Moss Capital Pty Limited v Queanbeyan-Palerang Regional Council - [2017] NSWLEC 127 - NSWLEC 2017 case summary — Zoe

NSWNSWLEC

Moss Capital Pty Limited v Queanbeyan-Palerang Regional Council

[2017] NSWLEC 127

Land and Environment Court (NSW)|2017-08-10|Before: Robson J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2017-08-10

Before

Robson J

Catchwords

(2017) 221 LGERA 73 Express Loans & Finance Pty Ltd v Hunter and Ors [2004] NSWSC 142
(2004) 11 BPR 21,451 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1
[2010] HCA 19 Kauter v Hilton (1953) 90 CLR 86

Source

Original judgment source is linked above.

Catchwords

(2017) 221 LGERA 73 Express Loans & Finance Pty Ltd v Hunter and Ors [2004] NSWSC 142(2004) 11 BPR 21,451 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1[2010] HCA 19 Kauter v Hilton (1953) 90 CLR 86[1953] HCA 95 Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62[2015] HCA 6 Moss Capital Pty Limited v Queanbeyan-Palerang Regional Council [2017] NSWLEC 42 Murphy v Wright [1992] NSWCA 168(1992) 5 BPR 11, 734 Nabeth Taleb v National Australia Bank (2011) 82 NSWLR 489[2011] NSWSC 1562 Parsons v McBain (2001) 109 FCR 120[2001] FCA 376 Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council [2004] NSWSC 880(2004) 12 BPR 22, 319 Secretary, Department of Social Security v Agnew (2000) 96 FCR 357[2006] FCA 59 Telfer v Fairfax [2016] NSWSC 60 Tooth & Co Ltd v Barker [1960] NSWR 51(1960) 77 WN (NSW) 231 Troncone v Aliperti (1994) 6 BPR 13, 291 United Dominions Corporation Ltd v Brian Pty Ltd and Others (1985) 157 CLR 1[1985] HCA 49 Walker v European Electronics Pty Ltd (In Liquidation) (1990) 23 NSWLR 1 West v Mead [2003] NSWSC 161

Judgment (18 paragraphs)

[1]

Background

The background facts are uncontroversial and can be summarised as follows.
In or about July 2011, Moss Capital entered into the Deed with Cannchar and Cannchar Investments to form an unincorporated joint venture with Cannchar Investments to develop Curtis Estate. Moss Capital was responsible for preparing and funding a development application for the proposed residential subdivision, and in return would receive a share of any profits upon the sale of Curtis Estate.
Moss Capital lodged a development application with Council on 19 July 2011 for approval of a concept proposal for development involving a 224 lot subdivision, associated infrastructure and roads, and dedication of approximately 30ha for conservation.
The development application was rejected on 29 July 2011 on the basis that it was not accompanied by a Species Impact Statement. Moss Capital accordingly lodged an application for review of Council's decision under s 82B of the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act'), which was rejected by Council on 26 August 2011 on the basis that it was not received within the time period provided in cl 123H(1) of the Environmental Planning and Assessment Regulation 2000 (NSW).
On 24 August 2011, Council resolved to compulsorily acquire the acquired land for the purpose of extending an existing road. Later, in 2014 Council, Cannchar and Moss Capital entered a period of negotiation with Council for a 'land swap' arrangement that could be carried out in lieu of the proposed compulsory acquisition, however agreement was not reached. Accordingly, on 10 July 2015 Council published a Notice of Compulsory Acquisition identifying a strip of Curtis Estate for acquisition, being the acquired land.
On 24 November 2015, Moss Capital's solicitors submitted a claim to Council for compensation for disturbance totalling $610,272 in respect of the acquired land under s 55(d) of the Acquisition Act (comprising $591,951.33 in relation to costs incurred in pursuit of the development of Curtis Estate and $18,321 in relation to legal fees incurred in connection with the acquisition). Moss Capital also noted that other heads of claim under s 55 of the Acquisition Act were "to be advised".
Solicitors for Cannchar also submitted a separate claim for compensation on 18 December 2015 under s 55 of the Acquisition Act in respect of the acquired land. Cannchar's claim was made under s 55(a) and (f) of the Acquisition Act for market value of the acquired land and the decrease in value of the remaining section of Curtis Estate that was not acquired, totalling $26,005,000. A further claim for disturbance was made under s 55(d) of the Acquisition Act totalling $177,803 and comprising costs incurred in relation to legal and expert advice.
On 1 December 2015 solicitors for Council advised Moss Capital that its claim for compensation was rejected. Accordingly on 24 February 2016 Moss Capital commenced these proceedings pursuant to s 67 of the Acquisition Act.

[2]

Claimed interest in the acquired land

Section 37 of the Acquisition Act creates a right to compensation where land is compulsorily acquired, and relevantly provides: 37 Right to compensation if land compulsorily acquired An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land.
The key issue for the purposes of the separate question is whether or not Moss Capital has a compensable interest within the meaning of the definition of "interest" contained in s 4(1) of the Acquisition Act, which provides: interest in land means: (a) a legal or equitable estate or interest in the land, or (b) an easement, right, charge, power or privilege over, or in connection with, the land.
I will refer to subclause (a) as limb one, and subclause (b) as limb two. Moss Capital submits that it has an interest in the acquired land under both limbs of the definition.
In relation to limb one, Moss Capital submits that it has an equitable interest as a result of one of three mechanisms: 1. by operation of the Deed, specifically: 1. by virtue of the sale proceeds clause being cl 12.1 of the Deed; and/or 2. the creation of a caveatable interest by cll 21 and 24.1(b) of the Deed; 1. by virtue of a partnership relationship between the parties to the Deed, which arises because of the express intention of the parties contained in cl 20.1 of the Deed; or 2. by a trust, which arises through: 1. the covenant contained in cl 10.5 of the Deed not to deal with the acquired land without Moss Capital's approval; and/or 2. the default option in cl 17.4.
In relation to limb two, Moss Capital submits that it has a right, charge, power or privilege over the acquired land by the operation of the Deed, and the relationship between itself and Cannchar.
Before considering each of these grounds, and given these proceedings turn primarily on the construction of the Deed, it is necessary first to have regard to the Deed.

