Gold Coast City Council v Cavill Estates Pty Ltd [2000] QSC 51

(b) an injunction restraining the defendant by its servants or agents from preventing it from having access to the said premises;

[2] At the request of the parties, I am to determine a number of questions (which I shall set out below) separately. It was agreed that the only evidence relevant to that determination is contained in a book of documents which was marked as exhibit 4.

[3] The action concerns a block of toilets and adjoining area used for community purposes on the ground floor of the building known as "Cavill Park" at 46 Cavill Avenue, Surfers Paradise. In December 1977 the plaintiff gave town planning consent for the construction of the building, subject to the following conditions:-

"19. The toilets in adjacent park to be re-located inside proposed development as indicated on the plan, to a standard and with maintenance arrangements satisfactory to the Chief Inspector and to be open to the public at all times.

22. That an area alongside the public toilets be set aside for community purpose area as shown on the amended plan, such area [to] be developed to the satisfaction of Council and exclusively and permanently set aside for such community purposes as Council may in its absolute discretion determine.

23. That appropriate security be given to Council prior to the building permit being issued to guarantee the provision of the toilet block, community area and landscaping of the park referred to in the above conditions."

When the construction was finished, the land was sold by Enacon Limited to The Colonial Mutual Life Assurance Society Limited. In September 1979, shortly before completion of the contract, Henderson & Lahey, solicitors acting for Enacon Limited, submitted to the plaintiff a draft deed intended for execution by their client and the plaintiff, setting out the obligation to keep the toilets open to the public and obligations of the plaintiff in relation to the area.

[4] Completion of the contract took place without the deed being executed. Relevant correspondence between those solicitors and the plaintiff continued up until the execution of a deed by Colonial Mutual and the plaintiff dated 5 March 1981 ("the 1981 Deed") in similar but not identical terms to the draft deed submitted in 1979. In particular the plaintiff inquired whether strata titling was envisaged, and if so, whether the toilets would be common property or an individual lot. It expressed concern that the proposed deed would be ineffective in the event of strata titling. It sought a lease of the area in question, but Henderson & Lahey would not agree to that. Apparently the plaintiff requested certain amendments by letter dated 19 August 1980, but that letter is not in the agreed book of documents. In any event, on 18 November 1980 Henderson & Lahey wrote to the plaintiff in these terms:

We understand that the condition that toilets and community facilities be provided in the building was a condition of the town planning consent granted by the Council for the erection of this building. In those circumstances it seems to us that the obligation to provide toilets and community areas would cease once the building is destroyed. It would be a separate matter as to what conditions were imposed should a further application be made to your client for consent to erect a further building on the land.

In any event if our opinion is incorrect and the obligation does not cease under the town planning approval upon destruction of the existing buildings, then any owner would be obliged to comply with the requirements of the town planning approval.

In these circumstances we are instructed that our client is not prepared to agree to the proposed amendments and we should be pleased if the Council would now sign the document.

(1) THE COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED a company incorporated in the State of Victoria having its principal place of business in Queensland at 289 Queen Street, Brisbane (hereinafter called "the Company" which expression shall extend to and include its successors in title) of the one part

(2) THE COUNCIL OF THE CITY OF GOLD COAST a body corporate constituted under and by virtue of the provisions of the Local Government Act 1936-1980 (hereinafter called "the Council" which expression shall extend to and include its successors in title) of the other part.

1. The Company is the owner of a building known as "Cavill Park" on the land situated at Cavill Avenue, Surfers Paradise and being described as Lot 1 on Registered Plan No. 161358 in the County of Ward Parish of Gilston containing an area of 2409 square metres and being the whole of the land contained in Certificate of Title Volume 5805 Folio 112 (which land is hereinafter called the "said land")

2. It was a condition of the Council's approval to the use of the land and the construction thereon of a building that toilets would be provided in the building for use by members of the public and that an area alongside the toilets would be set aside for such community purposes as the Council may determine.

3. Toilets have been provided in the building erected on the said land for use by members of the public and an area alongside the toilets has been set aside for community purposes being more particularly that part of the building erected on the said land marked in red on the plan set out in the First Schedule hereto (hereinafter called "the premises").

1. The Company will permit the premises to remain open and to be used by members of the public at all times which may be required by the Council.

