donnelly's claims for relief are for a remedy against KLALC. The debate is whether they are in respect of a warranty or other promise relating to an unenforceable agreement.
As KLALC submits, the words "in respect of" and "relating to" are expressions of wide import: Project Blue Sky at [87]; Workers' Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642; [1988] HCA 49 at 563-4. They simply require some connection or relationship between the subject matters referred to in the section. In other words, there needs to be a connection between the "remedy" and the "warranty or other promise" on the one hand, and between the "warranty or other promise" and the unenforceable agreement on the other.
A warranty is a guarantee or binding promise. In this case, the relevant unenforceable agreement is the agreement for lease.
The conclusion that I have come to is that Ms Donnelly's claim for equitable compensation based on a proprietary estoppel would be a claim for a remedy against KLALC in respect of a warranty or other promise relating to an enforceable agreement, within the meaning of s 42E(5).
Equitable estoppel operates upon promises or representations, including promises about legal relations: Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582 at 611-2, quoting Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 429 (Brennan J); [1988] HCA 7. While an estoppel seeks to give effect to the equity rather than the enforcement of a promise, the expectation of the proprietary interest in this case was induced by encouragement, namely a promise (or representation) of a long-term lease. In other words, an essential part of the Ms Donnelly's estoppel claim is the expectation created by the promise of a lease.
The ALR Act is beneficial legislation intended to improve the interests of Aboriginal people of NSW at a community level: Minister Administering the Crown Lands Act v NSW Aboriginal Land Council (2008) 237 CLR 285; [2008] HCA 48 at [45]. The evident purpose of s 42E(5) is to protect LALCs from claims relating to agreements to deal with land that have not been approved. As such, it should not be construed narrowly so as to exclude claims that have a relevant connection with a promise and an unenforceable agreement for lease.
In that context, I consider that Ms Donnelly's contention that her claims are not caught by s 42E(5) as she does not seek relief to give effect to an unenforceable agreement (which she accepts would be precluded by s 42E(5)) or to enforce a promise or warranty in respect of the agreement for lease within the meaning of s 42E(5) adopts too narrow an approach to that provision. The terms of s 42E(5) are not limited to disentitling claims that seek to enforce a promise or unenforceable agreement but extend to remedies that relate to and are in respect of those matters.
The position is, in my view, different for Ms Donnelly's claim in restitution. That claim is not intrinsically linked to a promise or a warranty in relation to the agreement for lease. Rather, it is premised on the alleged benefit to KLALC from Ms Donnelly's improvements to the Property in circumstances where the agreement for lease is void. An element of the restitution claim may be bound up with the agreement for lease, in the sense that Ms Donnelly's improvements were made in the mistaken expectation that she had a long-term lease of the Property. However, in my view, there is no relevant connection or relationship between the remedy sought, any promise or warranty underlying the remedy and the agreement for lease.
For these reasons, if s 42E(5) applied to the agreement for lease in this case, I would have concluded that it operated to preclude Ms Donnelly's equitable compensation claim but not prevent her from pursuing her common law claim in restitution.

Issue 4: Is Ms Donnelly prevented from obtaining any relief based on Anshun estoppel or other equitable considerations?