[3]

Deed

For the purposes of the Deed, Cannchar was defined as the 'Owner', Cannchar Investments as the 'Option Holder', and Moss Capital as the 'Manager'.
Clause 1 of the Deed sets out a number of further definitions, some of which are extracted below: ... Development means the Works, Subdivision and other improvements to be erected on the Property as part of the Project in accordance with the Approvals. Development Application means a development application for the development and use of the Property under section 77 of the EP&A Act 1979. ... Joint Venture means the unincorporated joint venture created by this Deed between the Option Holder and Manager to carry out the Project. Land Swaps means any disposal of any part of the Property in exchange for the receipt of unencumbered title to other land as defined by the Real Property Act 1900. ... Manager's Entitlement from the Project Return means the amount payable by the Option Holder to the Manager as detailed in clause 12.1. ... Project Account means the account from which all payments in respect of the Project are to be made and to which the Financing Facility and Sales Proceeds are to be deposited and from the Project Costs are to be paid as referred to clause 11.1. PCG means the Project Control Group constituted by clause 6. ... Project means: (a) the planning design and construction of the Works; (b) the execution of the Works; (c) the sale of the Lots and other parts of the Property; (d) the distribution of the Sale Proceeds; (e) any other thing to be done by the Manager under this deed. ... Project Costs means the costs in carrying out the Project and bringing the Project to Final Completion including, without limitation: (a) the Agreed Land Cost and all Holdings Costs; (b) all application moneys, fees, bonds and other charges payable to any local or municipal council or other statutory body or bodies or under or in connection with the Approvals; (c) all costs and expenses incurred in connection with obtaining the Approvals including lodgement fees and the costs and expenses of the preparation of all necessary plans, drawings and specifications; ... (h) any amounts paid or payable in respect of the preparation of all Plans and Specifications in respect of the Project and the obtaining of all necessary approvals and authorities and all other charges properly payable in respect of the Project and all other charges properly payable in respect of the Property. ... Project Completion means when the Option Holder has sold all Lots in all stages. ... Project Manager means the Manager or the Manager's nominee. ... Resumption means a resumption, appropriation or compulsory acquisition of all or any part of the Property under a statute or otherwise including a restriction or order under which compensation is payable in connection with all or any part of the Property. ... Sale Proceeds means the gross revenue (including deposits and GST) paid by the purchasers on completion of Sale Contracts in respect of the Lots (exclusive of any GST) and/or any consideration received as a result of a Resumption. ... Stage 1 Condition means that stage of the Project as described in clause 5.2. ... Sunset Date means the date which is 12 months from the date of this agreement being the date by which the Stage 1 Condition must be satisfied. ... Works means all works pursuant to the Development Consent including without limitation provision and/or construction of earthworks, roadworks, services, landscaping, construction and other activities associated with the development of the Property to enable the sale of the Lots.

[4]

Whether Moss Capital has an equitable interest in the acquired land

As noted at [16] above, Moss Capital submits that an equitable interest arises by the operation of the Deed, a partnership arrangement between itself and Cannchar, and/or the existence of a trust. I shall consider the parties' submissions on each of these issues in turn.

[5]

Operation of the Deed

In relation to the operation of the Deed, Moss Capital submits that an equitable interest arises by virtue of the application of Sale Proceeds provided in cl 12.1 of the Deed and/or the creation of a caveatable interest by cll 21 and 24.1(b) of the Deed.

[6]

Sale Proceeds ground

Relying on the chapeau to cl 12.1, as well as the definitions of 'Resumption' and 'Sale Proceeds' (which captures "consideration received as a result of a Resumption"), Moss Capital submits that cl 12.1 of the Deed gives it an express contractual right to a proportion of the proceeds upon any resumption of the acquired land.
Further, Moss Capital submits that the mechanism set out in cl 12.1 ensures that those proceeds are held in the Project Account, on express trust for the parties to the Deed. Moss Capital submits that the Project Account is a joint account administered by both Cannchar Investments and itself, with this nomination effectively setting up the trustee. The arrangement is further indicative of an express trust, Moss Capital submits, because the chapeau to cl 12.1 requires the trustee to effect a distribution of the Sale Proceeds in a particular way to the identified beneficiaries. Though the beneficiaries are identified disparately, Moss Capital submits that this becomes clear in the 50/50 split in cl 12.1(f) (which was amended by the third variation to the Deed referred to in [22(3)] above).
While Moss Capital accepts that this does not automatically establish an equitable interest in the acquired land (as distinct from an interest in the proceeds of any resumption) particularly given that the express trust in terms depends upon the satisfaction of the Stage 1 Condition, Moss Capital later submits that it may be demonstrative of a constructive trust, or a "right" in connection with the land.
Council disputes the inference drawn by Moss Capital's construction of cl 12.1 as giving rise to an equitable interest, submitting that cl 12.1 is limited to creating a contractual right to a proportion of the Sale Proceeds generated from the development of the acquired land.
Council submits that the words "as a result of a Resumption" in the definition of Sale Proceeds do not make good Moss Capital's claim, rather this simply acknowledges that such proceeds may derive from different scenarios, whether that be from purchasers of individual lots of Curtis Estate or because of a resumption event. Council submits that there is "no principle or authority for the apparent proposition that a contractual arrangement for payment for services out of the proceeds of sale of land creates or constitutes an equitable interest in the land."

[7]

Caveatable interest ground

Moss Capital submits that it has a caveatable interest in the acquired land by virtue of cll 21 and 24.1(b) of the Deed, which permit Moss Capital to lodge a caveat on any part of Curtis Estate. While accepting that there is generally a question as to whether a caveator has a relevant proprietary interest in land for the purposes of s 74F(1) of the Real Property Act 1900 (NSW), Moss Capital submits that the existence of a right to lodge a caveat can suggest an intention to create an equitable charge to support the caveat. Moss Capital submits, relying on Troncone v Aliperti (1994) 6 BPR 13, 291 ('Troncone') per Mahoney JA (Priestly JA and Meagher JA agreeing), that the grant of an authority to lodge a caveat carries by implication a grant of an estate or interest in land as necessary to enable that authority to be exercised.
Apart from these general principles, Moss Capital submits that in any event, an equitable interest arises from the default purchase option contained in cl 17.4 of the Deed. This clause operates as a "put option", requiring Moss Capital to acquire a 50% interest in Curtis Estate if the Stage 1 Condition is not satisfied, and providing that if Moss Capital fails to acquire this interest, it forfeits all costs expended in relation to the Deed and is required to remove its caveat from the property. By linking the costs incurred to the caveatable interest, Moss Capital submits that the Deed in fact provides for Curtis Estate to be used as security for Moss Capital's investment, and therefore creates a charge over Curtis Estate in respect of its costs of achieving Stage 1. Moss Capital submits that this position is further supported by cl 9.1 of the Deed.
Council submits that the focus on a caveatable interest is untenable for the purposes of establishing an interest in land. Rather, the relevant enquiry for the purposes of the Real Property Act 1900 is whether there is an existing legal or equitable estate or interest in land to authorise the lodgement of a caveat to protect that interest. Accordingly, Council submits that it is incorrect to suggest that where a caveatable interest is 'created', this necessarily 'creates' an equitable interest, noting in particular the decision of Bryson AJ in Nabeth Taleb v National Australia Bank (2011) 82 NSWLR 489; [2011] NSWSC 1562 ('Taleb') where his Honour found at [60]-[61] that a mere authorisation to lodge a caveat did not necessarily imply an intention to create an equitable interest. The primary step, Council submits, should always be identifying the relevant legal or equitable interest in land.