2. The Company will not in any way be responsible for the conduct operation and use of the premises.

3. The Council will at its own cost and expense keep and maintain the premises and all appurtenances therein in good order repair and condition in accordance with the normal standards for such facilities and in particular the Council will ensure that the premises are kept in a thorough state of cleanliness PROVIDED HOWEVER that nothing herein contained shall require the Council to effect any structural repairs to the building in which the premises are located except where such repairs arise out of the negligent act or omission of the Council its servants agents or contractors or any person using the premises.

4. The Council will at its own cost and expense provide all necessary requisites which may be required for the public's proper use of the premises.

5. It is expressly declared that the rights hereby conferred by the Company do not create any interest in the said land and this agreement shall enure for the benefit of the Company and the Council will consent to the assignment of this agreement to the person who from time to time is the owner of the said land.

6. The Council shall indemnify and hold indemnified the Company from and against all actions claims demands losses damages costs and expenses which the Company may sustain or incur or for which the Company may become liable in respect of or arising from loss damage or injury to property or persons arising or in any way related to the use or entry upon the premises by any person whomsoever (whether or not a member of the public and including without limitation any servant agent or contractor with the council except where such loss damage or injury is occasioned by the negligent act of the Company.

7. The Council shall pay to the assessing authority all charges for electricity gas or water consumed in the premises.

8. If the Council shall fail to perform any of its obligations hereunder then the Company may at its option do all such acts and things and incur such expenses as may be necessary to perform such covenants and the full amount of expenses incurred shall constitute a liquidated debt due and owing by the Council to the Company and shall be payable by the Council to the Company on demand.

9. The rights and obligations created by this Deed shall cease and determine in the event that the building is substantially destroyed.

10. If the Company shall sell transfer or otherwise dispose of the said land the Company shall at its own expense procure from such purchaser or disponee a covenant in favour of the Council that such purchaser or disponee shall observe and be bound by the provisions of this Deed."

Sale to Parlby Investments Pty Ltd and Hallgap Pty Ltd

[6] Over the ensuing years the land was sold first to Queensland Pastoral Investments Pty Ltd and then to Broadleaf Pty Ltd. On each occasion the purchaser made a covenant in favour of the plaintiff to be bound by the provisions of the 1981 Deed. On 22 June 1995 Broadleaf Pty Ltd contracted to sell the land to Parlby Investments Pty Ltd and Hallgap Pty Ltd. As originally drafted, the contract was conditional upon the purchasers' obtaining (on or before 30 November 1995) the plaintiff's approval of the strata titling of the building (clauses 6.5 - 6.7) but those provisions were deleted before it was executed. The nominated settlement date was 31 January 1996. Clause 9 provided:-

9.1 The Purchaser acknowledges that toilets located within the Building on the Land and part of the Land adjacent to the toilets have been set aside for community purposes. The Gold Coast City Council has undertaken to maintain the toilets and the adjacent area in accordance with its usual standards for community facilities.

9.2 The Purchaser agrees to comply with the terms of the Deed of Covenant from Settlement and will indemnify the Vendor against all costs, expenses and damages arising under the Deed of Covenant and incurred by the Vendor after Settlement.

9.3 Before Settlement, the Purchaser agrees to enter into a covenant in favour of the Gold Coast City Council pursuant to clause 10 of the Deed of Covenant. The covenant will be prepared and submitted to the Purchaser by the Vendor's solicitors."

Subdivision under Building Units and Group Titles Act 1980

[7] By letter dated 20 July 1995 Bennett & Bennett, consulting surveyors, advised the plaintiff that they had been instructed to prepare a plan to subdivide the building into 47 lots. On 8 August 1995 the plaintiff wrote to the surveyors listing works identified by its building, health and plumbing inspectors as requiring rectification as a prerequisite to conversion to a building unit subdivision. No mention was made of the toilet block and community purpose area. On 9 August 1995 the plaintiff received advice from its solicitors on the effect of strata titling on the agreement contained in the 1981 Deed; they recommended that the relevant lot (lot 8 having an area of 69 sq. m) be formally leased to the plaintiff for a long term ("say 99 years"), and recommended discussions with the building owner before any strata title plans were submitted to the plaintiff. Thereafter there were negotiations between the purchasers and the plaintiff about the ownership of lot 8, but no agreement was reached.