Anshun estoppel

There is no dispute that the applicable principles to determine whether an Anshun estoppel precludes Ms Donnelly from pursing her claims in this proceeding are those identified by Williams J in the 2020 judgment (at [90]), as follows: (1) Anshun estoppel operates to preclude a party from asserting a claim or raising an issue of fact or law that is so closely related to the subject matter of proceedings already conducted that it ought reasonably to have been asserted or raised at an earlier time; (2) the question is whether the matter relied on in this proceeding was so relevant to the subject matter of the 2013 proceeding that it was unreasonable not to rely on it in the 2013 proceeding; (3) this question is not answered merely by a mechanical approach to identifying common facts in proceedings said to give rise to an Anshun estoppel. There are a variety of reasons why it might be justifiable for a party to refrain from litigating an issue in one proceeding and seek to litigate it in a subsequent proceeding; (4) the mere fact that the matter could have been raised does not mean that it should have been raised. The matter has to have been so relevant to the earlier proceeding as to make it unreasonable not to raise it; and (5) it is a serious step to shut out a claim that a party wishes to pursue without determination of its intrinsic merit on the ground that it ought to have been raised in earlier litigation. See also Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 at [22] (French CJ, Bell, Gageler and Keane JJ) and Conference & Exhibition Organisers Pty Ltd v Johnson [2016] NSWCA 118 at [21]-[24] (Meagher JA, McColl and Leeming JJA agreeing).
In the 2020 judgment, Williams J considered and rejected KLALC's claim that Ms Donnelly's claims in this proceeding should be summarily dismissed on the grounds of Anshun estoppel.
While accepting that Ms Donnelly's claims in this proceeding were closely related to the claims she made in the 2013 proceeding and could have been raised in the alternative, her Honour considered that it was not unreasonable for Ms Donnelly not to have prosecuted the claims she seeks in this proceeding in the 2013 proceedings: at [106]. This was in circumstances where her Honour considered that Ms Donnelly's conduct in making the claims for relief in this proceeding was consistent with the terms on which White J dismissed Ms Donnelly's cross-claim in the 2013 proceedings, and any judgment in Ms Donnelly's favour in this proceeding would not be inconsistent with the consent judgment and orders made in the 2013 proceeding on 25 August 2015: at [105]-[106].
Her Honour also observed that Anshun estoppel principles are directed to promoting the efficiency and finality of litigation and there had been delay between the dismissal of Ms Donnelly's cross-claim in the 2013 proceeding and the commencement of this proceeding. However, her Honour did not consider that the delay per se rendered this proceeding an abuse of process: at [98], [106].
KLALC's submissions in support of its contention that Ms Donnelly is precluded from bringing her claims in this proceeding based on Anshun estoppel repeat and rely on submissions similar to those that were considered and rejected by Williams J. KLALC contends that Ms Donnelly's claim for monetary compensation should have been raised in the 2013 proceeding as an obvious alternative to her claim for specific performance. It submits that the principle of finality looms large because KLALC consented to the orders in August 2015 on the basis that the only remaining issue was the removal of fixtures on the Property and in circumstances where there was no suggestion that KLALC would need to meet a claim for monetary compensation in respect of the improvements. KLALC also submits that White J's orders dismissing Ms Donnelly's cross-claim for monetary compensation should be interpreted by this Court as only giving effect to s 91 of the Civil Procedure Act 2005 (NSW).
KLALC also submits, with due respect to her Honour, that Williams J gave insufficient weight to considerations of efficiency and finality in the conduct of litigation and undue weight to the apparent basis upon which White J dismissed Ms Donnelly's cross-claim on 17 November 2015. It also submits that it is not necessary for this Court to consider the Anshun estoppel issue by reference to whether Williams J was wrong because the circumstances before this Court are considerably different to those which confronted her Honour. This is said to be because, at the time Williams J heard KLALC's application, it had not yet filed its cross-claim against Ms Donnelly in this proceeding. Nor had Ms Donnelly accepted that she had committed an ongoing trespass by leaving her animals and possessions on the Property or conceded that the improvements were fixtures.
KLALC submits that Ms Donnelly's new concessions go to the heart of the dispute between the parties, are relevant to the Court's consideration of the Anshun estoppel issue and are of considerable significance to matters of discretion. KLALC also submits that it consented to the orders made by Young J on 25 August 2015 and negotiated with Ms Donnelly regarding her desire to remove items from the Property with a stated aim of obtaining finality.
I am not persuaded by KLALC's submissions. In my view, William J's reasoning in the 2020 judgment is compelling. In particular, I agree with her Honour's view that White J's dismissal of Ms Donnelly's cross-claim on terms that expressly preserved her ability to bring fresh proceedings claiming damages or monetary relief in relation to the alleged improvements in circumstances where KLALC had sought orders to the opposite effect is a strong indication that Ms Donnelly should not be shut out from bringing her claims in this proceeding, as is the fact that the pursuit of her claims in this proceeding would not give rise to an inconsistent judgment.