[8]

Sale Proceeds ground

The operation of cl 12.1 is clear on its terms and I am satisfied that it does no more than establish a contractual right on the part of Moss Capital to a proportion of the Sale Proceeds.
While the definition of Sale Proceeds does on its terms include any compensation received as a result of a compulsory acquisition of Curtis Estate (made clear by the inclusion of "consideration received as a result of a Resumption" in the definition of Sale Proceeds), it is difficult to see how this takes cl 12.1 any further than a contractual right, and I am not satisfied and indeed it has not been solidly advanced by Moss Capital that this gives rise to an equitable right.
In relation to Moss Capital's submission that cl 12.1 creates an express trust, it is well established that the creation of a trust requires certainty on three distinct matters, being the intention to impose an equitable obligation by way of trust; the subject matter of the trust; and the objects of the trust (i.e. the beneficiaries), see Kauter v Hilton (1953) 90 CLR 86; [1953] HCA 95; Herdegen v Federal Commissioner of Taxation (Cth) (1988) 84 ALR 271.
In the present circumstances there is no express statement of an intention on Cannchar's part to create a trust, nor am I satisfied that such an intention may be imputed from the language of the Deed, the nature of the transaction or the relationship between Cannchar and Moss Capital, see Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 ('Korda') per French CJ at [3] and [5]. Nor is it clear from cl 12.1 who the beneficiaries of the purported trust would be, noting particularly that the clause provides for Cannchar Investments and Moss Capital to together apply and receive the Sale Proceeds, thereby going against the implication that Cannchar Investments is a trustee and Moss Capital a beneficiary. I accept Council's submission that the Project Account is more akin to a joint bank account.
I accept that the Deed, at its highest, gives Moss Capital an interest in the Sale Proceeds of Curtis Estate, which would include an interest in any compensation received as a result of a compulsory acquisition of the land. However to establish an interest in the land for the purposes of a compensation claim under the Acquisition Act, Moss Capital is required to have an interest in the land itself, and indeed, one that has been divested, extinguished, and diminished by the acquisition. This is not the same as an interest in the form of a contractual right to receive a share of the proceeds generated from developed land or the proceeds of an acquisition.

[9]

Caveatable interest

Determining the nature and content of a caveatable interest is a complex task that inevitably depends on the particular circumstances of each case. Section 74F(1) of the Real Property Act 1990 (NSW) enables a person who claims to have a legal or equitable interest in land to lodge a caveat against the title. Relevantly, a registered proprietor cannot by contract confer a right to lodge a caveat where no caveatable interest exists, see Murphy v Wright [1992] NSWCA 168; (1992) 5 BPR 11, 734 per Handley JA (Priestly JA agreeing), citing Tooth & Co Ltd v Barker [1960] NSWR 51; (1960) 77 WN (NSW) 231 at 233, 242-3. However, a caveatable interest need not necessarily be a proprietary interest. While there are of course circumstances where a caveat is lodged to protect a proprietary interest, the right to lodge a caveat does not in itself convey a proprietary interest.
Whether clauses of the type relied upon by Moss Capital, being cll 21 and 24.1(b) of the Deed, create a proprietary interest in the land was considered in Bellissimo, where White J stated: [12] There is no doubt that in some cases an agreement that one party has authority to lodge a caveat in respect of the property of the other carries with it by implication an agreement to confer such an interest in the land as will sustain a caveat. That is the application of the principle that whoever grants a thing is deemed to grant that without which the grant itself would be of no effect (Troncone v Aliperti (1994) 6 BPR 13,291; Coleman v Bone (1996) 9 BPR 16,235; Nudd v Official Trustee in Bankruptcy [2002] NSWSC 399; (2002) 11 BPR 20,163 at 20,167, 20,169-20,170). In Troncone v Aliparti, the majority of the Court of Appeal construed an agreement that creditors could lodge caveats on the debtor's property as an implied grant by the debtor of an equitable charge. (See Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council [2004] NSWSC 880; (2004) 12 BPR 22,319 at [17]-[23].) In Iaconis v Lazar [2007] NSWSC 1103; (2007) 13 BPR 24,937, Young CJ in Eq (as His Honour then was) said (at [23]): "[23] The current commercial enthusiasm for this sort of clause in a contract and for lodging a caveat was given a great boost by the decision of the Court of Appeal in Troncone v Aliperti (1994) 6 BPR 13,291. This decision has often been interpreted by persons seeking charges as meaning that every time there is an agreement that X can lodge a caveat over any property Y may own, that an equitable charge is created. It should be remembered, as McLelland CJ in Eq said in Coleman v Bone (1996) 9 BPR 16,235 at 16 and 239, that the true principle is that 'Where the authority to lodge a caveat is given in connection with an obligation by A to pay money to B, and there is no sufficient indication to the contrary, the implication is that the estate or interest granted is an equitable charge to secure payment to B of that money.'" [13] As Bryson J (as his Honour then was) said in Express Loans & Finance Pty Ltd v Hunter [2004] NSWSC 142; (2004) 11 BPR 21,451 the question is always a matter of construction of the particular document under consideration. There, the defendant signed an authority and agreement authorising the caveator "to lodge a caveat on the above security property if the fees as agreed are not paid on demand and will sign all documents as required by [the plaintiff] to facilitate same". His Honour construed that agreement as an authority for the lodgement of a caveat and nothing else, and not as having created a charge over the land or any other means of enforcement. His Honour recorded the plaintiff's contention that "the agreement would be futile and ineffective if it did no more than it literally provides for". His Honour said (at [13]): "In my mind, this is incorrect. An impediment is placed in the way of a registered proprietor if a caveat is lodged, whether or not the caveat is effective, as its lodgement confronts the registered proprietor with problems and difficulties, whether or not it can be removed." The purpose of the clause, his Honour said, was "to enable the plaintiff to impede and obstruct the defendant's path as registered proprietor, without going any further." … [17] Had it been intended to create a charge, whereby the plaintiff could apply to the court for an order for sale of the property or for the appointment of a receiver, one would expect the nature of that arrangement to be spelled out clearly in an agreement between a solicitor and his client, or between a solicitor and a company associated with the client, and not be left to implication. [18] It is more likely that the parties intended by clause 2(iii), that by the plaintiff's being authorised to lodge a caveat, and by its being agreed that he had a caveatable interest in the property, that the parties intended, and intended only, that the company would not be permitted to deal with the land without the plaintiff's consent. Such a negative covenant does not create an interest in land (Redglove Projects Pty Ltd v Ngunnawal Local Aboriginal Land Council).