[8] On 3 November 1995 the defendant was incorporated. On 15 November 1995 Parlby Investments Pty Ltd and Hallgap Pty Ltd which had entered the contract as trustees, were replaced by the defendant as trustee. The plaintiff and the defendant concurred in submitting that nothing turns on that substitution, and that the defendant should be regarded as having assumed the obligations of the purchaser under the contract with Broadleaf Pty Ltd.

[9] On 6 November 1995 the plaintiff executed the building units plan without the imposition of any conditions, and three days later it returned it to the surveyors. The covering letter made no mention of the toilet block and community purpose area. Also on 9 November 1995 the plaintiff instructed its solicitors to advise the solicitors for the owner that if the building were strata titled, it would require a 99 year lease of lot 8. They did so the next day, but apparently no response was forthcoming. (Indeed the matter remained unresolved even after settlement of the sale and registration of the building units plan.)

[10] At the insistence of the vendor's solicitors, a draft deed of covenant to which Broadleaf Pty Ltd, Parlby Investments Pty Ltd, Hallgap Pty Ltd, the defendant and the plaintiff were to be parties was prepared after discussions between Broadleaf Pty Ltd's solicitors and Mr Heraghty and a copy was submitted to the plaintiff's solicitors on 15 November 1995. The plaintiff's solicitors advised the vendor's solicitors two days later that it was not its policy to be a party to any deed of covenant and that clause 10 of the 1981 Deed simply stated that the vendor was to obtain from the purchaser a covenant in favour of the plaintiff. (The letter refers to the "1989" Deed, but I assume that this is a typographical error.)

[11] Parlby Investments Pty Ltd, Hallgap Pty Ltd and the defendant all gave powers of attorney to Mr Heraghty (the defendant's solicitor) on 15 November 1995. These empowered him to execute deeds of covenant with the various tenants of the building and with the plaintiff.

[12] Completion of the sale took place on 22 December 1995. A deed was executed by Broadleaf Pty Ltd, Parlby Investments Pty Ltd, Hallgap Pty Ltd, and the defendant and dated 26 December 1995 ("the 1995 Deed"). Nothing turns on the apparent anomaly in the dates, or upon whether the deed was executed before or after completion. Clause 2 was in the following terms:-

2.1 On and from settlement of the Contract, the Transferee agrees to observe and perform all of the obligations in the Deed on the owner of the Land to the benefit of the Council, as if the Transferee was named in the Deed as the owner of the Land.

2.2 The Purchaser indemnifies Broadleaf from all costs, expenses and damages incurred by Broadleaf and arising under the Deed after settlement of the Contract."

The "Deed" referred to was the 1981 Deed. The "Transferee" was the defendant, and the "Purchaser" was Parlby Investments Pty Ltd and Hallgap Pty Ltd.

[13] The transfer to the defendant and the building units plan were produced for registration on 22 December 1995, and registered on 25 January 1996. Pursuant to s 8 of the Building Units and Group Titles Act 1980 the subdivision was effected by the registration of the plan.

[14] The questions for my determination are as follows:-

(i) Agreed questions for separate determination

"1. Is the plaintiff by virtue of the 1995 deed entitled to a declaration that:

(a) on and from the date of the 1995 Deed the defendant is and has been obliged to permit Lot 8 to remain open and to be used by members of the public at all times which may be required by the GCCC; and that

(b) if the defendant sells, transfers or otherwise disposes of Lot 8 it must, at its own expense, procure from such purchaser or disponee a covenant in favour of the GCCC that such purchaser or disponee will observe and be bound by the provisions of the 1981 Deed in respect of Lot 8; and that

(c) the rights and obligations referred to in (a) and (b) determine only [sic] the event that Cavill Park is substantially destroyed?

2. Is the plaintiff by virtue of the 1995 deed entitled to an injunction restraining the defendant from denying the GCCC by its authorised agents access [sic] Lot 8, or denying members of the public access to Lot 8?

3. If yes to Q. (1), on what terms is the plaintiff entitled to take the benefit of the 1995 Deed?

(ii) Conditions attaching to outcome of separate determination

4. In the event of a negative answer to Q 1, the plaintiff to have leave to argue that the defendant is estopped denying that it is bound to abide by the provisions of the 1981 deed on the basis of the estoppel claim in paragraph 29 and 30 of the amended statement of claim [which was ex. 1 to ex. 5 in the proceeding before me].