Although clearly related to the claims made in the 2013 proceeding, Ms Donnelly's claims for equitable compensation and restitution as raised in this proceeding involve different causes of action to those raised in the 2013 proceeding. There was also no hearing or determination of Ms Donnelly's claim in the 2013 proceeding for specific performance of the agreement for lease that led to entry of the consent judgment by Young AJ on 25 August 2015 dismissing her claim and granting possession in favour of KLALC. There seems to be an obvious reason for this; KLALC had raised the operation of s 40B(2) of the ALR Act in its defence (on Ms Donnelly's evidence, for the first time) and Ms Donnelly accepted, correctly, that her claim to enforce the agreement for lease was misconceived as NSWALC had not approved the lease and KLALC was entitled to judgment for possession as a matter of law.
Further, Ms Donnelly is not raising a claim for a monetary remedy referrable to the value of alleged improvements in this proceeding for the first time. She did so as part of the 2013 proceeding. While that claim was summarily dismissed, as Williams J observed in the 2020 judgment (at [104]), there was also a good reason for that dismissal as Ms Donnelly's pleading did not identify the cause of action said to give rise to KLALC's liability in damages.
I accept that there has been a significant delay in Ms Donnelly bringing her claims in this proceeding and the finality of litigation is an important object which tends in favour of KLALC's position. However, Ms Donnelly's delay in bringing this proceeding can, in my view, be explained to some extent by the parties' attempts to reach a resolution of their disputes, Ms Donnelly's lack of funds and her reliance on pro bono legal advice, which has resulted in multiple lawyers representing her throughout the relevant period.
I do not accept KLALC's submission that the concessions made by Ms Donnelly following the filing of KLALC's cross-claim in this proceeding demonstrate that she acted unreasonably in failing to pursue her monetary claim advanced in this proceeding as part of the 2013 proceeding. In my view, KLALC's defence and cross-claim against Ms Donnelly for trespass do not assist in a better understanding of the reasonableness of Ms Donnelly not pursuing her claim for monetary relief for the value of the improvements she made to the Property in the 2013 proceeding. Assessing unreasonableness for the purposes of an Anshun estoppel requires a forward-looking evaluation taken at the time of the first proceeding, not a determination made subsequently with the benefit of hindsight: Vehicle Monitoring Systems Pty Ltd v SARB Management Group Pty Ltd t/as Database Consultants Australia [2020] FCA 6 at [73].
In any event, I am not persuaded that Ms Donnelly made a mid-trial concession to the effect that the dwelling and other improvements are fixtures given her claims, as pleaded in the ASOC, are all premised on the works amounting to improvements to KLALC's property, consistent with the position that they are fixtures.
As to the submission regarding Ms Donnelly's awareness and present acceptance that she has no right to occupy, as I have found, Ms Donnelly was not aware that her agreement for lease required approval from NSWALC until the 2013 proceeding. Ms Donnelly may have consented to judgment for possession in favour of KLALC in 2015 but, after that order was made, there were various attempts made to settle the disputes between the parties on terms that included offers for Ms Donnelly to remove the structures from the Property, remain in occupation and pay rent, or purchase Property.
Further, after obtaining possession in November 2016, KLALC acquiesced in Ms Donnelly retaining her personal belongings and animals at the Property until it sent the letter to her solicitors on 19 March 2018 (as referred to at [58] above) that expressly withdrew all previous consents. I accept that Ms Donnelly's conduct in continuing to store her possessions and animals on the Property may be relevant to the Court's consideration of equitable and other relief in this case. But, I do not see how that matter or the existence of the unapproved structures are relevant to the determination of whether Ms Donnelly's claims are precluded by Anshun estoppel, particularly as the issue of the unapproved structures has been resolved by attributing no value to them.
It also seems likely, if not inevitable, that had Ms Donnelly pursued her claim for monetary relief in relation to her improvements as part of the 2013 proceeding, a separate hearing on that issue would have been needed. This is in circumstances where Ms Donnelly accepted that her claim for specific performance of the agreement for lease was bound to fail and KLALC was legally entitled to possession, and the issue of the removal of the fixtures and fittings had been raised and reserved. While Ms Donnelly's current monetary claim could have been resolved earlier, in my view, that delay is not, either by itself or together with the other matters raised by KLALC, sufficient to conclude that her failure to prosecute her monetary claims was unreasonable in the context of the 2013 proceeding. This is particularly as Ms Donnelly's monetary claim in respect of the improvements had been raised as part of the 2013 proceeding, was the subject of orders made on 17 November 2015 that contemplated the possibility of Ms Donnelly bringing fresh proceedings, and there is no prospect of any inconsistent judgment.
Finally, and while not determinative, as Ms Donnelly's counsel submitted, KLALC could have but has not brought any evidence of prejudice which it has suffered as a result of her delay in bringing her claim.
For these reasons, I have concluded that Ms Donnelly's claims in this proceeding are not precluded by Anshun estoppel.