[10]

Partnership

Moss Capital submits that, despite the references to "joint venture" in the Deed, both the Deed and the conduct of the parties suggest a relationship of trust and confidence between them, in that they account to each other, communicate constantly, and trust one another - all of which are consistent with a partnership relationship. As such, Moss Capital submits that its interest in the assets of the partnership constitutes an equitable interest in the land.
Moss Capital relies on Gibson Motor Sport Merchandise Pty Ltd v Forbes [2005] FCA 749 ('Gibson Motor Sport') where Crennan J (as her Honour then was) set out the characteristics of a joint venture as distinct from a partnership as follows: [78] Distinctions which can be made between a joint venture and a partnership are not always simple or without controversy. The term 'joint venture' has conventionally and commonly been used to refer to an association for the purposes of a single undertaking rather than for the continuous 'carrying on (of a) business' characterising a partnership (s 5, Partnership Act 1958 (Vic)), yet, numerous single undertakings, to which the term joint venture may reasonably be applied, do not always in truth lie outside the uniform Partnership Acts or partnership principles and the collocation has certainly been used in a general sense to describe undertakings which do not have legal attributes differing from partnerships: see: J D Merralls QC., 'Mining and Petroleum Joint Ventures in Australia: Some Basic Legal Concepts' (1988) 62 ALJ 907; see also, extra‑judicially, Hon. Justice McPherson, 'Joint Ventures' in Equity and Commercial Relationships, ed. Finn, 19 at 30-32, and Hon. Mr Justice J A Dowsett 'Operator of a Joint Venture - Principal or Agent' (1987) AMPLA Yearbook 269, and see generally W D Duncan (ed) Joint Venture Law in Australia (1995) Ch 2. Federation Press in Association with the Centre for Commercial and Property Law, Queensland University of Technology, 1994. [79] While joint venture agreements are generally governed by the principles applicable to contract and property, equity, through the mechanism of a constructive trust, may be called in aid in circumstances of incomplete agreement: Muschinski v Dodds (1985) 160 CLR 583 ('Muschinski') at 618, or called in aid because of a breach of a fiduciary duty: Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300 ('Ravinder v Krizaic'). Agreed contractual duties of joint venturers are not necessarily or routinely subject to any implied duty to act in good faith: Noranda Australia Ltd v Lachlan Resources N.L. (1988) 14 NSWLR 1; Australian Oil and Gas Corporation Ltd v Bridge Oil Limited (1995) 14 AMPLA Bull 60 at 70, Kelly v C.A. & L. Bell Commodities Corporation Pty Limited (1989) 18 NSWLR 248 at 258. See also the observations of Ormiston J. in Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 96-97 ('Vroon'). [80] Recognisable and common characteristics of joint ventures include: 1. Participants hold proprietary interests in the assets of the joint undertaking, often, but not necessarily, as tenants-in-common: see the abovementioned article of Mr Merralls QC. 2. Participants exercise joint control of the undertaking. 3. Participants contribute to the joint undertaking, not necessarily equally; such contributions may be disparate: Canny Gabriel Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at 327; Television Broadcasters Limited v Ashton's Nominees Pty Ltd (No.1) (1979) 22 SASR 552. 4. Participants in the joint undertaking enjoy rights and assume obligations, which are often several, and calculated by reference to ownership of shares and/or contributions made. 5. Participants have a joint (or community of) interest in the performance of the undertaking's purpose: Cummings v Lewis (1993) 41 FCR 559 at 314/315 (per Cooper J); 6. Participants associate in the undertaking for mutual commercial gain which can be mutual profits.

[11]

Consideration

For the reasons set out below, I do not consider the relationship between the parties to be a partnership. Further, even if there was a partnership, I accept Council's submission and consider it a complete answer that in circumstances where the partnership is alleged to exist between the members of the joint venture (being Cannchar Investments and Moss Capital), Curtis Estate (and therefore the acquired land) was not an asset of the partnership.
I accept that on occasion the characteristics of a joint venture and those of a partnership can overlap, and that the "recognisable and common characteristics of joint ventures" are those set out by Crennan J in Gibson Motor Sport at [78]-[80], and the usual indicia of a partnership are set out by Jagot J in Yacoub v Federal Commissioner of Taxation at [24]. Moreover, whether a partnership exists on the present facts is to be determined by reference to the "true contract and intention of the parties as appearing from all the facts and circumstances relevant to the relationship" (Amadio Pty Ltd v Henderson (1998) 81 FCR 149 at [172]) and "the substance and reality of the transaction…" (Fenston v Johnston (1940) 23 TC 29).
In these proceedings, the evidence is that the Deed reflects an undertaking to generate a development, in the sense of a product, from which profits will flow. In the circumstances, I am satisfied that there was no partnership between the parties as at the date of Council's acquisition of the acquired land. My reasons may be shortly stated. 1. First, whilst it is true that the parties' description of the relationship does not deny the potential for the relationship to be characterised as a partnership (as per United Dominions) and there is no doubt that the parties in the joint venture are in the undertaking together, the "substance and reality" of the matter is a one-off undertaking, in effect to generate a product being the development of the Curtis Estate. 2. Second, although the relationship does include mutual interest in the development of Curtis Estate the primary source of the relationship is the contractual agreement. I accept Council's submission that the trust and confidence that Cannchar Investments and Moss Capital may have had in each other arises primarily in the context of their having entered into a joint venture and the parties contractual obligations under cl 20.1(b) of the Deed. 3. Third, while Moss Capital submits that the fact that the parties account to each other is indicative of their status as partners, I find that the relationship between the parties and the manner in which they account to each other and communicate is simply a reflection of the agreed contractual position under the Deed which, again was expressly entered into as a joint venture rather than a "partnership". 4. Fourth, I accept that on one view cl 10.5 evidences a lack of trust and confidence, such that Moss Capital thought it contractually necessary to bind Cannchar and Cannchar Investments from dealing in the land without its approval. 5. Fifth, there is no compelling evidence that the parties have any mutual concern for each other's financial stability apart from that which would usually be the case in any joint venture. In fact, the Deed as a whole appears by cl 9.1 to place the burden of financial liability for the project primarily on Moss Capital, demonstrated by Moss Capital being liable for the costs to satisfy the Stage 1 Condition as well as any shortfall between the Project Costs and debt raised. This is further supported by cl 7.4 which requires Moss Capital to "procure finance for the Project Costs on behalf of and with the assistance of the Option Holder". 6. Sixth, while I accept that the PCG and its duties and powers outlined in cl 6 of the Deed do indicate a level of mutual control and management, I do not consider that this in itself takes the relationship from being a joint venture to being a partnership. Granted the PCG is described as the "executive management vehicle for the Project" and is charged with making "all major decisions and determinations" (cl 6.4 of the Deed), however the remainder of the Deed envisages a clear separation of duties and powers between the parties (see e.g. cll 7 and 8). Most joint venture agreements will include a clause relating to how decisions are to be reached, and in the circumstances I consider that the aim of cl 6 and the PCG is to ensure efficient decision-making, rather than evincing an intention that the parties are participating in the endeavour as partners. 7. Seventh, there is no provision for the sharing of losses from the apparently one-off venture and, importantly, the parties are clearly not jointly and severely liable for the acts or omissions of other parties.