5. In the event of an affirmative answer to 1, the defendant is to have leave to argue that the plaintiff is estopped from relying on the 1995 deed against the defendant on the basis of the estoppel claim set out in Schedule One [to ex.5]."

[15] Although the plaintiff did not execute the 1995 Deed, it may nevertheless sue to enforce the obligation in its favour, and it must observe any covenants on its part: Chelsea and Walham Green Building Society v Armstrong [1951] Ch 853 at 856-58; Re Vallance (1884) 26 Ch D 353; Re Whittaker [1901] 1 Ch 9.

[16] It is necessary to go back to the 1981 Deed to ascertain "the obligations ... on the owner of the Land to the benefit of the Council." Construing the 1995 Deed in its factual context there is no basis for concluding that the defendant intended to assume an obligation greater than that of Colonial Mutual.

[17] Counsel for the defendant submitted that the 1981 Deed ceased to be binding on anyone on the registration of the plan of subdivision. The intention of the parties to it is to be ascertained from its terms read in the light of the surrounding circumstances. The following considerations have led me to conclude that the submission of counsel for the defendant is correct:-

(a) The obligation to make the toilets and the community purpose area available was a personal one; the plaintiff did not acquire any interest in the land.

(b) It reflected a condition of the plaintiff's approval of the use of the land and the construction of the building.

(c) It was undertaken by Colonial Mutual in its capacity as owner of "the said land" even though it relates to "the premises". This is apparent from an examination of the 1981 Deed as a whole, and in particular clauses 5 and 10, and recital 1. "The said land" was the whole of lot 1; there was no extended definition applicable in the event of subdivision.

(d) By clause 10, in the event of sale or other disposition "of the said land", Colonial Mutual was to obtain a covenant from the purchaser or disponee in favour of the plaintiff. A subdivision (whether or not a strata titling) would not be a disposition for this purpose, and a proprietor of a separate lot under a building units plan would not be a disponee "of the said land" for this purpose.

(e) There is no evidence that the possibility of strata titling was considered when the town planning approval was given. Certainly it was raised by the plaintiff before the terms of the 1981 Deed were finalized, but the solicitors for Enacon Pty Ltd either ignored the issue or refused to make provision for it.

(f) That there were two possibilities in the event of strata titling (that the premises should be part of the common property, or that they should form a separate lot) and thus two possibilities as to who should bear the burden of the covenant in the event of strata titling (all of the proprietors in proportion to their lot entitlements or the proprietor of the separate lot) is a strong indication that the parties to the 1981 Deed did not intend it to be effectual in that event. It would be unjust to construe it as referable to the newly created separate lot alone, as the proprietor of that lot would be obliged to meet rates, taxes and body corporate levies in relation to it, and to make it available to the plaintiff on the basis that the plaintiff pay for repairs, necessary requisites and electricity, gas and water. (Despite the concession by the counsel for the plaintiff, I have difficulty accepting that rates would fall within "necessary requisites".)

(g) The 1981 Deed made no provision for rates, taxes, or body corporate levies which would apply in the event that the premises comprised a separate lot.

(h) The rights and obligations created by the 1981 Deed were to cease and determine upon the substantial destruction of the building.

[18] In agreeing to the terms of the 1981 Deed, the plaintiff elected to bear the risk that there might subsequently be an application for strata titling, and to deal with the problem of securing its rights to the relevant area if and when it arose. Of course, strata titling required its consent, and it would be open to it to impose conditions upon the granting of that consent. When the plan was submitted to the plaintiff in 1995, it chose to execute it and then seek to negotiate a lease of lot 8. There is no apparent reason why the issue could not have been resolved before the plan was executed.

[19] Relevantly the registration of the plan of subdivision had two effects -

(ii) the obligation of the defendant under the 1995 Deed was stripped of its content.

[20] Accordingly, the questions for my determination should be answered as follows:-

Accordingly, I grant the plaintiff leave to argue that the defendant is estopped from denying that it is bound by the provisions of the 1981 Deed on the basis of the estoppel claim in paragraph 29 and 30 of the amended statement of claim which was ex. 1 to ex. 5 in the proceeding before me.