Other discretionary factors

KLALC's defence and submissions also raise equitable defences of laches and unclean hands and contend that Ms Donnelly's claim for equitable compensation should be refused on those bases. Its written submissions refer to Meyers v Casey (1913) 17 CLR 90; [1913] HCA 50 at 123-4.
In support of these defences, KLALC points to Ms Donnelly's conduct in relation to the Property. In particular, it says that Ms Donnelly has known that she had no lawful right to occupy the Property from as early as August 2008 and points to the unequivocal indications that she is not entitled to be on the Property since KLALC's March 2018 letter. It says that, despite this, Ms Donnelly has continued to trespass on the Property by leaving her possessions and animals there and effectively asserting adverse possession by putting her own lock on the gate.
KLALC also submits that Ms Donnelly should not be entitled to benefit from her own wrongdoing by obtaining monetary compensation by reference to the value of the improvements to the Property during her wrongful occupation. As was put at the hearing, Ms Donnelly's delay in commencing the proceeding has caused unconscionable prejudice and she should not be entitled to the benefit of any value increase over that period
KLALC referred to Ms Donnelly having carried out works to the Property that are unapproved. Its pleading asserts that Ms Donnelly's conduct has caused prejudice to it as it has been unable to achieve its objects set out in s 51 of the ALR Act, although this was not pressed in submissions.
Ms Donnelly rejects that she should be denied any equitable relief on the basis of laches or unclean hands but accepts that some adjustment to what she recovers should be made based on the principle that she should do equity to receive equity. She accepts that the Court should take into account the benefit she has received in being permitted to keep her possessions and animals on the Property until at least March 2018 and submits that the Court should do the best it can on the information available to account for that benefit in the absence of any evidence on which it can be valued.
I do not accept that KLALC has established defences to Ms Donnelly's claims based on laches and unclean hands.
To establish a laches defence, KLALC must demonstrate both unreasonable delay and prejudice to it. As the authors of Meagher, Gummow & Lehane's Equity Doctrine and Remedies state at [38-005]: Laches is an equitable defence to an equitable claim. It is no answer to a claim at law. In its primary sense, laches requires a defendant to establish that a plaintiff has so delayed the institution or prosecution of an equitable claim that the defendant has altered his or her position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb. Mere delay, of itself, is not sufficient to establish the defence. (citations omitted)
Ms Donnelly may have delayed in commencing this proceeding, but I am not satisfied that KLALC has established that it has suffered some unconscionable prejudice as a consequence of that delay: Crawley v Short [2009] NSWCA 410 at [163]. Nor do I consider that the circumstances of Ms Donnelly's delay warrant the conclusion that it would be practically unjust to grant her any relief at all.
As to unclean hands, in this case, the relevant equity being sued for is the loss of the proprietary interest that Ms Donnelly expected to receive and which she no longer enjoys, with the payment of a money sum to the value of the improvements she made, by way of equitable compensation, as an appropriate proxy for that interest. That equity arose independently, and relevantly, before Ms Donnelly's alleged misconduct. Thus, the impropriety complained of does not have the immediate and necessary relation to the equity sued for: Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd (in liq) [2009] NSWCA 145 at [28] (Hodgson JA).
That said, in my view, discretionary factors are of some significance in this case. This is particularly as Ms Donnelly accepts that she has trespassed on the Property for some period and consented to judgment for possession in favour of KLALC in 2015. In my view, Ms Donnelly's entitlement to equitable compensation must be qualified if I conclude that the value of the improvements would exceed what is justified by the requirements of conscionable conduct and would be unjust to KLALC: Sullivan at [94]
There does not appear to be any governing principle that the relief to be granted is that which is the minimum necessary to do justice, although a party seeking to enforce an equitable estoppel must do equity. There must also be proportionality between the remedy and the detriment which it is directed to avoiding: Giumelli at [40]-[48]; Commonwealth v Verwayen (1990) 170 CLR 394 at 413; [1990] HCA 39.