[12]

Constructive trust

As noted above, Moss Capital submits that it has an equitable interest in the acquired land because the operation of the Deed (in particular cll 10.5 and 17.4) indicates a constructive trust of the type envisaged in Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59. Relying on the summary of Campbell J of the elements of a Baumgartner trust in West v Mead [2003] NSWSC 161; (2003) BPR 24,431, Moss Capital submits that: 1. there must be both a joint relationship or an endeavour in which expenditure is shared for the common benefit in the course of and for the purpose of which an asset is acquired; 2. the purpose of the joint relationship or endeavour must have been removed or the joint endeavour prematurely terminated without attributable blame; and 3. there must be an element of unconscionability.
Moss Capital accepts the fact that the Deed does not expressly contemplate what would occur in circumstances where the Stage 1 Condition was not met. Rather, Moss Capital submits that the Deed presumes that it will be met, and that upon satisfaction, the costs incurred by Moss Capital would be jointly securitised by Curtis Estate. Moss Capital submits that this intention is enforced by cl 17.4 of the Deed, which requires it to acquire a proportion of Curtis Estate, or to forfeit its costs incurred.
Moss Capital submits that the unequivocal nature of the creation of a caveatable interest, the prohibition against dealing, the establishment of the joint account and the obligations of utmost good faith, trust and fidelity as provided for in the Deed all indicate that it would be unconscionable for Cannchar to retain full title to Curtis Estate in circumstances where the joint venture has been frustrated.
Moss Capital further submits that is clear that a constructive trust has been established, as the alternative would be that Cannchar would retain the full benefit of Curtis Estate, which had been pledged to the joint endeavour, in circumstances where the joint endeavour had been frustrated. Moss Capital submits that this would clearly be unconscionable.
Relevantly, Moss Capital submits that a constructive trust is only imposed if some other remedy is not suitable (relying on John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd; Walker Corp Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at 45; Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at 172), and that such a trust arises when the conduct to which it is imposed occurs, rather than when the Court declares it (see Secretary, Department of Social Security v Agnew (2000) 96 FCR 357; [2006] FCA 59; Parsons v McBain (2001) 109 FCR 120; [2001] FCA 376 at 124-5).

[13]

Consideration

On the facts of the present matter there is no occasion for any remedy based upon constructive trust. The purported constructive trust requires at the least, an element of unconscionability. Contrary to Moss Capital's position, I do not accept that unconscionability, simply expressed as Cannchar being able to retain "full benefit" of Curtis Estate in circumstances where it had been pledged to the joint venture and there had been a joint endeavour to improve it, amounts to unconscionable conduct such as to trigger relief in the form of the declaration of constructive trust.
I accept Council's submission that the principles in respect of constructive trusts do not operate as some type of overriding principle to effect what may be a "fair outcome". To the extent that the parties had not expressly contemplated what would occur in circumstances where the Stage 1 Condition was not met does not, by the operation of constructive trust, or in my view otherwise, amount to an equitable interest, let alone an equitable interest in the land as required pursuant to the Acquisition Act. In any case, I am not completely comfortable that the Deed does not provide for the circumstance where the Stage 1 Condition is not satisfied, given cl 17.4 clearly sets out a potential course of action for such circumstances.
Apart from the above I am not comfortable, on the evidence presently before the Court, that there is frustration of the Deed and/or that the Deed is not able to be implemented according to its terms despite the acquisition. Relevantly, in oral submissions Mr Galasso clarified that the frustration alleged goes only to the acquired land, stating that, as a result of the acquisition "... the purpose [of the] endeavour has been removed, at least as far as the acquired land is concerned" (transcript 10 August 2017, 28.15).
As per Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 at 729: [F]rustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract...
In circumstances where only a portion of Curtis Estate has been acquired, it has not been made out by Moss Capital that the acquisition makes the development on Curtis Estate "radically different" from that which was originally contemplated, and in the circumstances I am hesitant to draw the conclusion that the purpose of the Deed has been frustrated. I note that the Deed itself does not provide for or describe the specific development envisaged beyond subdivision and general works (e.g. earthworks, roadworks etc.). Accordingly, while the specific development for which concept approval was sought, being a 224 lot subdivision, associated infrastructure and roads, and dedication of approximately 30ha for conservation, may no longer be able to proceed on those terms (although I have not received any evidence or submissions on this point), that is not to say that the general development of Curtis Estate contemplated by the Deed is frustrated.

[14]

Whether Moss Capital has a right, charge, power or privilege in the acquired land

Moss Capital submits that the 'rights' captured within the scope of the second limb of the definition of "interest" are interpreted to be wider than those caught within the first limb of the definition. Examples of such rights include easements, charges, profits à prendre, profits à rendre, and/or licences coupled with interests.
Relying on Dial a Dump Industries Pty Ltd v Roads and Maritime Services [2017] NSWCA 73; (2017) 221 LGERA 73 ('Dial a Dump Industries') at [156], Moss Capital submits that there are two fundamental requirements in establishing such an interest, being: 1. that the power or privilege must be "over or in connection with the land"; and 2. there must be an "owner" of the power or privilege such as to be entitled to compensation.
Moss Capital submits that it had a right to charge the land in respect of the costs incurred in pursuing the development of Curtis Estate, which was a right it could protect by caveat. Even if this is found not to be an equitable interest, as I have determined above, Moss Capital submits that it must be construed as a charge, which descends on the contractual grant of the right.
Moss Capital submits that the charge is clearly connected with Curtis Estate, and is capable of alienation by way of the costs Moss Capital expended on the development as well as the contractual right under cl 12.1 to money spent in developing the land.
In relation to physical rights, Moss Capital submits that the Deed necessarily conferred on Moss Capital permission to undertake activity in realisation of the development of Curtis Estate, which included unfettered access to the site for the purpose of ensuring relevant experts and consultants could have access to it. Moss Capital submits that such a right was a valuable right, connected to the land, which was taken away by the acquisition, and was therefore clearly a right or power falling within the second limb of the definition of "interest".
Council also relies on Dial a Dump Industries for the relevant principles, summarising the key principles as follows: 1. a power "over or in connection with the land" involves an ability to control or direct (at [157]); 2. for there to be a power or privilege it must be capable of alienation (at [159]); and 3. an interest in land must be limited to iura in re aliena, i.e. limited to proprietary or quasi-proprietary rights less than a fully-fledged estate (at [139]-[160]).

[15]

Consideration

Accepting, as I must, that an "interest in land" within the meaning of s 4(1)(b) is not as confined as was historically the case (Hornsby Council v Roads and Traffic Authority (NSW) (1997) 41 NSWLR 151; Dial a Dump Industries at [156]), to constitute an "interest in land" there must be first, a "power or privilege" which must be "over or in connection with the land" and, second, that there must be an "owner" of the power or privilege such as to be entitled to compensation.
For the reasons set out below I do not accept Moss Capital's submission that at the date of acquisition it had a right to charge the acquired land in respect of the costs it had expended.
In accordance with my findings above, the Deed at most gives Moss Capital a contractual right to develop Curtis Estate (with Cannchar Investments) and, upon development, to share in profits at a later point of time. This is not a proprietary or quasi-proprietary right, nor does Moss Capital have the ability to deal with or otherwise control or direct the use of the land.
Although Moss Capital submits "at the very least" it had this ability through the PCG, in which it participated and was entitled to equal decision-making power as the land owner and registered proprietor, I do not accept this submission because, even accepting that the PCG was constituted by nominees "representing each Party equally" (cl 6 of the Deed), this is not sufficient to indicate that Moss Capital itself had the requisite power or privilege vis-à-vis Curtis Estate necessary to satisfy the second requisite element in Dial a Dump Industries. At most, and similar to the facts in Dial a Dump Industries, Moss Capital could determine how certain matters in relation to the joint endeavour were carried out. However, it could not otherwise "control or direct what went on the land" (as per Dial a Dump Industries at [157]) other than in accordance with the PCG. Relevantly, I find that the ability to participate in decision-making does not go beyond a mere contractual project development right.
Apart from the above, for there to be a power or privilege within the meaning of limb two of the definition of "interest" in the Acquisition Act, Beazley P in Dial a Dump Industries at [159] held that that the power or privilege must be capable of alienation, stating: I am also of the opinion that for there to be a power or privilege within the meaning of para (b), that power or privilege must be capable of alienation. Otherwise, the concept of ownership as part of the statutory scheme, especially in s 37, would be superfluous insofar as a power or privilege over or in connection with the land was concerned. Dial A Dump had nothing that it could sell or transfer. ...

[16]

Conclusion

For the reasons above, while it is clear that the Deed did confer upon Moss Capital certain contractual rights, I am not satisfied that Moss Capital has established that it was the owner of any "interest" in land as defined in the Acquisition Act that has been divested, extinguished or diminished by the acquisition.
It is clear that the Deed did contemplate the possibility of a compulsory acquisition, and accordingly sets down certain procedures which were to be followed in the event of compulsory acquisition. The difficulty however arises given the lack of clarity in the Deed as to what would occur in relation to the costs expended by Moss Capital if the land were acquired before the Stage 1 Condition was satisfied. While this may seem to be an oversight, on one view it could be indicative of the nature of the joint venture embarked upon by the parties - that being that in return for Cannchar contributing the land to the joint endeavour, Moss Capital bore the risk of the initial stage of the project.
The nature of Moss Capital's contractual rights under the Deed is a complex question that may need to be properly determined. However, this is a matter that will fall to be determined between the parties, and is separate from that which is currently before me. The relevant question for my purposes is whether or not Moss Capital has an interest in land for the purpose of the Acquisition Act. The fact that the joint venture related to land does not in itself give Moss Capital an interest in land, and I am not satisfied that the Deed on its terms or through its operation makes good such an interest.
The separate question must therefore be answered in the negative and in my opinion that answer is dispositive of the proceedings. I reserve the question of costs.

[17]

orders

The orders of the Court are: 1. The answer to the separate question: Did the Applicant have an "interest" in the following land: a. Lots 69-88 in Deposited Plan 15764 (inclusive); b. Lots 184-197 in Deposited Plan 15764 (inclusive); and c. Lots 225-229 in Deposited Plan 15764; as at 10 July 2015 for the purpose of section 37 of the Land Acquisition (Just Terms Compensation) Act 1991? is no. 1. Costs are reserved.

[18]

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: 29 September 2017

Parties

Applicant/Plaintiff:

Moss Capital Pty Limited

Respondent/Defendant:

Queanbeyan-Palerang Regional Council

Legislation Cited (8)

Environmental Planning and Assessment Regulation 2000(NSW)

Real Property Act 1990(NSW)

Land Acquisition (Just Terms Compensation) Act 1991(NSW)

Environmental Planning and Assessment Act 1979(NSW)

Partnership Act 1892(NSW)

Real Property Act 1900(NSW)

Uniform Civil Procedure Rules 2005(NSW)

Partnership Act 1958(Vic)

Cases Cited (50)

Telfer v Fairfax [2016] NSWSC 60 Tooth & Co Ltd v Barker [1960] NSWR 51; (1960) 77 WN (NSW) 231 Troncone v Aliperti (1994) 6 BPR 13, 291 United Dominions Corporation Ltd v Brian Pty Ltd and Others (1985) 157 CLR 1; [1985] HCA 49 Walker v European Electronics Pty Ltd (In Liquidation) (1990) 23 NSWLR 1 West v Mead [2003] NSWSC 161; (2003) BPR 24,431 Yacoub v Federal Commissioner of Taxation [2012] FCA 678; (2012) 292 ALR 128 Category: Procedural and other rulings Parties: Moss Capital Pty Limited (Applicant) Queanbeyan-Palerang Regional Council (Respondent) Representation: Counsel: A Galasso SC with C O'Neill (Applicant) R Lancaster SC with S Nash (Respondent)