Conclusion on Ms Donnelly's claim

As I have found that Ms Donnelly has established her primary claim for equitable compensation based on proprietary estoppel by encouragement, and that KLALC's defences do not operate to preclude that claim, the remaining issue is the quantum and form of the relief to be granted.
The upper limit of the amount of compensation to be awarded to Ms Donnelly is the value of the improvements (but not the unapproved structures) which, as noted at [120] above, I have found to be $185,000 as at the date of the hearing and $135,000 as at 20 April 2020. However, I consider that these values are higher than justified in this case and do not reflect the circumstances of Ms Donnelly or KLALC. Regard should be had to Ms Donnelly's acceptance that she has been trespassing and receiving a benefit from storing her possessions and animals on the Property without any right to do so from, in my view, November 2016 when KLALC took possession. Ms Donnelly's delay in commencing this proceeding does not disqualify her claim entirely but is a relevant factor given the timing of her claim and the apparent increase in the value of the improvements between April 2020 and October 2021.
Doing the best I can, and adopting a broad brush approach, I have come to the view that the appropriate remedy is an order for the payment of compensation in the amount of $115,000. I have arrived at that amount by taking the April 2020 valuation as the appropriate starting point and discounting it by $20,000. That discount takes into account the occupancy benefits received by Ms Donnelly for the last five years and assumes that there was an increase in the value of the improvements between the date that KLALC obtained possession and Mr Burley's valuation, which I accept would be unjust if KLALC were required to compensate Ms Donnelly for.
I have also concluded that the payment of this sum to Ms Donnelly should be conditioned on Ms Donnelly's compliance with the orders made on 19 October 2021 in respect of KLALC's cross-claim. That condition is, in my view, appropriate as it is a means by which Ms Donnelly can be required to do equity in order to obtain equitable relief.