Judgment

Before the Court is a separate question arising in Class 3 proceedings brought by Moss Capital Pty Limited ('Moss Capital') against Queanbeyan-Palerang Regional Council's ('Council') rejection of Moss Capital's claim for compensation under s 39 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ('Acquisition Act'). The proceedings relate to the compulsory acquisition of lots 69-88, 184-197 and 225-229 in DP 15764 ('acquired land'), which was acquired by Council by notice published in the New South Wales Government Gazette No 57, 10 July 2015. The acquired land, which has an area of approximately 3.5 hectares, was part of the western portion of a 78 hectare parcel of land known as Curtis Estate, which is located to the east of Ellerton Drive, in East Queanbeyan, NSW.
At the date of acquisition, Curtis Estate (including the acquired land) was owned by Cannchar Pty Ltd ('Cannchar'). In or about July 2011, Moss Capital entered into a Joint Venture and Development Deed with Cannchar and Cannchar Investments Pty Limited ('Cannchar Investments') for the purposes of developing Curtis Estate ('Deed'). Moss Capital claims that it is entitled to compensation as it has an "interest" in the acquired land for the purposes of s 37 of the Acquisition Act.
Council disputes that Moss Capital has a relevant interest in the acquired land, and as a result of a Notice of Motion filed by Moss Capital on 21 February 2017, I ordered that the following question be determined as a separate question pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') (see Moss Capital Pty Limited v Queanbeyan-Palerang Regional Council [2017] NSWLEC 42): Did the Applicant have an "interest" in the following land: a. Lots 69-88 in Deposited Plan 15764 (inclusive); b. Lots 184-197 in Deposited Plan 15764 (inclusive); and c. Lots 225-229 in Deposited Plan 15764; as at 10 July 2015 for the purpose of section 37 of the Land Acquisition (Just Terms Compensation) Act 1991?

Mr A Galasso, of senior counsel, who appears (with Mr C O'Neill) for Moss Capital also directed me to a number of further clauses, some of which are set out below: 2 Purpose of this Agreement The Option Holder and Manager agree that: (a) the Manager will secure all necessary consents from relevant authorities to commence construction on the Project before the Sunset Date; (b) the Option Holder and Manager will appoint PCG which will represent all parties and approve all material decisions pertaining to the Project; (c) the PCG will arrange the Civil Works Contract between the Contractor and Option Holder to carry out the Works; (d) the Property will be pledged as security to raise debt to fund the Project Costs and any shortfall between debt raised and the Project Costs will be met by the Manager; (e) the PCG will take all necessary steps to carry out the Project and cause the Project to reach Project Completion; and (f) the PCG will carry out the Project in accordance with the Project Program. 3 Appointment of the Manager 3.1 The Option Holder appoints the Manger to exclusively carry out the Development Management Services in accordance with this Deed. ... 4 Appointment of the Project Manager 4.1 The PCG will be responsible for the appointment of all Contractors and service providers. 4.2 The Manager agrees that it will provide the Project Management Services or, with the approval of the PCG, secure the services of suitably qualified and experienced service providers or Contractors. ... 4.4 In consideration for providing the Project Management Services the Project Manager will be entitled to the Project Management Fee and that fee will be paid from the Project Account but only on and from the Stage 1 Condition being satisfied. ... 5 Staged Project 5.1 The Project is to take place over two (2) stages. 5.2 Stage 1 will involve the following tasks: • Obtain development approval necessary to commence construction of the Works. 5.3 Stage 2 will involve the following tasks: • Obtain lump sum Civil Works Contract with the Contractor (within the constraints of the project budget); • Commence full sales marketing campaigns and the parties agree the Lots may be sold and developed in stages; • Commence and Complete construction of the Works; • Complete all sales and final profit distribution. 5.4 The parties may agree to sell the Property in one line after the Stage 1 Condition has been satisfied. 5.5 All decisions of the Joint Venture will be made by the PCG in accordance clause 6. 5.6 Subject to Clauses 17.4 and 19, the Stage 1 Condition must be satisfied by the Sunset Date otherwise either party may terminate this Deed in which case neither party may have a claim against the other for all and any costs, liabilities, expenses arising from this Deed. 6 Decision making 6.1 The parties each acknowledge that, following the Stage 1 Effective Date the Manager is authorised to exclusively carry out the Development Management Services and/or Project Management Services. ... 6.3 On the date of this agreement the Option Holder and Manager agree to establish the PCG which will be structured and will operate in accordance with the provisions of this clause 6. The Option Holder and Manager must act in accordance with any direction or decision of the PCG. 6.4 The PCG: (a) is the executive management vehicle for the Project; and (b) will oversee the operational activities of the agreement on behalf of each Option Holder and Manager and will make all major decisions and determinations required to be made by the Option Holder and Manager in relation to the Project. 6.5 The PCG will consist of 4 nominees representing each Party equally: Option Holder's nominees Manager's nominees Member's Name [insert name] Member's Name [insert name] Alternate Member Alternate Member [insert name] [insert name] Alternate Member Alternate Member [insert name] [insert name] 6.6 The Manager will be the Chairman of the PCG. 6.7 All decisions of the PCG must be unanimous. In the event of a disagreement or deadlock or where a decision cannot be made, clause 16 shall apply. ... 6.15 The Option Holder and Manager must not act contrary to any decision or resolution of: (a) the Manager in respect of Day to Day Matters. (b) the PCG in respect of Material Matters. ... 7 Functions and Duties of the Parties 7.1 The Manager's Duties The Manager agrees to: (a) obtain all necessary approvals to commence construction including obtaining construction certificates; (b) secure finance to fund the Project Costs from commencement of Stage 2; (c) perform such duties as are delegated by the PCG provided they are not inconsistent with or in excess of the Project Management Services and Development Management Services; and (d) supervise and manage any delegated service providers and Contractors as approved by the PCG. ... 8 Subdivision 8.1 Preparation of the Subdivision Documents The Manager agrees to progress and finalise the preparation of the Subdivision Documents for the approval of the PCG involving: (a) preparation and development of a subdivision concept and staging plan; (b) engaging a surveyor; (c) arranging for preparation and progression of the Subdivision Documents; and (d) arranging for the Subdivision Documents to be approved by the Council and registered by LPI. ... 9 Payment of Project Costs 9.1 Liability for Project Costs The Manager is liable for the costs to satisfy the Stage 1 Conditions. Once the Stage 1 Conditions are satisfied, the costs incurred to achieve Stage 1 will form part of the Project Costs and thereafter, both the Option Holder and Manager in equal shares are liable for all Project Costs on the basis that the Property will be used as security to raise debt to meet the Project Costs. Any shortfall between the Project Costs and the debt raised shall be contributed by the Manager (as a loan to the Option Holder) and Option Holder equally or as otherwise agreed. ... 10 Sale Contracts 10.1 Responsibilities under Sale Contracts The PCG must approve any Sale Contracts before they are executed and exchanged. ... 10.5 Land Dealings The Owner and the Option Holder shall not deal or otherwise transact in the land without the approval of the Manager. ... 11 Project Account 11.1 Project Account for Sales Proceeds and Project Costs As soon as possible after the date of this deed the Option Holder and Manager shall establish a Project Account into which will be deposited: • all Sale Proceeds; • any contributions by the Option Holder or Manager pursuant to clause 9.1 and from which will be paid; • all Project Costs by the Option Holder and Manager; • any disbursements pursuant to Clause 12. ... 12 Application of Sales Proceeds 12.1 Use of Project Sale Proceeds The Sale Proceeds and the other monies received in respect of the Project, must be deposited into the Project Account and the Option Holder and Manager agree to apply the Sales Proceeds in the following manner and order of priority: (a) firstly, all GST and sales commissions; (b) secondly, to pay to the Option Holder the Lot Value of each Lot sold. If the Manager was required to acquire a 50% interest in the Property pursuant to clause 17.4 then this amount will be paid equally between the Manager and the Option Holder; (c) thirdly, to repay all moneys from time to time owing to the Financier under the terms of Financing Documents including interest and principal required to ensure those financing facilities comply with the terms of the loans; (d) fourthly, if not previously attended to, reimburse the Manager the costs incurred in satisfying the Stage 1 Conditions; (e) fifthly, to reimburse the Option Holder and Manager for any funds contributed to pay the Project Costs; and (f) sixthly, 50% of the Project Return to the Option Holder and to the Manager 50% of the Project Return (in the case of the Manager plus GST). 12.2 General reporting requirements The Manager must provide access to the Option Holder reasonably satisfactory to the Option Holder from time to time of the quantum of the Sales Proceeds. 12.3 Manager's Entitlement to Project Return The Option Holder and Manager agree that the Option Holder will distribute the Manager's Entitlement from the Project Return by way of a fee invoiced to the Option Holder. The Manager's share of the Project Return is exclusive of GST and GST will be added when the invoice is provided to the Option Holder. 12.4 Interest on Surplus Proceeds The Option Holder may invest any surplus proceeds in the Project Account on such favourable terms as the PCG determines from time to time. ... 17 Termination 17.1 Termination This deed will only terminate: (a) with the written agreement of all parties; or (b) upon Project Completion, and the parties agree that they will not take action to terminate this Deed or have it declared void or terminated except in these circumstances. ... 17.4 Notice of Sale (a) If the Stage 1 Condition has not been achieved by the Sunset Date, then the Option Holder may by notice to the Manager require the Manager to acquire a 50% interest in the Property by paying to the Option Holder no later than one month from the date of that notice 50% of the Agreed Land Cost (being [redacted]) (exclusive of GST if payable) and the Option Holder will transfer to the Manager a 50% interest in the Property. (b) If clause 17.4(a) applies then the Option Holder and Manager will own the Property as tenants in common in equal shares and this agreement will govern their relationship as co-Option Holders but will be replaced with a form of agreement with any necessary amendments for the fact that the Option Holder and manager are now co-Option Holders of the Property. (c) If clause 17.4(a) applies, and the Manager fails to make the payment to the Option Holder as set out in clause 17.4(a) in the time required, the Option Holder may terminate this deed in which case the Manager has no claim against the Option Holder for costs incurred in the Project and the Manager must remove its caveat from the title to the Property. ... 20 Purpose & Intention of Parties 20.1 Intention of Parties The Owner, Option Holder and Manager covenant and agree with each other that it will: (a) perform its obligations under this Agreement; (b) act always with the utmost good faith and be just and faithful in its dealings with the other party. … 21 Caveat The Manager may lodge a caveat upon any part of the title to the Property to secure its interest in the Joint Venture and the Property. ... 23 Assignment The Manager may assign, transfer, or novate its interest in this Deed at anytime to another party provided it is a 100% owned subsidiary of the Manager, without the consent of the Option Holder, and the Option Holder will execute any deed reasonably required by the Manager to affirm that this agreement continues between Option Holder and the party to whom the Manager seeks to assign, novate or transfer the interest in this agreement as if they were the original parties to this agreement. 24 Option 24.1 Owner Obligations The Owner acknowledges and agrees, by execution of this Agreement that: (a) the Option Holder has the right to enter into this Agreement; (b) the Manager may lodge a caveat over the Property to protect its interest in the Property created by this Agreement; (c) the Manager has rights against the Option Holder and the Owner which if the Option Holder fails to exercise the Option in accordance with its terms and, in particular within the option exercise period which expires on 31 December 2012, then the Manager's rights created by this Agreement may be exercised against the Owner as if the Owner had entered into this Agreement as the Option Holder; and (d) further to clause 20.1 the Owner must take whatever steps are reasonably necessary (as determined by the Manager) to give effect to the provisions of this Agreement). 24.2 Option Holder Obligations The Option Holder agrees that it will, as soon as practicable after the Stage 1 Effective Date, exercise the Option.

His Honour went on to give other examples of where, if a right created by a contract is merely personal, the fact that a breach may be restrained by an injunction and does not sound only in damages cannot convert a personal claim into a proprietary interest. At [28]-[30] he stated: [28] A party who is given a right of first refusal to buy land can enforce a contractual claim to restrain a dealing with land, but before the conditions for the exercise of the right have been satisfied, he has no equitable interest in the land. In Mackay v Wilson (1947) 47 SR (NSW) 315 Street J said (at 325): But an agreement to give 'the first refusal' or 'a right of pre-emption' confers no immediate right upon the prospective purchaser. It imposes a negative obligation on the possible vendor requiring him to refrain from selling the land to any other person without giving to the holder of the right of first refusal the opportunity of purchasing in preference to any other buyer. It is not an offer and in itself it imposes no obligation on the owner of the land to sell the same. He may do so or not as he wishes. But if he does decide to sell, then the holder of the right of first refusal has the right to receive the first offer, which he also may accept or not as he wishes. The right is merely contractual and no equitable interest in the land is created by the agreement. [29] When the conditions for the exercise of the right of first refusal have been satisfied then the mere contractual right to enforce the right of first refusal by restraining a dealing in land can be transmuted into an equitable interest in the land. (See the cases reviewed by Campbell J in Sahade v BP Australia Pty Ltd [2004] NSWSC 512 at [41]-[43]). But before then, it is clear that the mere contractual right as described by Street J does not create an equitable interest in the land which is the subject of the right of first refusal. [30] Another example is the case of a shareholder in a company which owns a block of units and whose shares confer a contractual licence on him to occupy a unit in the building. Such a shareholder would have the right to restrain the company from dealing with the unit in breach of its contract with the shareholder embodied in the articles of association. However, such a shareholder does not hold any estate or equitable interest in the unit owned by the company. (Tittman v Traill (1957) 74 WN (NSW) 284 at 287; H H Halls Ltd v Lepouris (1964) 65 SR (NSW) 181 at 191-192, 194).