KLALC's cross-claim

As noted above, the parties have resolved KLALC's cross-claims for injunctive relief. The orders made by consent on 19 October 2021 in relation to the cross-claim: 1. require Ms Donnelly to remove her personal belongings from the Property by 4 pm on 14 January 2021 and restrain her from entering upon or using the Property for any purpose without KLALC's written permission after that time; 2. note that KLALC requires an undertaking from Ms Donnelly to remove only her personal items and cause no harm to the Property as a condition of her entry, and that that condition is not an admission of any value in the structures on the Property; and 3. reserve the remaining issues for decision.
The only remaining issue concerns KLALC's claim for damages for trespass which, as previously mentioned, is limited to a claim for nominal damages.
At the hearing, KLALC indicated that it did not put on any evidence of damage arising from trespass or seek substantial damages in its cross-claim as it understands that Ms Donnelly is not in a position to make good any award of damages. Apart from indicating that the relief sought in its cross-claim was limited to nominal damages, KLALC did not make any submissions regarding how the Court should quantify an award of nominal damages.
Trespass is "actionable per se". Nominal damages serve to vindicate a plaintiff's right to exclusive possession of their land even where no actual loss has been suffered: Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353 at [189]-[190] (Port Stephens Shire Council).
Adopting a broad brush approach and in the absence of any submissions from the parties on the issue of quantification, I have concluded that KLALC should be awarded nominal damages for trespass in the amount of $800, which reflects approximately $160 per year for the five-year period since KLALC took possession of the Property (as referred to at [48] above).
In coming to that view, I have had regard to the amount of annual rent payable under the agreement for lease ($1), as well the amounts which Ms Donnelly offered to pay per week during her negotiations with KLALC after judgment for possession was granted in KLALC's favour (for example, $350 per week, at [60] above). In this case, Ms Donnelly's trespass may have continued over a period of some years, but KLALC has seemingly acquiesced in her keeping some possessions on the Property until March 2018.
I have also had regard to the approach and the amounts of nominal damages awarded in other cases, such as: $250 for each of four instances of trespass in Port Stephens Shire Council; $200 in nominal damages for two occasions of trespass, and $20 in nominal damages for the continuing encroachment of a retaining wall in Hill v Higgins [2012] NSWSC 270; and $4,000 for a mortgagee temporarily taking possession of property in Vella v Australia and New Zealand Banking Group Ltd [2009] NSWSC 123, which Young CJ in Eq calculated as a proportion of the annual rent figure reflecting the period for which the plaintiff was out of possession (not disturbed on appeal).

Orders and costs

As noted above, KLALC's creditor's petition in the bankruptcy proceeding was due to expire on 17 December 2021. Cognisant of that and having progressed the drafting of these reasons to an advanced stage, the matter was listed for judgment on 13 December 2021. On that occasion, the parties were informed that I was in a position to give judgment and make orders that day and would provide the parties with an overview of my findings, with my detailed written reasons to follow soon after. The parties were content with that approach.
Accordingly, and for the reasons set out above, on 13 December 2021, I made the following orders: 1. On the Plaintiff's amended statement of claim, judgment in favour of the Plaintiff in the sum of $115,000 (judgment sum). 2. On the Defendants' cross-claim, judgment in favour of the Defendant in the sum of $800 for trespass to the Defendant's land. 3. Payment of the judgment sum is to be made to the Plaintiff within 21 days of the Plaintiff complying with the orders made on 19 October 2021 that the Plaintiff remove her personal belongings from the Defendant's property. 4. Reserve costs. 5. Grant liberty to the parties to approach my Associate to advise whether the issue of costs has been agreed or whether it is to be determined by submissions and on the papers.
I should also record that when the orders were made, Ms Donnelly's counsel indicated that she would not take issue with any application for an extension of time to cover the period between the entry of orders on 13 December 2021 and the date of delivery of these reasons in the event of any appeal.
As to costs, on 16 December 2021, the parties notified my chambers that they were unable to reach agreement on that issue, were content for it to be determined on the papers, and proposed a timetable for the exchange of submissions on that issue pursuant to the following directions which I will make: 1. By 18 February 2022, the plaintiff is to file and serve written submissions as to the costs of the proceedings. 2. By 25 February 2022, the defendant is to file and serve written submissions as to the costs of the proceedings. 3. By 4 March 2022, the plaintiff is to file and serve any written submissions in reply.

Endnotes

The letter is dated 6 August 1991 but Ms Donnelly's evidence, which I accept, is that this was an error.
This provision was amended to be in this form in 2006.
This provision was amended to be in this form in 2006. 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: 24 December 2021

Aboriginal Land Rights Amendment Act 2001(NSW)

Aboriginal Land Rights Amendment Act 2009(NSW)

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